Despite a good harvest, soybean prices have soared almost 76 percent in the domestic markets, benefitting farmers on one hand but battering the poultry industry on the other.

According to data by Agmarknet, soybean prices in the benchmark Indore markets between October and end of November rose from Rs 3,500 a quintal to around Rs 6,200. Prices have moved to around Rs 6,700 a quintal in some markets since November-end.

The government-monitored minimum support price of soybean (yellow) for 2021-22 is fixed at Rs 3,950 a quintal.

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Soybean production is estimated to be 12.72 million tonnes in the 2021-22 season, as per the agriculture ministry’s first advance estimate of this year’s Kharif crop production. The estimate is only marginally lower than the 12.89 million tonnes produced last year.

What's driving up the prices?

According to a report by Drip Capital in November, several agricultural commodities have witnessed spiralling prices due to a constant rise in demand which is not being met by equivalent supplies.

Apart from high demand, labour and raw material shortages and rising costs of sea freight and energy are also responsible for the price rallies in soybean, wheat, cotton, sugar, corn, coffee and palm oil, The Economic Times reported.

Traders believe growers are holding stocks in anticipation of better prices in the near future, which is resulting in lower supplies.

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"Last year I sold soybeans immediately after harvesting at Rs 4,000 per 100 kg and within a few months prices spiked above Rs 9,000. I am not going to repeat the mistake. I won't sell below 7,000,” farmer Suresh Dhane, who harvested soybeans, told Reuters.

In October 2020, soybean futures were trading close to Rs 3,800, which spiralled to a record Rs 10,680 in August 2021 on lower output and strong demand from the poultry industry.

Hoping to reap gains from the price surge, a number of farmers expanded soybean planted area in June this year. However, to protect the poultry industry, which was reeling under price pressure, the government stepped in and took a series of measures to bring down the prices of soymeal and edible oil, including slashing edible oil import taxes and allowing import of genetically modified soymeal till January 31, 2022.

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Now, lack of clarity on whether the import of genetically-modified soybean meal will be permitted beyond January 31 is pushing up market sentiments, say traders.

“In soybean, the oil content is about 18 percent and the rest is de-oiled cake or soymeal, so it is the high soybean meal price which is driving the market, instead of anything else,” a senior industry observer told Business Standard.

The poultry industry, where soymeal is a major feed along with maize, is hoping the government will extend the deadline to March 2022 as prices are still high. However, the Soybean Processors Association of India said further imports need not be required as the projected demand and supply situation of soymeal was very comfortable. The association has said the spike in soybean prices is a result of hoarding and undue speculation of soybean futures.

“Farmers cannot be forced to sell soybean at MSP as desired by the poultry industry. Soybean farmers have as much right to livelihood and get remunerative prices as poultry farmers,” the Soybean Processors Association of India said.

(Edited by : Shoma Bhattacharjee)