Soybean oil and Soybean on wooden table.
| Photo Credit:
inewsistock
There is a fear that the oilseeds acreage may fall during the current kharif season, potentially reducing the output after the government reduced the import duty on crude edible oils last week. . Even as the Agriculture Minister Shivraj Singh Chouhan has defended the decision coming ahead of kharif sowing, many experts and farmer leaders have questioned the timing of the duty cut.
“In the first season after the National Edible Oil Mission was launched, the mustard acreage dropped, leading to a fall in production. Now in the current kharif season, the second, duty cut has been announced. As a result, prices are reported to have dropped already. What will be the motivation to ask farmers to stick to oilseeds when competing crops like paddy and maize are providing better returns,” a former top official of the Agriculture Ministry wondered.
Lower GVA
According to the latest report of the Commission for Agricultural Costs and Prices (CACP), three years’ average gross returns over costs of production (A2+FL) between 2021-22 and 2023-24 was more than ₹30,000 per hectare (ha) in the case of paddy and maize. In contrast, the return was ₹19,749/ha in soyabean, ₹13,917/ha in sunflower, ₹13,576/ha in sesamum and ₹1,474/ha in nigerseed. Only exception was groundnut, where the return was higher at ₹38,017/ha.
The report said tthe Gross Value of Output (GVO) from nigerseed, sesamum, sunflower and soyabean was substantially lower than groundnut due to lower yields. Recently, the Agriculture Minister asked scientists of Indian council of Agricultural Research (ICAR) to seriously think about raising the productivity of soyabean. He feared that area under paddy and maize would expand over soyabean acreage if yield of the oilseed is not increased.
The government on May 30 cut the effective import duty on crude edible oils such as palm, soyabean and sunflower oil to 16.5 per cent overall from 27.5 per cent, with effect from May 31. The industry was demanding a duty difference between crude and refined at a minimum 20 per cent. After the duty cut, it will be 19.25 per cent as the duty on refined oils has been kept at the same level of 35.75 per cent,. The industry has welcomed it.
Weightage in inflation
But, the government probably decided to opt for the duty cut instead of raising the duty on imported refined oils due to inflation.
The retail inflation of oil and fat, which has weight of 3.56 in the consumer price index (CPI), recorded 17.42 per cent jump in April, 2025 as against (-)6.71 per cent year-ago, official data show. The inflation in mustard oil was 19.6 per cent, in groundnut oil (-) 1.43 per cent, coconut oil 67.59 per cent, refined oil (sunflower, soyabean, saffola) 23.75 per cent and vanaspati 20.73 per cent.
Rampal Jat, President of Kisan Mahapanchayat, on Tuesday warned that the import duty cut on palm products would adversely affect crops like mustard, groundnut and sesame. He demanded substantial hike in import duty on palm oil to protect domestic farmers.
Demand for structural changes
Pointing out that increasing the import duty on refined palm oil was also an option to raise the difference with crude oil, he suggested, in a letter to the Prime Minister, to make structural changes by making the Ministry of Agriculture and Farmers Welfare the sole arbiter in case of decision on import, export and determination of related policies for agricultural products.
Demanding a roll back of the duty reduction, ASHA-Kisan Swaraj has asked the government to safeguard the interests of domestic producers.
Pointing out that the decision contradicts the recent hikes in Minimum Support Prices (MSPs) for major oilseeds for kharif 2025-26 as the price revision was supposedly for boosting domestic oilseed production and ensure fair returns to farmers. “The reduced import duty, however, is expected to depress local prices, effectively undermining the MSP hike,” it said.
Published on June 3, 2025