Mandi prices for several agricultural commodities for which the government has announced a 5-9% increase in minimum support prices (MSPs) for the year 2022-23 are currently higher than the MSP. Only the prices of pulses are generally lower than the benchmark price.
Mandi prices of oilseeds, particularly soybean, whose MSP was raised by 9% to Rs 4,300 per quintal for the next crop season, are currently 50% higher than the MSP of Rs 6,500 per quintal in Indore, an oilseed trade hub.
According to the Soyabean Processors Association of India, soybean prices are expected to be around Rs 5,500 to Rs 6,000 per quintal at the start of 2022-23, which begins on October 1. Domestic demand for edible oil and soybean meal, which is used as poultry feed, has determined prices above the MSP.
"Soybean has been selling significantly above MSP; however, an increase in MSP provides positive signals to farmers," D K Pathak, executive director of the Soyabean Processors Association of India, told FE.
The current market price of groundnut oil in Gujarat is around Rs 6,090 per quintal, which is about 4% higher than the MSP of Rs 5,850 per quintal for the coming season.
India currently produces approximately 45% of domestic edible oil consumption. Soybean and groundnut account for 24% and 7% of domestic production, respectively.
In the case of rice, mandi prices are approximately 4% higher than the MSP of paddy announced for the Kharif 2022-23 season. FCI's rice stocks at the start of the month were around 33 million tonnes (MT), which is more than double the buffer stock requirement.
Rice, which is primarily grown during the Kharif season, is expected to benefit from the anticipated normal monsoon rains.
While benchmark prices for tur, moong, and urad have increased by 4.8%, 6.6%, and 4.8%, respectively, to Rs 6,600, Rs 7,755, and Rs 6,600 per quintal, the current mandi prices for tur and moong are 4.5% and 9% below MSP.
According to traders, ample imports, particularly of tur, have ensured adequate domestic availability, whereas, in the case of moong, demand has been sluggish, pushing prices below MSP. Mandi urad prices are hovering around MSP.
"With oilseeds becoming the preferred choice among growers, the increase in Kharif MSP will undoubtedly encourage farmers to consider increasing seeding acres for pulses," said Harsha Rai, CEO of Mayor Global Corporation, a commodity trading farm.
"Efforts have been made over the last few years to realign the MSP in favor of oilseeds, pulses, and coarse cereals to encourage farmers to shift larger areas under these crops and correct demand and supply imbalance," an agriculture ministry official said.
India imports approximately 55-56% of its total domestic edible oil requirement, while imports account for 15% of pulses consumption.
