August 22, 2003



India Government Woos More Farmers To Grow Oilseeds

India wants to grow more oilseeds. The federal government and provincial governments in key grain producing states

are busy framing policies to wean farmers away from producing wheat and rice so they plant more oilseeds.


Prime Minister Atal Bihari Vajpayee told a gathering of farmers at his residence last month of the need to "change cultivation patterns" for growing more oilseeds.


India's eagerness to raise oilseeds production stems from it's anxiety about the bulging edible oil import bill. India is expected to import a record 5 million metric tons of edible oil this year.


The federal government has started acting on its goal of increasing oilseeds production. The Ministry of Agriculture Tuesday issued a statement urging state governments to encourage farmers growing rice and wheat to switch over to growing oilseeds and pulses.


The federal government has promised funds to state government for helping first time oilseeds farmers buy seeds, fertilizers and other inputs.


India's new policy of sacrificing grains production for increasing oilseeds output stems from the high stocks of grains in government granaries.


Food grains production in financial year April 2003-March 2004 is expected to touch 220 million tons, higher than the estimated 185 million tons in 2002-2003. The 2003-2004 bumper harvest is expected to further boost grains stocks, giving the  government the confidence to go ahead with a crop switch program.


"India is self-sufficient in rice and wheat and production continues to rise year on year. So, it makes sense at this point to create policies that encourage farmers to grow more oilseeds," said Riyaz Khan, an economist with the Centre for Monitoring Indian Economy, or CMIE.


States Too Get Into Crop Switch Act


Provincial governments in two of India's largest wheat and rice producing states -- Punjab and Haryana -- this month announced their intention of launching initiatives to make farmers switch over from grains to oilseeds farming.


"Haryana is selling seeds for growing oilseeds at 30% lower than market rates, by absorbing some of the cost itself," said Chief Minister Om Prakash Chautala said last  week.


Haryana plans to sow 45,000 hectares with oilseeds in the current sowing season, compared with 12,000 hectares in the last calendar year.


Oilseeds sowing in India begins in June and harvesting takes place in September. Good monsoon rains so far have boosted hopes of a bumper oilseeds harvest this year.


Punjab Chief Minister Amarinder Singh last month sought INR1.2 billion from the  federal government for a program to make farmers in the state switch over from paddy farming to oilseeds.


He told reporters that financial incentives would speed up the process of farmers switching over to oilseeds, as many farmers were anyway disenchanted with federal government's modest hikes in intervention prices of rice and wheat over the past three years.


"Punjab and Haryana have very fertile soil. So instead of producing excess food grains, they can easily switch over to growing high-oil content crops like sunflower," said Sandeep Bajoria, president of the Central Organization of Oil Industry and Trade, or COOIT.


No Easy Way For Increasing Oilseeds Production


Economists and industry officials feel there are number of obstacles in making significant numbers of farmers switch to oilseeds from grains.


A key reason for India's success in growing food grains has been high intervention or support prices offered by federal government, which assured farmers minimum prices for their crop.


"Productivity of rice and wheat is anyway higher than oilseeds. Higher productivity coupled with high intervention prices makes grain farming much more lucrative than oilseeds farming," said B.V.Mehta, director of the Solvent Extractors Association of India.


In Punjab, for instance, average productivity in wheat is around 3 tons/hectare, compared with average productivity of sunflower crop at 1 tons/hectare.


"As long as intervention prices in grains remain enticing, it would be tough to wean away rice and wheat farmers into growing oilseeds," says CMIE's Khan.