Oilseed prices have risen in the last two days following the government’s decision to bail out domestic edible oil producers through a sharp rise in import duties.
The government had on November 18 almost doubled the import duty on all variants of edible oils. The hike has started working in favour of farmers and soybean is leading the oilseed price increase.
Soybean prices have shot up by seven per cent to Rs 3,052 a quintal over the last two weeks in the Indore mandi. Trailing by Rs 200-250 a quintal for several weeks, soybean in the Indore mandi has exceeded its minimum support price.
Prices of all other variants of seeds and oils have also risen. Castorseed in the Disa mandi rose by 2.7 per cent to trade currently at Rs 4,548 a quintal.Rapeseed oil and groundnut oil prices are up by 6.41 per cent and 2.27 per cent, respectively, to trade at Rs 83,000 a tonne and Rs 90,000 a tonne in the week ended December 1.
The measures have turned around the fortunes of edible oil producers with many of them planning to increase their operating capacities, which had declined to their lowest level of 30-35 per cent in November. “Crushing activity will certainly receive a boost. Now prices of oilseeds, edible oils and meals will go up. In turn, farmers’ realisation will also rise,” said Atul Chaturvedi, chief executive officer, Adani Wilmar, producer of the Fortune brand of edible oils.
The revised Foreign Trade Policy also raised benefits in the Merchandise Exports from India Scheme for soybean meal to seven per cent from the existing 5 per cent.
“The two per cent additional incentive for soya meal should benefit our oilseed extraction business with an increase in capacity utilisation and output of value-added products. This will have a positive effect on our margins,” said Dinesh Shahra, managing director and chief executive officer of Ruchi Soya, India’s largest oilseed extraction company.
Owing to poor soybean crops, the company has been utilising only 13-15 per cent of its crushing capacity in the last two years. Ruchi Soya’s capacity utilisation is expected to rise to 45-50 per cent in the current year.
The Solvent Extractors’ Association of India reckons the country’s 350 solvent extraction plants have an annual oilseed processing capacity of 30 million tonnes. India imports 15 million tonnes of vegetable oils (crude and refined) to meet a demand of 24 million tonnes. After reaching 2.47 million tonnes (worth Rs 4,298.5 crore) in 2014-15, India’s oilmeal exports plunged to 1.86 million tonnes (worth Rs 3,178.7 crore) in 2016-17.