India increases subsidies for oilseed production

On October 18, 2023, the Cabinet Committee on Economic Affairs (CCEA) in India approved an increase in the minimum support price (MSP) for Rabi oilseed crops for the marketing year 2024-25. The move is aimed at boosting farmers’ incomes and crop diversification ahead of the 2024 parliamentary elections. The Ministry of Agriculture and Farmers Welfare has also released final crop production estimates for 2022/23, including oilseeds.

The new MSP will be effective from October to March and includes wheat, barley, gram, lentil, rapeseed-mustard, and safflower. The MSP for rapeseed-mustard increased by 3.6 percent from INR 5450/quintal (USD 66.4/quintal) to INR 5650/quintal (USD 68.9/quintal). The MSP for safflower increased by 2.6 percent from INR 5650/quintal (USD 68.9/quintal) to INR 5800/quintal (USD 70.7/quintal).

The MSP hike for rapeseed-mustard jumped by 98 percent and 52 percent for safflower. This is by the 2018/19 budget by the Indian government, where the MSPs for Kharif and Rabi crops were announced at a level 1.5 times higher than the total weighted average cost of production sustained by the farmers.

To improve food self-sufficiency and raise farmers’ incomes, the government is encouraging crop diversification towards oilseeds/pulses/millets through initiatives like the National Food Security Mission and the National Mission on Oilseeds and Oil Palm. As food prices are inflated presently, MSP will guarantee remunerative pricing for the farmers and boost crop diversification.

On October 18, 2023, the Ministry of Agriculture and Farmers Welfare released the final production estimate (2022/23) of major crops, including total oilseed production at 41.3 million metric tons (MMT). Groundnuts are estimated at 10.3 MMT, soybeans at 14.9 MMT, and rapeseed-mustard at 12.6 MMT, contrary to the United States Department of Agriculture’s official estimates of 7 MMT, 12.4 MMT, and 11.8 MMT, respectively.

In addition, on November 6, 2023, the Solvent Extractors’ Association of India (SEA) and the Brazilian Association of Vegetable Oil Industries (ABIOVE) signed a memorandum of understanding (MOU) for soybean oil supply to India. The MOU aims to encourage technological collaboration between the two organizations in oil meals and edible vegetable oils and to maximize crop yields through the trade of oilseed planting equipment and materials.

The increase in MSP for Rabi oilseed crops is a positive move by the Indian government to boost farmers’ incomes and crop diversification ahead of the 2024 parliamentary elections. The release of final crop production estimates and the MOU with Brazil’s oilseed industry groups are also significant developments in India’s agriculture sector.

Tags: subsidies, soybean, India, rapeseed, mustard