Sans lubrication of assured price, oilseeds leave a bitter aftertaste

The area under oilseed production in the country has been steadily on the rise since 2018.

But the country still depends on imports for 56% of its edible oil needs. Numerous schemes by the state and union government have not been able to incentivise farmers to adopt the cultivation of oilseeds in the state.

Unable to compete with cheap edible oil imports, farmers in Karnataka have been reluctant to make the shift.

In fact, a study over a 15-year period between 2005 and 2021 showed that the area under oilseeds had declined by 14.65 lakh hectares in the state.

According to data from the Reserve Bank of India, in 2021 the state produced 321 thousand tonnes lesser oilseeds than it did in 2005.

Margal Srinivas, a farmer leader from Bangarpet, recalls that about two decades ago, cultivation of soybean was common in his district.

“The government cut import duties for edible oil at this time and the prices crashed. Since then, prices did not recover,” he says. The cost of cultivation of oilseeds is also significantly higher than returns, making it difficult for farmers to continue growing the crops.

“The cost of cultivation of groundnut is Rs 7,352 per acre, including labour, transport, seeds, fertiliser and pesticides,” says agriculture economist, Prakash Kammardi.

However, the minimum support price for the crop is set at Rs 5,885 and the prevailing price is Rs 5,400.

Without price stability, cultivation of groundnut, sunflower, safflower and soybean is difficult, and will see only a marginal increase because of incentives, Kammardi says.

Farmers are forced to match prices of imported edible oil, particularly palm oil (crude and refined) — which constitutes about 62% of all edible oil imports.

“Palm oil is so cheap that even farmers who grew oilseeds under mixed cropping for home use shifted to cereals. They buy a litre of palm oil for Rs 110 to Rs 120 instead,” says Anandateertha Pyati, director of a farmer-producer organisation. Due to its high perishability, the palm fruit needs to be transported to a processing mill within 24 hours of harvesting. However, many areas that cultivate palm oil continue to remain without such mills.

Narasimha Murthy, a farmer who has been growing oil palm for 30 years and who is on the project committee to expand oil palms, explains that his endeavour remains largely unprofitable. “The government has agreed to pay a viability price gap, but it is only Rs 11,000 and the cost of cultivation comes up to about Rs 16,000,” he explains.

This has discouraged many farmers from taking it up, despite the many incentives that the government provides.

When faced with this issue two decades ago, Poornaprajna, a farmer from Sagar, Shivamogga, decided to cut down his palm trees, even after they reached fruition — this takes about five years.

An official from the department of agriculture says it is difficult to promote oil palm cultivation among farmers when the price of oil extensively relies on import tariffs.

Ultimately, “even the cultivation of oil palms will suffer if farmers in India have to match the highly subsidised price of imports from Indonesia and Malaysia,” says Kammardi.