Amid oil price rise, Centre to distribute free oilseeds
The government hopes the move would raise domestic production of oilseeds and reduce extra reliance on imports.
India’s policymakers, alarmed by the growing prices of edible oils due to high import costs of oilseeds, have decided to re-use a Green Revolution-era strategy of distributing free seed packets, say officials familiar with the move. They hope this would shoot up domestic production of oilseeds and reduce the over-reliance on imports. However, experts say that an idea of 1960s vintage may not produce the desired results today.
The Narender Singh Tomar-led Union agriculture ministry is giving away thousands of free packets of high-quality oilseeds to farmers in nearly a third of the country’s districts for the kharif (summer crops) season beginning next month. This plan was discussed with the state governments in April.
“The government is giving out nearly 800,000 soybean seed mini-kits and 74,000 groundnut mini-kits to farmers to raise production,” said an official requesting anonymity.
Just like pulses, India relies on imports to meet its edible oil demand. On an average, the annual demand for edible oils is about 24 million tonnes. While domestic output varies between 8 and 11 million tonnes, up to 60% of the demand is met through imports. High global prices over the past two months have made cooking oil the priciest item in the household food basket.
Consumer affairs ministry’s data from a year ago show oil prices have risen by up to 60%. The average cost of a litre of mustard oil rose to ₹170 in May as compared to ₹120 in the corresponding period last year. Similarly, prices of groundnut oil, soya oil, palm oil and sunflower oil are at a decade’s high.
The government plans to bring a 6.37 lakh hectare area under oilseed cultivation. This should lead to an output of 12 million quintals of oilseeds, resulting in 2.43 million quintals of edible oil.
This strategy had paid dividends for Indian agriculture earlier when the offer of free, high-yielding wheat and rice seeds had worked to stir up the Green Revolution. But experts say that the strategy worked because the farmers didn’t have to worry about selling their produce as the government was an assured buyer. With oilseeds, it may not work as free seeds without a supporting procurement framework and other incentives may not nudge cereal-focused farmers to shift to oilseeds, they say.
“The government resorts to mostly token procurement of oilseeds, which has gone up slightly in recent years,” said K S Mani, a farm economist.
With high global prices, farmers are likely to grow more oilseeds this year, leading to a glut, and, consequentially, a price crash — a pattern seen repeatedly with many commodities in the country.
BV Mehta of Solvent Extractors Association of India, an oilseeds industry body, said the government should offer farmers financial incentives in hard cash per acre for shifting from cereals — of which there is a glut — to oilseeds.