Rapeseed Output in Key Indian State Unlikely to Rise.

Rapeseed output in India's top producing state is unlikely to rise in 2012, increasing the likelihood of higher cooking oil imports which add to inflation headaches, despite incentives from New Delhi for the main winter oilseed crop.

Rajasthan state, which produces over half the country's total output of rapeseed, is expected to produce almost the same as 2011, as the crop is likely to be sown on 2.4-2.5 million hectares, sharply lower than a target of 3.0 million hectares.

"Rapeseed area is unlikely to cross last year's coverage," G.C.

Mathur, joint director at Rajasthan's farm department, told Reuters.

India produced 7.7 million tonnes of rapeseed in 2011 with Rajasthan providing 51 percent at 3.9 million tonnes.

The country has imported 7.8 million tonnes of vegetable oils so far in 2011 - adding to inflation which is over 12 percent currently and prompting the central bank to push interest rates sharply higher.

The government hiked minimum support prices (MSPs) - a guaranteed return for farmers - by 39 percent in an effort to encourage more production of rapeseed and pushed chickpea MSPs up 33 percent.

But it edged sugar cane MSPs up just 4.2 percent as output in the world's largest consumer is outstripping demand.

Now, the MSP for chickpea is 2,800 rupees ($56.93) per 100 kg, as against the price for rapeseed of 2,500 rupees ($50.82) per 100 kg.

In addition, the market price of chickpea has gone up about 38 percent this year as against a rise of about 24 percent for rapeseed.

"Lower availability of water, frequent power shortage and relative high temperatures are acting as deterrents to rapeseed planting," said D.S.

Yadav, deputy director at the farm department of Rajasthan.

Lower output of rapeseed would also come at a time when demand for vegetable oils is likely to rise as the country's one billion plus population gets more spending power and more expensive food tastes in an economy growing 8-9 percent a year.

A Reuters survey in September forecast India's edible oil imports could rise 5.2 percent in 2011/12, reversing the fall in the previous year.

"The initial planting trend does not hint at higher rapeseed output in 2012," said Jyoti Kanda, president of the Oil Millers and Traders Association in North Rajasthan.

India imports almost half of its 16 million tonnes or so annual domestic demand of cooking oils - mainly palm oil - from Malaysia and Indonesia and a small quantity of soyoil from Brazil and Argentina.

Source : brecorder.com