An obstacle course

Amid the ongoing farmers' protest over the issues of assurance of guaranteed minimum support price (MSP) in writing, and scrapping of contentious three farm laws, the announcement of a significant increase in the MSP of pulses and oilseeds by the Union government indicates that the government is all set to promote crop diversification at a large scale to make the country free from oil-import dependency as, at present, over 60 per cent of India's edible oil needs are met through imports.

The MSP for wheat — the main rabi crop — has increased by just Rs 40, which amounts to 2.03 per cent and is the lowest in the last 12 years, while the support price for the other rabi crops — barley, gram, lentil (masur), rapeseed and mustard, and safflower — have been increased in the range of 2.14 per cent to 8.60 per cent.

The MSP for wheat was increased by Rs 40 to Rs 2,015 per quintal, and for mustard seed by Rs 400 to Rs 5,050 per quintal, for the current crop year. The decision in this regard was taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) — chaired by Prime Minister on September 8 this year.

In the given scenario when a majority of farmers are dependent on paddy and wheat cultivation, hoping them to switch over to oilseeds and pulses, just by increasing the MSP, may prove to be a herculean task for the government due to several factors associated with the cultivation of oilseeds and pulses.

The issues around non-availability of hybrid seeds in adequate amount, processing units, cost-effective technologies, favourable climatic conditions, augmentation of infrastructure for procurement, etc. need to be addressed to attract farmers for cultivating pulses and oilseeds. The total area under paddy during the kharif seasons has been 15-25 per cent more than the sum of area under pulses and oilseeds.

Experts have stated that the prices of edible oils such as palm oil, sunflower oil, mustard oil etc. have increased by over 100 per cent in the last one year; the exorbitant rise in the prices of edible oils has been attributed to labour shortages and crop failures in major edible oil-producing nations such as Indonesia, Malaysia, Argentina and Ukraine.

The consumption of mustard oil is limited to some parts of India only, while it is exported to some foreign countries due to its demand among the residents of Indian origin. The low production might be the reason behind increase in the price of mustard oil.

Thus, the government hopes to reduce India's dependence on foreign oil imports by boosting domestic production, and protect Indian consumers from price shocks arising due to global factors. In order to boost domestic production, the MSP for rapeseed and mustard seed has been increased by as much as eight per cent in comparison to a mere two per cent increase in the MSP for a major crop like wheat.

It is also worth mentioning that the Centre had announced the National Edible Oil mission worth Rs 11,040 crore on August 18, 2021 with the aim to encourage domestic production of palm oil, as palm oil is a major ingredient in food industry and represents a significant share of India's overall imports.

Is India ready for crop diversification and will it be a viable option for farmers who are majorly dependent on rice and wheat farming? In response to it, agriculture analyst Sandip Das opined that it's a foresighted decision of the government, which is aimed at making India atmanirbhar (self-reliant) in the production of oilseeds and pulses. It's the need of the hour to diversify crops, as India imports about 15 per cent of its pulses from Myanmar, Mozambique, etc, while about 60 per cent of edible oils are imported to meet domestic need, he said.

"It is going to be a win-win situation for farmers if they switch to pulses cultivation from wheat and rice as farmers would get better price of their produce and health of the soil would also be improved. Pulses help in nitrogen fixation that helps in improving productivity," he said, adding that paddy growing farmers can switch to cultivation of maize, soybean oilseeds, groundnut, etc.

"The major challenge associated with the production of pulses and oilseeds is non-availability of processing plants near the regions where pulses and oilseeds are grown. The government must focus on setting up processing units in all such identified oilseeds- and pulses-producing regions," Das said, adding that assurance of price guarantee is another major challenge, as if price crashes on the pattern of international markets, it would create a big problem for farmers.

Giving details about the developments that took place prior to taking such an innovative decision, BB Singh, who is former ADG, ICAR, said that the government had prepared an outline plan for it in 2016 after a meeting with officials of Agriculture Ministry and Indian Council of Agricultural Research (ICAR). The meeting was chaired by the then Principal Secretary to PM, Nripendra Misra, over the issue of increasing the production of oilseeds and pulses in the country.

"Apprehensions were expressed by the PMO official about non-availability of technologies in the country. We assured him of having all the latest technologies for carrying forward the project to increase oilseed production. Upon satisfaction, Misraji asked us to go ahead," Singh said, adding that Rs 150 crore was immediately allocated for seed development, procurement of pulses was allowed and the fund was released in January 2016, leading to the start of project in March 2016.

"The higher MSP on pulses and oilseeds would definitely help in motivating farmers to grow these crops. Since we are growing surplus wheat, rice and sugar, the time has come to change the crop cultivation pattern," he said.

In contrary to Singh and other agriculture experts, a senior official in Agriculture Ministry advocated for fixing minimum selling price instead of increasing MSP in a routine way. "If there would be a base selling price for any agricultural product, the farmers would be more benefitted from it," the official said.

"It's a known fact that institutional procurement of wheat, paddy, pulses, oilseeds etc. is limited to a few states only. So, in states where there is no scientific procurement, farmers are forced to sell their produce at throwaway prices. If there would be fixed minimum selling price, farmers wouldn't sell their produce below the base price, resulting into an increase of their income," the official said, adding that the states should be given the right to fix the MSP of crops as wage rate is fixed by the states.

"Since agriculture is a state subject, so let them decide agriculture policies and MSP for their respective states," the official said, while stressing on the need to bring major reforms in the sector.

"The prime objective behind increasing the MSP of oilseeds and pulses is to curb the import of edible oils as we are importing about 13-14 million tonnes of edible oil from foreign countries," said Rajni Kant Rai, an agriculture analyst.

"India imports about three million tonnes of pulses so the consumer price of essential food item is too high. The rise in MSP is a way to motivate farmers to shift from paddy and wheat cultivation to pulses and oilseeds for better remunerative prices," said Rai, who is chief executive, Agri Business at ITC.

"It's not that the farmers would start growing pulses just on the basis of high MSP on these crops. They compare it with returns, which is high in wheat and paddy, as the acreage of wheat is four tonnes in one hectare of land, which is just one tonne to 1.5 tonne in oilseeds," he said.

"The other important factor associated with these two crops is their environment-friendly characteristics as these crops are very environmentally-sustainable. These require less water and fertiliser. These crops enrich the nutrients of soil by discharging proteins and nitrogen in the fields," he said.

"The major challenge is low yield and risk coverage. The government should make available high-yield seed varieties and rollout a robust risk management scheme, as loss of crops is high in pulses and oilseeds, so farmers should get better insurance cover on failure of their crops," Rai said.

"Farmers cultivating paddy in natural water logging areas can switch to corn cultivation as its demand is increasing due to its usage in poultry and cattle feeds. Corn cultivation is also a suitable crop for irrigated areas. The cost of corn has also increased. Earlier, it was sold at Rs 7-8/kg and now it's been sold at Rs 20- 25/kg," he said.

On the availability of seeds, incumbent ADG (seeds), Dr DK Yadav said that there is no dearth of qualitative seeds in the country, and the ICAR is ready to meet the domestic requirement of seeds of pulses and oilseeds.

"It's not going to happen in a single year. It will go in a phased manner. At the start, only 10 per cent farmers may go for crop diversification and, after seeing their return, others would also participate. In parallel to it, the system would get developed," Yadav said.

The highest absolute increase in the MSP over the previous year has been recommended for lentils (masur), rapeseeds and mustard (Rs 400 per quintal each) followed by gram (Rs 130 per quintal). In the case of safflower, there has been an increase of Rs 114 per quintal, in comparison to last year. The differential price is aimed at encouraging crop diversification.

Notably, the increase in wheat MSP is the lowest in the last 12 years as, in 2009-10, the MSP for wheat was hiked by only 1.85 per cent — Rs 1,100 per quintal in 2009-10 against Rs 1,080 in 2008-09.

The area under different pulses fluctuates from one another during the kharif season. The area under tur peaked at 5.34 million hectares in 2016-17, for urad at 4.73 million hectares and moong at 3.83 million tonnes in 2018-19.

The area under all pulses during the kharif season has contracted in recent years. It was down to 13.2 million hectares in 2020-21 from 13.5 million hectares in 2019-20 and 14.8 million hectares in 2018-19. That increased the shortfall in supply and led to a rise in prices in the wholesale and retail markets.

Tur dal acreage peaked in 2016-17 after the prices of pulses climbed to Rs 200 a kilo in October-November of 2015 and stayed high for several months while urad dal acreage got a boost when prices stayed elevated all through 2016 and early 2017.

The area under kharif oilseeds saw a rapid expansion in the last two seasons, recovering from a contraction in 2017-18 due to some measures taken under the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) —an umbrella scheme with three components launched in 2018 to ensure better transmission of MSP to farmers. The total area under oilseeds rose to 20.8 million hectares in the kharif season of 2020-21 from 17.2 million hectares in 2017-18, led by an increase in the area under groundnut and soybean.

Farmers' reluctance to diversify away from the paddy during the kharif season and wheat during the rabi season cannot be attributed to MSP alone as assured procurement plays a significant role. The procurement process for paddy and wheat is well-established due to the stocking requirements of the government.

Paddy and wheat are procured for maintaining the buffer stocks as well as for distribution at subsidised rates through the ration shops. In states such as Punjab, Haryana and Telangana, more than 80 per cent of paddy offered for sale are procured by government agencies. In Punjab, as much as 90 per cent of the marketable surplus gets procured.

There are no limits on the quantity that may be procured from any individual farmer. A similar practice extends to wheat procurement also, where more than 75 per cent of the marketable surplus is procured in Madhya Pradesh, Haryana and Punjab. In comparison to primary cereals, the procurement of pulses and oilseeds is abysmally low.

It can be hoped the attempts of the government to curb edible oil export turn out to be a huge success and India becomes atmanirbhar in the production of oilseeds and pulses.

Views expressed are personal