CACP suggests linking oilseeds MSP to oil content to ensure better returns

CACP has proposed oil-linked MSP for mustard and safflower to incentivise high-yield varieties, reduce edible oil imports, and improve farmers' returns

The minimum support price (MSP) for oilseeds like rapeseed and safflower should be linked to oil content to ensure better returns for farmers and incentivise them, the Commission for Agricultural Costs and Prices (CACP) has said.

 

It made the recommendation in its latest policy report on rabi crops pricing for 2026-27.

 

“The Indian Council of Agricultural Research has developed a number of high oil content varieties and management practices to increase the oil yield in mustard and safflower. However, farmers currently have little incentive to adopt these varieties and management practices unless they receive a premium for higher oil content. Therefore, it is essential to incentivise farmers for producing oilseeds with higher oil content. Therefore, the Commission recommends linking the MSP of mustard and safflower seeds with oil content with a benchmark oil content of 34 percent in mustard and 28 percent in safflower,” said CACP.

   

For every incremental increase of 0.25 percentage points in oil content beyond certain levels (34 pc for mustard and 28 per cent for safflower), farmers should get an additional incentive to promote the cultivation of high-oil content varieties and increase area under these crops. The CACP’s non-price recommendations are largely advisory and are not binding on the government.

 

India imported around 16 million tonnes of edible oils in 2023-24 marketing year (November to October) worth around Rs 132,000 crore.

 

Edible oil imports have slowed since pandemic-affected years of 2021-22 when they touched a record Rs 157,000 crore, but are higher than previous years.

 

“The determination of incentives for higher oil content can be based on oil and oil cake content in the seeds and prices of oil cakes,” the CACP said. The effective implementation of the National Mission on Edible Oils - Oil Palm will help bridge the gap between demand and supply.

 

It suggested a dynamic duty structure linking tariffs on imports to international prices. In case of a sudden fall in global prices, trigger points can be identified for quick action to raise import duties.

 

The CACP recommended raising urea price in phases so that the money raised can be used to provide higher subsidies to farmers on phosphorus and potassium fertilisers.

 

It also suggested a comprehensive project on commodity markets and price outlook. “This would enable farmers to make informed decisions on production and marketing as well as help the Government to manage price volatility and take evidence-based policy decisions,” CACP said in its report.