NAFED has to take action after 3 years in mustard
The government steps in to procure cotton, maize and oil seeds such as mustard and groundnut only when their prices rule below the MSP. After three years, NAFED has come forward to purchase mustard. Last year also (2022-23) during RMS, there was no public procurement because the price was above MSP. As the price went below MSP, NAFED has to take a step forward to save the interest of farmers.
Mustard prices are lower than MSP
NAFED (National Agricultural Cooperative Marketing Federation of India) has started its procurement up to ½ million tons at MSP (Minimum Support Line) but prices are still below MSP in marketing yards. The MSP is at INR 5,450 per quintal but at major APMC yards its ruling below MSP.
Haryana’s framers came forward for sale
Procurement was begun on 20th March and recent data of 4th May states that during Rabi Marketing Season (RMS), NAFED has accumulated procurement of 47,676.7 Million Tons of mustard valued at 25.99 Billion rupees.
Out of this NAFED purchased 34,700 Million Tons from Haryana, 7175.9 Million Tone from Madhya Pradesh, 3,498 Million Tons from Rajasthan and 2,302.8 tons from Gujarat. Still, the procurement is in progress.
Farmers of Rajasthan are at protest
Rajasthan is the leading producer of mustard in India which contributes about 42% of total production. It is cultivated in the states of Rajasthan, Haryana, Uttar Pradesh, Madhya Pradesh, and Gujarat. Interesting fact is that though Rajasthan, is the largest producer of mustard, more procurement was done from Haryana which stands at second in the farming of mustard. Farmers of Rajasthan are at a protest against the sale of mustard at MSP. Out of these 101 farmers went to Delhi at Jantar-Mantar for mustard price protest to save their interest of that they may get higher prices.
Market sentiments are weak
Farmers are still waiting that they will get higher prices in the near future. Large farmers continue to hold back mustard, anticipating higher prices. “The daily market arrivals seemed to have slowed down, resulting in slight firming of prices, which has moved up by about INR 100 per quintal over the past three days. Daily market arrivals across mandis during the early part of May ranged between 7 – 8 lakh bags of 50 kg each, while it was 13.5 lakh bags during April. We expect the prices to remain weak going ahead due to the bearish sentiment in the edible oil segment,” said Rahul Chauhan of IGrain India.
Lower edible oil prices affecting mustard
Further, the reduction in edible oil prices by solvent extractors following a decline in global prices is likely to weigh on mustard prices. The industry informed that the global prices of different edible oils have fallen by $200-250 per tonne in the last two months. Last year at March end around 5.8 Million Tons of edible oils were imported while this year at March end 7.1 Million Tons are imported till now which is around 22% high than the previous year. Apart from these 2.4 Million Tons of edible oil is still in an urge to come through the pipeline. This is why due to the heavy import of edible oil and stock in the pipeline, the use of mustard as edible oil seems struggling now.
Harvesting is more than the previous year
As per the advance estimates, India has seen harvesting a record mustard seed output of 12.8 Million Tons during 2022-23, over the previous year’s 11.9 Million Tons, an increase of 7%. Mustard output has more than doubled since 2014-15 when it stood at 6.28 Million Tons.
Conclusion
Production of mustard has increased the previous year and its utilization in edible oil has decreased due to higher imports at lower prices leading to lower prices. Demand is certainly there but supply is more which leads to lower prices of mustard than MSP. After three years NAFED has come forward to buy mustard at MSP. Some farmers are clearing the stock but some are at protest and expecting higher prices.