The Indian Soybean Processors’ Association (SOPA) has appealed to the central authorities to enhance the import duty on consumable oils by at least 10% to shield farming community from low domestic rates, which have negatively impacted cultivation. According to SOPA’s Chairman, Davish Jain, the current conundrum of reduced cost imports combined with a dip in domestic oilseed pricing has led farming communities to limit their oilseed cultivation or even give up on such grows in some cases. In his plea, he stated, ‘We hope for your earnest intervention to reconsider the structure of duty on import of edible oils, pushing up the duty by a minimum of 10%, at the earliest’. Mr. Jain puts forth the view that such action will be instrumental in restoring the faith of farmers, encouraging an increase in their oilseed production and complimenting India’s strive for self-reliance.
This appeal materialized as the land used for cultivating soybean has seen a reduction by more than 5% this year, largely due to farmers being disheartened by inadequate earnings from the crop. Throughout the current trade calendar, the pricing of soybean crops have remained stagnant, ongoingly below the minimum support price (MSP) determined by the government. This lack of financial stability has left the government with no choice but to intervene and carry out procurement operations.
In an effort to bolster domestic refining processes and maintain control over food inflation, the government in May trimmed down the import duty imposed on crude edible oils, including crude soybean oil. The previous duty rate of 20% was adjusted to 10%. However, this redefinition did not extend to the duty on refined edible oils, leaving it constant at 35.75%.
Even after initiating procurement by the government, SOPA reports that stock liquidation has occurred at a financial loss. Observations of the current state of crop cultivation suggest a high chance of another government procurement of soybeans on the horizon, an operation that could cost upwards of ?5,000 crore.
SOPA took the opportunity to remark upon the fact that presently consumable oils are not adding to the inflation. Soybean oil prices, in particular, continue to be bearable. The Association stressed that while consumer interests are indeed crucial, there exists a need to strike the right balance. They argue that customers should exhibit readiness to pay an equitable price, a move that could catalyze a surge in oilseed production and simultaneously reduce India’s dependence on imports.
The argument put forth by SOPA points out the potential damage caused by a prolonged policy that permits imports either at nil or at miniscule duty prices. Such a policy, they claim, has detrimentally impacted the economic health of the oilseed sector. According to the representation submitted, it has become essential to promptly rectify this imbalance.
The proposed remedy involves deploying a policy framework that is capable of safeguarding the interests of consumers while also ensuring that farmers receive rewarding returns for their share of cultivated crops. SOPA believes that the practicable option to achieve this balance is by putting into action an increase in customs duties imposed on import of edible oils. As per their statement, this strategic maneuver forms a decisive measure in the desired direction.
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