But Singh, 55, says he will only switch to growing oilseeds, such as rapeseed and sunflower, on his 15-acre (six-hectare) plot in the northern state of Punjab, if the government promises guaranteed rates for their production.
“Sometimes we grow sunflower, but we can’t sell it on the MSP,” said Singh, 55, referring to the Minimum Support Price (MSP) that the government pays for his rice and wheat.
“In fact, we often have to sell sunflowers at deep discounts,” added Singh, a blue turban, a participant in the daily farmers’ sit-ins on the outskirts of the capital New Delhi.
Such a shift by farmers in the barn states of Punjab and Haryana could reduce edible oil shipments that have tripled in the past two decades to rack up India’s third-largest import bill, after crude oil and gold.
That would also melt bulging stocks of rice and wheat worth billions of dollars that lie unsold in government warehouses after years of bountiful harvests.
But industry experts say grain producers are unlikely to make the switch in large numbers unless the government offers financial assistance.
“Farmers will switch to oilseeds if the government agrees to provide incentives of a few thousand rupees per acre for diversification, which is necessary,” said veteran trader Govindbhai Patel, director of GG Patel & Nikhil Research Co.
Such a move seems unlikely during the clash over three new farm laws adopted by Prime Minister Narendra Modi’s government in September, which protesting growers call a ruse to abandon the MSPs.
These prices are set for more than 20 harvests each year, but the state purchasing agency Food Corporation of India (FCI) applies them only to rice and wheat purchases, blaming a lack of funds and storage space.
Only the prospect of financial support will encourage farmers to switch from cereal crops, at government-set prices, to less predictable oilseed profits.
“We have asked the government to provide that kind of support to farmers,” said BV Mehta of the industry body Solvent Extractors Association of India (SEA).
The government, which earns Rs 35 billion ($ 4.77 billion) from taxes on edible oil imports, can easily set aside Rs 4 billion a year for crop diversification, through more taxes on edible oil. imports, Mehta added.
Higher oilseed production and fewer oil imports will boost farmers’ incomes, create jobs in the domestic crushing industry and help save valuable foreign exchange, he said.
Producers’ transition away from grain is a key step in a government plan to boost oilseed production, said a senior government official, who sought anonymity in accordance with the policy.
Once the government solves the month-long farmer agitation, it can allocate financial incentives to boost crop diversification, industry officials say. Negotiators from both sides will meet on January 4 to try to break out of the impasse.
GRAINS PREFERRED TO OIL SEEDS
Government purchases, initially aimed at promoting self-sufficiency in household staples, have encouraged farmers, especially those with access to better irrigation, to favor grains over the years, rather than oilseeds and crops. vegetables.
That has brought India to the rank of the world’s second-largest producer of rice and wheat, but caused a glut. At the same time, lower oilseed production has made it the world’s largest oil importer, covering almost 70% of consumption.
These imports have risen to 15 million tons from 4 million two decades ago and could reach 20 million in 2030, driven by a growing population with higher incomes to satisfy the penchant for calorie-laden curries and fried food.
India buys palm oil from Indonesia and Malaysia and soybean oil and sunflower oil from Argentina, Brazil, Russia and Ukraine.
Oilseeds are now grown primarily in rainfed areas with low crop yields, but Punjab, with efficient irrigation, can expect higher yields, experts say.
Farmers in the state and neighboring Haryana can produce 6 million tonnes of rapeseed if they divert half of the area that is now cultivated with wheat, generating an increase in the national supply of 2.5 million tonnes, Mehta estimated.
Agricultural economists say India should create a transition fund.
“Both the central and state governments should come up with a financial package that sets this crop diversification in motion,” said former government adviser Ashok Gulati. ($ 1 = 73.34 rupees)
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