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Informist, Thursday, Oct. 30, 2025

 

By Pallavi Singhal

 

NEW DELHI – Eight years after shelving it, the Madhya Pradesh government has reintroduced the controversial Bhavantar Bhugtan Yojana, a scheme intended to shield soybean farmers from crashing market prices by compensating them when their produce sells below the minimum support price. However, it has failed to bring cheer to farmers growing the oilseed in the state. Several farmers said the previous version of the scheme had failed to offer a fair compensation.

 

Introduced in October 2017, the Bhavantar scheme – which translates to price difference scheme — was meant to act as an alternative to direct procurement by the government by offering compensation to farmers on selected crops. However, the scheme has been marred by allegations of price manipulation by traders, delays in payment, and complex registration processes.

 

Madhya Pradesh relaunched this month a refined version of the scheme, specifically for soybean farmers. For the current 2025-26 season, the procurement window has been fixed from Oct. 24 to Jan. 15. Farmers were supposed to register between Oct. 3 and Oct. 17 to avail the benefits of the scheme.

 

Talking to Informist, farmers pointed out that the system remained prone to exploitation. For small and marginal growers, the model price – the average price prevailing in the market – set by the government rarely matched the actual prices received in local mandis, leaving farmers with compensation which often fell short of the actual difference with the minimum support price of INR 5,328 per 100 kg. Delays in direct benefit transfer payments further compounded their hardships, particularly for those relying on immediate sales to meet their daily needs. Many farmers are blaming the announcement of the scheme itself for a glut in market arrivals, which triggered a crash in local soybean prices.

 

The biggest issue, farmers said, was that the averaging method for calculating the model price overlooks many of the lowest transaction rates in mandis, meaning that only the difference between the minimum support price and this average model price is compensated, and not the difference between the minimum support price and the true sale price for each lot.

 

"Even though my soyabean output fell this year due to heavy rainfall that damaged the crop, I will not be selling my produce till the Bhavantar scheme ends," Gopal Patel, a farmer of Siroliya village in Dewas district, Madhya Pradesh, said. "The average model price being calculated across mandis is hovering between INR 4,500-INR 4,600 per 100 kg, but good quality crops are fetching better prices." So the compensation is lower than what a farmer would get if the actual price, which is higher for better quality crops, is taken as the base.

 

Last year, Gopal produced more than 3,500 kilograms of soybean, but this season, the output has dropped to less than 3,000 kg. Yet he considers himself relatively fortunate, as his decision to sow the climate-resistant JS 2172 soybean variety, has cushioned the blow. "Still, with mandi prices suppressed, my crop which should fetch at least INR 5,000 per 100 kg, will only get around INR 4,000 per 100 kg. Even if government pays me the difference between the model price and MSP, I end up in loss." Gopal will sell his produce in the mandi after the scheme ends, he said. "There is no surety that the prices of soybean will go up, but since I have a good crop, I am sure I will be able to fetch more than what I will get right now," he said.

 

According to Narendra Porwal, a Ratlam-based trader, a majority of the crop is currently trading in the range of INR 4,000-INR 5,000 per 100 kg, while the lower-quality lots, impacted by heavy rains and high moisture content, are fetching around INR 3,000-INR 3,500 per kg. "Nobody is to blame here-- it is the weather that ruined quality. No trader would want to pay higher (for this quality)," Porwal said.  

 

Another issue with the scheme has been the delayed online payments, Suresh Motwani, vegetable oils program head of Solidaridad, said. Solidaridad is an international non-governmental organisation that works to create sustainable supply chains and improve livelihoods for farmers and workers. "While the scheme is well-intentioned, the execution is weak. Farmers face delays in receiving their compensation, which is especially hard for small farmers who need immediate payment for daily expenses and to buy inputs for their next crop," he said. 

 

Moreover, a rush in Madhya Pradesh to sell soybean at whatever rate it fetches in the market during the three-month window ending Jan. 15 and later claim the price difference has created an overflow of supply in the market. With traders assured of enough soybean supply due to the Bhavantar scheme, the overall rates of the crop have come down further, market experts said.

 

However, D.N. Pathak, executive director at the Soybean Processors Association of India, argued that compensating for fair average quality is a reasonable approach, even if an individual farmer falls short on MSP payouts. "Payment variation mirrors variation in quality," he said. "If 10% is the accepted amount of moisture, why would I pay the full amount for, say a crop which has 13% or 15% moisture in it? Why would a trader pay for nothing? Moreover, this would increase my work of drying out the soybean." 

 

MARKET FUNDAMENTALS

Low soymeal exports, its falling domestic demand, and weak edible oil prices are central to the price slump, experts point out. Outputs of both soyoil and soybean meal are facing downward pressure, making it impossible for soybean prices to remain robust despite government intervention, said SOPA's Pathak. 

 

According to data released by SOPA Wednesday, the country's soymeal exports slid over 11% to 2.02 million tonnes in oil year 2024-25 (Oct-Sept) from 2.28 million tonnes the year before.  

 

Domestic demand for soymeal has also softened owing to the ample availability of the cheaper distillers' dried grains with solubles, or DDGS, which is a byproduct of various feedstocks used for making ethanol and is used as animal feedstock. "It is the increased utilisation of DDGS in place of soybean meal in poultry feed which continues to affect the demand for soybean meal and adversely impacts the industry. Considering the reduction in demand of soybean meal in local market, we have reduced estimates of domestic consumption (for 2024-25 oil year) by 300,000 tonnes, to 6.3 million tonnes from 6.6 million tonnes," Pathak had said in March. 

 

The prices of distillers' dried grains with solubles derived from maize are hovering between INR 16,000 and INR 17,000 per 100 kg, while those of soymeal are around INR 30,000-INR 31,000 per 100 kg, as per industry sources. 

 

Government policy on edible oils is adding to the price pressure, said Pathak. In May, the basic customs duty on crude palm, soybean, and sunflower oil was cut by 10%, bringing the overall import duty down to 16.5% from 27.5%. The social welfare surcharge was also reduced to 1.5% from 2.5%.

 

SOPA has repeatedly called for raising import duties, warning that cheaper imports hurt domestic oilseed realisations. "Through most of 2024–25 (Oct-Sept), soybean mandi prices remained below the MSP of INR 4,892 per 100 kg due to weak soymeal and oil prices," SOPA said in a representation to Agriculture Minister Shivraj Singh Chouhan on Sept. 6.

 

The organisation had pointed out that soybean MSP has been further increased to INR 5,328 per 100 kg for 2025–26 even when prices of soyoil and soybean meal remain low. While soyoil prices were subdued due to reduced import duties, the demand for meal, it said, is being affected by the availability of cheaper alternates of distillers' dried grains with solubles. It further urged the government to raise import duties on edible oils.

 

SOYBEAN PRODUCTION

According to the third advance estimates for crop year 2024–25 (Jul-Jun), soybean production in India is projected at 15.2 million tonnes, up from 13.1 million tonnes in 2023–24. Maharashtra leads the country in soybean production with an estimated output of 7.4 million tonnes, followed by Madhya Pradesh at 5.3 million tonnes, Rajasthan at 1.2 million tonnes, Karnataka at 490,000 tonnes, Gujarat at 440,000 tonnes, and Telangana at 290,000 tonnes. 

 

However, with persistently low prices, the projected acreage of soybean for 2025-26 has been reduced 7% to 12 million hectares, from 13 million hectares a year ago. With heavy rains lashing several parts of the country, yield, and therefore output, is expected to take a further hit. Despite the lower acreage, prices of the crop have failed to rise. 

 

Meanwhile, seeing discontent among farmers, the central government on Monday announced an additional procurement initiative covering four states--Maharashtra, Telangana, Madhya Pradesh and Odisha–for kharif 2025–26 season. According to an official statement, Madhya Pradesh alone will see procurement of up to 2.22 million tonnes of soybean, backed by an allocation of INR 17.75 billion.   End

 

Edited by Tanima Banerjee

 

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