Bumper soyabean— and crashing prices!

The gross revenue from 82 kg meal and 18 kg oil at current ex-factory rates, then, works out to Rs 3,152.

Written by Harish Damodaran | New Delhi | Updated: November 3, 2016 11:04 am
indian farmers, indian monsoon, Guindian commodities, gujarat, gujarat farmer, gujarat groundnut farmer, gujarat soyabean, soyabean price, india news, latest news By comparison, the gross revenues at October 2015 meal and oil realisations would have been Rs 3,900, corresponding to a mandi price of Rs 3,550 per quintal for soyabean.

Gujarat’s groundnut farmers aren’t the only ones facing the heat from crashing realisations. Soyabean growers in neighbouring Madhya Pradesh — also BJP-ruled — are facing a similar situation, with prices in mandis currently at Rs 2,700-2,900 per quintal. Not only are these below last year’s Rs 3,400-3,500 levels at this time, but perilously near the minimum support price of Rs 2,775/quintal — a rare phenomenon in soyabean where open market rates have tended to rule much higher.

“Given the crash in meal realisations, this fall in soyabean prices was inevitable and necessary to reestablish crushing parity,” said Davish Jain, chairman of the Indore-based Soyabean Processors Association of India. For every quintal (100 kg) of soyabean crushed, processors recover roughly 18 kg of crude oil. The balance 82 kg comprises protein-rich de-oiled cake and other solid extractions, also called meal. Farm distress: Gujarat’s groundnut growers take a hit as prices plunge below MSP

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Ex-factory meal prices are now around Rs 24.50 per kg, down from the average Rs 34.25 for October 2015. Realisations on crude soyabean oil are a tad better, at Rs 63.5/kg, against the average Rs 60.60 levels of October 2015.

The gross revenue from 82 kg meal and 18 kg oil at current ex-factory rates, then, works out to Rs 3,152. Deducting processing costs of Rs 150 — both variable (hexane/solvent, fuel, electricity, contract labour) and fixed (wages/salaries, financial charges, other overheads) — would translate into a price of Rs 3,000 per quintal for soyabean delivered at the factory.

“If you further take out 5-5.5 per cent towards transport and mandi-level costs (market fee, middleman/arhatiya commission, labour expenses), the price works out to roughly Rs 2,850/quintal. That is what farmers are realising in the mandis today,” noted Jain. By comparison, the gross revenues at October 2015 meal and oil realisations would have been Rs 3,900, corresponding to a mandi price of Rs 3,550 per quintal for soyabean.

“It is a steep fall for farmers. Some are holding back their produce in the expectation of prices improving, but the smaller ones cannot obviously do this. They need money to purchase fertiliser, seed and other inputs for planting wheat or chana in the rabi season,” pointed out P S Vijay Shankar of Ram Rahim Pragati Producer Company Ltd, a Bagli (Dewas)-based organisation that aggregates and markets the soyabean and maize of 2,000-plus farmer-members.

Many farmers also seek temporary three-phase electricity connection for irrigating their fields. These, typically for four months, entail upfront payment at the rate of Rs 3,000 per horsepower or Rs 15,000 for a 5-hp connection. Generating that money again requires selling soyabean, putting further pressure on prices.

“In 2013, we had untimely and excess rains flooding the fields. In 2014 and 2015, there was delayed rains and drought. This year, the monsoon has been good and evenly distributed, resulting in a bumper soyabean crop. Unfortunately, even that hasn’t helped farmers, who have only seen their realisations collapse,” added Vijay Shankar.