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Time of India
27-05-2025
- Business
- Time of India
An import duty hike promised to support Indian farmers. Instead, prices crashed
For many years, Anand Kumar Baghel, a 54-year-old farmer from Hatod Tehsil in Indore,has been growing maize and pulses on his 1.5 acres of land. However, the potential for higher profits enticed him to switch to soybean farming last year. Now he wishes he hadn't made that choice. He sold his 10 quintals of soybean harvest in two quality-based batches at Indore's Lakshmi Bai Nagar APMC ( mandi ) in the open market to traders, earning Rs 2,500 per quintal for one batch and Rs 1,900 for the other—much lower than the minimum support price ( MSP ) of 4,892 per quintal. Soybean farmers in Madhya Pradesh are facing challenges due to erratic monsoon patterns, which have significantly impacted the region's soybean cultivation, a major source of income for many farmers. Madhya Pradesh and Maharashtra are the two largest soybean-producing states in the country, contributing 54% and 30%, respectively, to India's total production. Adding to the woes, 'rising input costs have severely impacted our profitability,' says Baghel. 'With seed, fertiliser, and labour prices doubling, farmers are struggling, as their returns have remained stagnant—unchanged for over a decade,' he says. 'If farmers don't get fair prices for their produce, they will be discouraged from sowing the same crop in the future. This season, soybean prices fell Rs 500-1,000 short of the MSP, highlighting the challenges farmers face, says Anil Ghanwat, President, Shetkari Sanghatana, a Maharashtra-based farmers' union. He claims that farmers sell their produce in the open market throughout the year, often at unfavourable prices. ET Online This isn't a challenge exclusive to soybeans; it exists in other edible oil crops, such as groundnut and mustard, too. To help local farmers secure better prices for their kharif oilseeds, the government hiked the duty on vegetable oil imports in September 2024; the basic customs duty on crude palm, soybean and sunflower oils was raised from 5.5% to 27.5%, while the duty on refined grades was set at 35.75%, thereby making imports more expensive. Live Events However, the increase in import duty did not yield the desired outcome. The prices stayed not only below the MSP but also lower than the levels seen during the period of duty-free imports, suggesting that the duty hike has not reversed the downward price trend. For example, soybean prices dropped from Rs 4,184 per quintal in October 2024 to Rs 3,962-4,080 in the first week of April 2025 in Madhya Pradesh and from Rs 4,145 to Rs 3,944 during the same period in Maharashtra, against an MSP of Rs 4,892. For groundnut, prices remained in the range of Rs 5,975 and Rs 6,080 per quintal, below the MSP of Rs 6,783. 'For soybean, the mandi prices in Madhya Pradesh mostly operated 15-17% below MSP during the harvest time (November-December 2024) despite the government procurement. The all-India average groundnut price stood also much below MSP during harvest,' says S.P. Kamrah, Secretary General of the Indian Vegetable Oil Producers' Association (IVPA). Industry stakeholders and experts attribute this to various factors, including global market influences, crushing margin challenges and trade loopholes. They believe that a more pragmatic approach is required to address these issues. Crushed at the root India's per capita consumption of edible oil has increased sharply over the past decades, reaching 19.7 kg per year, according to a report by NITI Aayog last August. The increase in demand has significantly surpassed domestic production, resulting in a heavy dependence on imports to meet both domestic and industrial requirements. In FY24, India produced a total of 39.7 million tonnes (MT) of oilseeds, compared to 41.4 MT in FY23, 38 MT in FY22, 35.9 MT in FY21 and 33.2 MT in FY20, according to the data by the Directorate of Oilseeds Development. iStock For soybean, the mandi prices in Madhya Pradesh mostly operated 15-17% below MSP during the harvest time (November-December 2024) despite the government procurement. Despite the government's several initiatives to achieve self-sufficiency, production has not grown at the same pace as consumption. India's still 15-16 million tonnes annually, spending billions of dollars to meet domestic demand. India is a major importer of edible oils, relying on imports to meet around 60% of its total needs. Palm oil accounts for a significant portion of these imports, nearly 60%, followed by soft oils like soybean and sunflower. 'India's edible oil consumption is 26 million tonnes per year, while domestic production meets only 16 million tonnes. Increasing import duty on vegetable oil could help in supporting local farmers,' says Pasha Patel, Chairman, Maharashtra State Agricultural Price Commission. 'While the government increased the import duty by 20% in September, we had requested a 35% increase. An increased duty might have pushed oilseed prices above the MSP,' Patel adds. Despite India's heavy reliance on imports, farmers like Baghel are struggling to get fair prices for their produce. Some are even having difficulty finding buyers, forcing them to hold onto it for more days. This delay could potentially impact the quality of oilseeds, making it even more challenging for them to sell. Experts could not provide the total volume figure or percentage range of edible oil crops currently held by farmers, processors and traders; however, they believe it is substantial, which has crushed their hopes for better returns. Oil, toil and trouble For the uninitiated, oilseeds consist of two main components: oil and meal. The ratio of oil to meal differs by type; for instance, soybeans contain 18% oil and 82% meal, while mustard and sunflower have 40% oil and 60% meal. After harvest, farmers sell oilseeds to traders and processors. Millers or processors crush the oilseeds and subsequently sell the oil and meal separately. Margins vary based on the crop and its quality. For instance, soybean meal (SBM) generates most of the revenue for soybean processors, accounting for over 80% of the raw material's value. However, the domestic demand for soybean meal has decreased over the past two years, primarily due to the heavy availability of rice and maize Distiller's Dried Grains with Solubles (DDGS), a by-product of ethanol production. According to experts, the poultry sector, the major buyer of SBM, is shifting towards DDGS, a cheaper alternative to SBM. This has reduced demand for soybean meals, which led to reduced crushing, resulting in decreased buying and subsequently lower soybean prices. Rahul Chauhan, Director, IGrain India, says, 'Due to the high usage of DDGS, the overall demand of oilmeals within India reduced drastically. This decrease in prices has reduced the profitability of crushers,' says Chauhan. 'The situation is further exacerbated by the overall high availability of SBM in global markets at lower prices versus Indian SBM, leading to lower exports of Indian SBM, Kamrah explains. Higher import duties may not benefit domestic oilseed farmers if crushing economics aren't favourable, according to experts. They say idle mills resulting from unprofitable meal exports will restrict farmgate demand, thereby making crushing economics more crucial than import volumes. The negative crushing margins are attributed to weak global meal prices, which are a result of South America's oversupply and capped oil premiums due to competitive imports. Kamrah states that weak global meal prices have pushed margins into negative territory. So, even after the government hiked import duties, many crushers have reduced processing volumes due to losses, leading to limited demand for domestic oilseeds, leaving farmers like Baghel in the lurch. The profitability of the mills hinges on the difference between revenues generated from edible oil and oil meal sales and the input costs. iStock The negative crushing margins are attributed to weak global meal prices, which are a result of South America's oversupply and capped oil premiums due to competitive imports. Additionally, excessive imports of palm oil, often blended with other oils, put local farmers at a disadvantage due to unfair competition, resulting in low prices for their produce, says Shetkari Sanghatana's Ghanwat. Blending palm oil with other oils, typically in the 30% to 40% range, is a common practice to achieve desired food properties. This blending ratio is often used to balance the characteristics of the final product. He suggests that regulating imports and enforcing stringent blending limits could benefit farmers as well as consumers. Trade loopholes While the profitability of mills and global demand dynamics are important aspects of this discussion, it is essential to consider trade loopholes. According to agriculture economist Deepak Pareek, imported edible oils are being rerouted through countries like Nepal, using bilateral trade agreements to bypass duties. He says, 'This duty avoidance dilutes the effectiveness of the tariff increase.' Kamrah notes that the Indian duty hike has triggered zero import duties under the South Asian Free Trade Area (SAFTA). Trade expects about 1 million tonnes of zero-duty imports from SAFTA countries, especially from Nepal. 'While this is bad for the domestic industry, it also dampened domestic sentiment, and hence, oilseed prices also came under pressure,' adds Kamrah. All this emphasises the pressing need to tackle production and supply chain issues. On February 10, 2025, the Solvent Extractors' Association of India (SEA) wrote to Prime Minister Narendra Modi highlighting concerns over duty-free imports under SAFTA, which they said were causing a 'massive influx' of refined soybean and palm oils from Nepal and other South Asian countries. Under SAFTA, Nepalese refiners have been exploiting a duty advantage by importing crude oil and exporting refined oil to India at discounted prices, taking advantage of the trade agreement's preferential tariffs, SEA says. Between October 15, 2024, and January 15, 2025, Nepal imported 194,974 tonnes of edible oil, mainly crude soybean and sunflower oil, and exported 107,425 tonnes to India, according to the trade data. Nepal's import volume exceeded its monthly requirement of 35,000 tonnes, indicating significant refining and re-export activity. Notably, Nepal's exports of soybean oil to India have surged, despite the country producing little soybean oil itself. Global tariff war: Pain ahead The reciprocal tariffs imposed by US President Donald Trump, which are set to expire on July 9, have resulted in increased volatility in vegetable oil prices. According to trade data, the tariff announcements have led to a 7-8% drop in crude oil benchmarks, impacting related vegetable oil contracts. Additionally, China's recent announcement of a further 10% tariff on US soybeans has significantly reduced US exports. Experts say that this move has led to a decline in global edible oil prices, with US soybean oil futures dropping over 2% and palm oil and sunflower oil prices falling 3-4% in early April 2025. They anticipate a period of softer global edible oil prices, which could limit price gains for oilseed farmers in India. iStock For the duty hike to result in sustained price increases in domestic prices that benefit farmers, concurrent support is necessary to improve yields, processing efficiencies, and overall value chain integration. 'These tariffs create a shift in trade flows, with countries looking for alternative suppliers, which may impact the availability and pricing of these oils globally. As a result, India could face higher prices for palm, sunflower, and soybean oils, which are key imports. In response, India should focus on enhancing domestic production through targeted policies, such as those included in the National Mission on Edible Oils-Oilseeds,' says Nilachal Mishra, Partner and Head of Government & Public Services at KPMG India. The Path Forward The current oilseed situation in India poses a multifaceted challenge. 'Firstly, there is no quick fix. Reducing import dependency requires a calibrated, multi-year strategy that balances farmer incentives, consumer affordability and market stability,' says Kamrah. He suggests adopting a dynamic duty slab system wherein duties on crude and refined edible oils would automatically adjust within pre-defined bands tied to global price benchmarks. Secondly, he requests maintaining a duty gap of 15-20% compared to the current 7.5% to incentivise domestic refining and value addition. Kamrah also urges the implementation of rules that allow duties to adjust monthly based on a rolling average of global prices. This approach, he says, will minimise policy lag, ensuring protection for farmers without causing abrupt shocks for consumers. According to experts and stakeholders, India should also prioritise strengthening its oilseed value chains, boosting productivity, and making the MSP system more functional and profitable for farmers. They highlight the high-cost structure of domestic oilseeds, which makes them uncompetitive with imports, especially during global price fluctuations. Additionally, supply chain issues like low productivity and inadequate processing infrastructure prevent domestic oilseeds from fully benefiting from import duty increases, they add. For the duty hike to result in sustained price increases in domestic prices that benefit farmers, concurrent support is necessary to improve yields, processing efficiencies, and overall value chain integration. 'Such structural improvements, along with tariffs, can significantly boost domestic prices in the short term,' says Mishra. According to Pareek, India should provide farmers with high-yielding, disease-resistant seed varieties to boost productivity. Currently, India ranks fourth globally in soybean acreage but fifth in productivity. He also emphasises the need to strengthen government procurement at the MSP level by ensuring timely purchases and payments. While some states procure soybeans through price stabilisation schemes, improvements are needed in coverage, timing, and execution. 'Increase buffer stocks or subsidise processors to buy at MSP when market prices fall, stabilising farmer incomes,' says Pareek.
Time of India
11-05-2025
- Business
- Time of India
Vidarbha Farmers' Crop Choice Dilemma
Nagpur: Cotton and soybean growers in Vidarbha are facing a dilemma ahead of the upcoming sowing season. After receiving poor returns from traditional crops like cotton, soybean, and tur, many farmers found a better alternative in maize. However, the threat of crop raids by wild animals continues to be a major year, farmers failed to secure good prices for traditional crops. Cotton rates hovered around the Minimum Support Price (MSP) of ₹7,500 per quintal, while soybean prices stayed near ₹4,000 per quintal until the government began procurement at the MSP. The open market prices for tur remained subdued at around ₹7,000 per financial losses have compelled farmers to explore alternative crops. Maize, being a sturdy and high-yield crop, emerged as a profitable option, especially due to increased demand from the ethanol industry. Yet, farmers remain apprehensive about potential losses due to raids by wild herbivores such as wild boars and nilgai (blue bulls). In Gadchiroli, there have even been reports of elephants damaging maize crops."In Vidarbha, intrusion by wild herbivores has always been a challenge. Farmers have suffered heavy losses due to crop raids," said Vijay Nichal, a farmer from Yavatmal."Maize is currently fetching over ₹2,200 per quintal, and its yield is around 25 quintals per acre, compared to an average of 5 to 8 quintals for cotton or soybean. This makes it a profitable crop. However, large parts of the Vidarbha hinterland are infested with wild boars and nilgai," said Panjak Bothra, a farm input dealer in Yavatmal."Killing these animals leads to legal complications, and installing wire fences has failed to resolve the problem," he Nanote, a farmer from Akola, echoed similar concerns. "Wild boars and nilgai destroy the crops, resulting in losses for farmers. That's why many are hesitant to opt for maize," he the confusion doesn't end there. Vegetables are another viable option, but the lack of local markets makes it difficult for farmers to sell their produce. "Growing jowar is an alternative, but the threat from wildlife is still a major deterrent," said Vijay Jawandhia, a former Shetkari Sanghatana activist."Ultimately, farmers often go back to sowing cotton and soybeans—because wild boars don't feed on these plants," lament another farmer. Get the latest lifestyle updates on Times of India, along with Mother's Day wishes , messages , and quotes !
Indian Express
01-05-2025
- Business
- Indian Express
Why are bad debts rising in Maharashtra's farm sector
Just five years after the last farm loan waiver in Maharashtra, demand for another such debt relief is gaining momentum. Farmers and farm leaders say lower-than-expected farm incomes have left them with little money in hand, leading to a rise in bad loans. A 'bad loan' is basically a loan that has not been repaid even after the grace period for repayment has expired. What are crop loans and how do they help farmers? Farm loan or crop loan refers to the short-duration finance extended to the farm sector before the start of the agricultural cycle. Banks extend this loan to farmers to meet capital expenditure needs for seeds, fertilisers, farm labour, etc. Agriculture finance comes under priority sector lending, and banks have to compulsorily lend to the sector. Crop loans are usually for a period of 11 months with a minimal rate of interest of 5 per cent, of which 2 per cent is subvented by the central government and another 2 per cent by the state government. Also, in Maharashtra, crop loan upto Rs 3 lakh has been made interest-free since 2021. Farmers are expected to repay the principal amount (along with interest if the principal is above Rs 3 lakh) within 11 months, failing which the loan is deemed outstanding. Before the start of the agricultural lending circle (mostly from April- May), banks are given targets for farm loans along with other priority sector lending. For the financial year 2024-25, the annual target for crop loan was Rs 1,77,342 crore, of which till December 31, 2024, banks had loaned out Rs 1,42,286 crore, or 80 per cent of their target. This mechanism has been put in place to ensure easy access to institutional finance for farmers, who would otherwise turn to private moneylenders. These moneylenders charge interest between 10-15 per cent, and farmers often end up locked in a cycle of endless debt. Studies have shown a strong link between farm distress and lack of easy finance. What is the status of outstanding farm loans in Maharashtra now? As of December 31, 2024, banks have reported Rs 2,63,203 crore of outstanding agriculture loans. This is almost double of the Rs 1,40,413 crore reported in 2019, when the last farm loan waiver was announced by the state government. Farmers with outstanding loans are unable to raise fresh finance from banks, which again makes them vulnerable to private moneylenders. Why have outstanding farm loans gone up in Maharashtra? Anil Ghanwat, leader of the farm union Shetkari Sanghatana, blamed central government policies for farmers being unable to make the most from their fields. 'Since 2019, restrictions have been brought in in the form of export bans. Limiting the amount that traders can hold has had a negative effect on most major commodities like wheat, onion, soyabean pulses,' he said. Cost of production, Ghanwat said, has been on the rise. 'Thus farmers have been unable to make ends meet,' he said. Soyabean, which is grown over 40 lakh hectares, has been trading well below its government declared Minimum Support Price (MSP) since 2021. This was mostly because of easy import of edible oil due to the slashing of import duties. The same was raised in 2024, but a bumper crop failed to see any appreciation in prices. In the case of onion, export ban and continuous clamping on trade to ensure low retail prices resulted in lower prices for farmers. The export ban was recently removed but prices are still low. Similarly, cotton, another important kharif crop, has been trading below its MSP over the last two seasons. Both cotton and soyabean contribute to over 80 lakh hectares out of the 1.20 crore hectares sown during kharif season. Meanwhile, on the input side, the prices of fertiliser complexes (fertilisers which contain all the three primary nutrients viz Nitrogen, Phosphate and Potassium) have seen a sharp rise. Yuvraj Patil, a farmer from Nanded district, pointed out that the most commonly used complex 10:26:26 (phosphorus and potassium present in 1:1 quantity) is trading at Rs 1,700 per bag of 50 kg each. 'Last year, the price of this fertiliser, which is widely used in almost all crops, was Rs 1,470,' he said. Labour is another pain point for farmers, especially for cotton and soyabean growers who have to depend on manual labour for most of their work. At present, a male labour charges between Rs 400-500/day while a female labourer can be hired at the rate of Rs 300-350/day. 'For the last season, harvesting cost for soyabean per acre was Rs 3,500 — a sharp rise from Rs 2,000 which was the rate for the season of 2023-24,' he said. Overall labour costs have increased by 10-15 per cent on a year on year basis. Former MP and farm leader Raju Shetti claimed the previous loan waivers had failed to make any difference to farmers. 'When Uddhav Thackeray was the chief minister, he announced a loan waiver of Rs 20,000 crore, but given the stringent conditions to be a beneficiary, not much relief was felt on the ground,' he said. Shetti said the present rise in outstanding loans is mostly due to increased prices of insecticides, pesticides and fertilisers. Maharashtra and loan waivers: a brief history In 2019, the Uddhav Thackeray-led Maha Vikas Aghadi (MVA) announced a blanket waiver of outstanding loans upto Rs 2 lakh. This scheme was not for people in government services, elected members of the state legislature and Parliament, and those who file income tax returns. As of December 31, 2020, 29 lakh farmers had benefited from the scheme with bad debt of Rs 21,991 crore being waived. In June 2017, the then chief minister Devendra Fadnavis had announced a waiver of Rs 34,000 crore to alleviate farm distress. Ghanwant said Maharashtra is one of the few states where loan waivers have been pushed by the political leadership. 'Unfortunately, this has seen farmers default willfully in the hope of waivers. Even before the 2024 state elections, there were talks of a waiver. Bad credit is a combination of both political support and farm distress,' he said.
Hans India
23-04-2025
- Politics
- Hans India
Marathwada farmer suicides rise: 269 in Jan-March 2025
Chhatrapati Sambhajinagar: Maharashtra's Marathwada region has recorded 269 farmer suicides between January and March 2025, up from 204 such deaths registered in the same period last year, according to a report from the divisional commissioner office here. The region in central Maharashtra, which consists of eight districts, is considered a semi-arid zone characterized by water scarcity due to low rainfall and monsoon variability. Beed district recorded a notable rise in farmer suicides -- from 44 in January-March 2024 to 71 in the first three months of the current year, said the report. The first quarter of 2024 saw 204 farmer suicides in Marathwada and these numbers rose by 65 to reach 269 in the January-March period of the current year, it said. The district-wise break-up of farmer suicides (January-March 2025) in Marathwada given in the report was: Beed (71), Chhatrapati Sambhajinagar (50), Nanded (37), Parbhani (33), Dharashiv (31), Latur (18), Hingoli ( 16) and Jalna (13). Raju Shetti, former Lok Sabha MP and president of the Shetkari Sanghatana, an outfit of cultivators, lashed out at the BJP-led Mahayuti government over suicide by farmers and demanded a waiver of agricultural loans. Talking to PTI, he said, 'The government promised to waive loans of farmers in the state during the last year's assembly election campaign, but they did not do it. This was like cheating farmers.' He reflected on factors leading to small and marginal tillers taking their own lives. 'The per hectare yield of crops like cotton, soybean has gone down. On the other hand, input costs for these crops have gone up. If we talk about soybean, the farmers in Maharashtra have faced a loss of nearly Rs 8,500 crore as they sold their crop below the MSP (minimum support price) at Rs 1,200 per quintal in the last season,' Shetti noted. The Centre had declared the MSP for soybean for the 2024-25 season at Rs 4,892 per quintal.
Time of India
22-04-2025
- Politics
- Time of India
Maharashtra: Marathwada records 269 farmer suicides in Jan-March 2025, up by 65 in same period last year
Maharashtra 's Marathwada region has recorded 269 farmer suicides between January and March 2025, up from 204 such deaths registered in the same period last year, according to a report from the divisional commissioner office here. The region in central Maharashtra, which consists of eight districts, is considered a semi-arid zone characterized by water scarcity due to low rainfall and monsoon variability. Beed district recorded a notable rise in farmer suicides -- from 44 in January-March 2024 to 71 in the first three months of the current year, said the report. The first quarter of 2024 saw 204 farmer suicides in Marathwada and these numbers rose by 65 to reach 269 in the January-March period of the current year, it said. 5 5 Next Stay Playback speed 1x Normal Back 0.25x 0.5x 1x Normal 1.5x 2x 5 5 / Skip Ads by by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Đường Tây Mỗ: Khám phá lợi ích của máy phát điện dự phòng cho gia đình LocalPlan Tìm Ngay Undo The district-wise break-up of farmer suicides (January-March 2025) in Marathwada given in the report was: Beed (71), Chhatrapati Sambhajinagar (50), Nanded (37), Parbhani (33), Dharashiv (31), Latur (18), Hingoli ( 16) and Jalna (13). Raju Shetti, former Lok Sabha MP and president of the Shetkari Sanghatana, an outfit of cultivators, lashed out at the BJP-led Mahayuti government over suicide by farmers and demanded a waiver of agricultural loans. Live Events Talking to PTI, he said, "The government promised to waive loans of farmers in the state during the last year's assembly election campaign, but they did not do it. This was like cheating farmers." He reflected on factors leading to small and marginal tillers taking their own lives. "The per hectare yield of crops like cotton, soybean has gone down. On the other hand, input costs for these crops have gone up. If we talk about soybean, the farmers in Maharashtra have faced a loss of nearly Rs 8,500 crore as they sold their crop below the MSP (minimum support price) at Rs 1,200 per quintal in the last season," Shetti noted. The Centre had declared the MSP for soybean for the 2024-25 season at Rs 4,892 per quintal.
