Despite overproduction of soybeans, India imports large volumes of soybean oil

India is facing a paradoxical situation in its oilseed sector as domestic soybean prices are below the minimum procurement price (MSP) despite an active government policy to support the sector. This is coinciding with increasing soybean oil imports, a phenomenon not explained by cheaper imports but rather a shortage of buyers for local soybeans, leading to overproduction and low prices. The surplus of soybean meal, due to a global record soybean harvest and increased production of processed products, and competition from a cheaper alternative in the feed industry, DDGS, are the main reasons for the price stagnation. Urgent intervention is needed to support farmers, expand domestic and foreign markets for soybean meal, and increase yields. The situation warrants reconsidering the current strategy of supporting the sector.

Despite the government’s active policy to support the oilseed sector, India is facing a paradoxical situation: domestic soybean prices remain below the minimum procurement price (MSP), while soybean oil imports are increasing. For two consecutive seasons, starting from October 2023, procurement prices in the main producing states – Madhya Pradesh, Maharashtra and Rajasthan – have been consistently below the MSP. Meanwhile, soybean oil imports from Brazil, Argentina and the US have been increasing steadily. It would seem that cheaper imports could explain this trend, but analysis shows the opposite: soybean oil produced in India is cheaper than imported by 16-21 rupees per liter. Despite this, there is a shortage of buyers for local soybeans in the domestic market, which leads to its overproduction and a further fall in prices in agricultural farms. The main reason for the stagnation of prices is the surplus of soybean meal, which arose due to the global record soybean harvest ...