New Plan to Support Farmers and Control Market Volatility

The central government of India is considering an Oilseeds Buffer Fund to stabilize prices, boost production, and protect farmers. This initiative would function similarly to the pulses buffer fund, which helps maintain price stability.

Currently, the government allows oilseed purchases at the minimum support price (MSP) after approval from the Agriculture Ministry. A dedicated fund could help states procure oilseeds, store them temporarily, and release them into the market when needed. This would prevent drastic price drops during peak harvesting periods.

If approved, the government may allocate USD 60 million for a revolving fund in the upcoming budget. This fund would ensure that farmers receive fair prices, especially when market rates drop below MSP during harvest time. A similar price stabilization scheme for tur dal helped control market prices after they exceeded USD 2,40 per kg in 2015-16. A comparable model for oilseeds could help farmers maintain stable earnings, even without expanding crop acreage.

Shift to Maize Raises Concerns Over Oilseed Production

The government wants to increase oilseed production, but shifting crop patterns could pose a challenge. Many farmers who previously grew soybean and mustard have switched to maize and gram this year. This shift raises concerns about the National Mission on Oilseeds, which aims to increase production from 39 million tonnes to 69,7 million tonnes.

Several grain-based distilleries have opened in recent years, some without government subsidies. This has affected maize prices, making it a more attractive option for farmers. Hybrid maize yields 5-5,5 tonnes per hectare, and at a rate of USD 0,29 per kg, a farmer can earn around USD 1,58 per tonne per season from maize alone. In comparison, soybean generates only USD 0,19 per kg, with an average productivity of 1,5 tonnes per hectare.

Maize Market Trends and Price Movements

The minimum support price (MSP) for maize is set at USD 0,27 per kg, while the all-India average selling price in mandis from early January stood at USD 0,28 per kg. Some regions recorded even higher prices:

• Farmers in Uttar Pradesh earned over USD 0,30 per kg
• Farmers in Rajasthan received USD 0,29 per kg

In October, the all-India average price was around USD 0,25 per kg. Many farmers sold below MSP due to high moisture content in their produce.

Declining Mustard Acreage and Oilseed Production Goals

The total area under mustard cultivation has dropped 5% to 8,93 million hectares in the current Rabi season. Soybean acreage also declined during the last Kharif season.

To address this, the government launched the National Mission on Edible Oil (Oilseeds) with a budget of USD 1,2 billion. The mission aims to boost oilseed production from 39 million tonnes to 69,7 million tonnes. Along with NMEO-OP (Oil Palm), this initiative targets a domestic edible oil output of 25,45 million tonnes, covering 72% of India’s estimated consumption needs.

First-Ever Edible Oil Survey Launched

For the first time, the government is conducting a large-scale survey on edible oil production. The study covers 12,93 million hectares and is hosted on the MyGov platform. The survey began in early January and will close in late February. The Ministry’s Statistics Division will analyze responses and release a report.

This initiative aims to shape policies that encourage farmers to grow high-demand crops and reduce India’s reliance on edible oil imports.

Conclusion: Balancing Market Stability and Production Growth

If approved, the Oilseeds Buffer Fund could provide much-needed price stability for farmers. However, the government must also address shifting crop preferences, as more farmers turn to maize and gram instead of oilseeds.

Expanding oilseed acreage and improving productivity will be key to meeting India’s edible oil demand. The results of the new edible oil survey will likely guide future policies to ensure both farmer welfare and national self-sufficiency.

Click here to reach our trading platfrom CMBroker