Why are wholesale soyabean prices so low, and why hasn’t procurement by the government helped?

Soyabean is a major kharif crop that is harvested in September. The oilseed marketing year runs from September to October.

In the current season, even before farmers had harvested their produce (in September 2024), soyabean was trading below the government’s Minimum Support Price (MSP) of Rs 4,892/quintal.

The National Cooperative Agricultural Marketing Federation (NAFED) and the National Cooperative Consumers Federation (NCCF) had set a target of procuring 30 lt across the country. However, NAFED has so far procured only 14.71 lt – and as of February 24, operations in six of the seven states, (barring Chhattisgarh) have ended.

Union Agriculture Minister Shivraj Singh Chouhan has put the total procurement of the oilseed up to February 9 at 19.91 lt, benefitting 8.46 lakh farmers.

Government procurement of the crop was done through sub-agents who procured from farmers, and payments were made directly into the accounts of farmers.

It was expected that once the government weighed in to start procurement, wholesale markets would respond, and there would be an upward correction in prices.

So did the markets respond in the anticipated way?

On the contrary, wholesale prices at the soyabean market in Latur, Maharashtra, one of the largest wholesale markets for the crop in the country, went in the opposite direction.

For most of November and December, the price of soybean per quintal remained around Rs 4,200, lower than the average price of Rs 4,380/ quintal earlier. Prices are currently in the range of Rs 4,100-4,150/ quintal.

At the national level, the average price that farmers got for their produce fell from Rs 5,220 in September to Rs 4,706 in October, and to Rs 4,511 in November.

Average prices per quintal recovered to Rs 4,872, very close to the MSP, in December, but fell to Rs 4,867 in January, according to Agmarknet data.

The Indore-based Soyabean Processors Association (SOPA) has estimated that as of February 1, about 57.40 lt of the total 134.76 lt of produce still remained with farmers or traders.

The window for procurement is now closed, and traders are not hopeful of any appreciation of prices in the days ahead. According to SOPA, about 20 lt of soyabean stocks are lying with the government.

Why are prices low, and when can the situation improve?

For Indian traders, exports of soyameal, the protein-rich solid left after oil has been extracted from the seeds, is important. Soyameal is used as feed for poultry and other animals.

Indian exports are currently commanding a price of $ 380/tonne (ex Kandla port), while those from Argentina, the world’s largest exporter of soyameal, are shipping at $360/ tonne.

Traders say prices may not rise significantly even if exports increase. A section of traders have asked for subsidy support to push exports, but others say prices could move southward again once the government begins to offload its stocks.

Pune-based agri commodities analyst Dipak Chavan said a sharp correction in prices in the wholesale market would not be possible until the government’s stock of 20 lt is exhausted. According to Chavan, the government should try to offload some of this stock as a protein additive in the public distribution system (PDS) along with rice and wheat.