The strategy of reducing food inflation through cheap imports is turning out to be a loss-making proposition for farmers. It is natural for them to feel disillusioned, especially in the case of pulses and oilseeds. The sowing data from the current Kharif season also reflects this trend.
In June, the retail inflation rate (CPI) fell to a six-year low of 2.1 percent. While this is good news for the Reserve Bank of India and the non-agricultural sectors of the economy—since it creates an environment conducive to interest rate cuts and supports economic growth—its adverse impact on agriculture has not been adequately considered. In fact, this decline in the inflation rate is primarily due to food inflation falling to a negative 1.1 percent, driven by a steep drop in food prices. Even the prices of imported food products have declined, owing to the government’s promotion of cheaper imports. However, the drop in prices of key crops like pulses and oilseeds below their Minimum Support Prices (MSP) is a serious concern, as it has reduced farmer interest in cultivating them. This is evident from the current sowing data.
As of July 11, the area under pigeon pea stood at 25.42 lakh hectares, down from 27.18 lakh hectares at the same time last year. Similarly, soybean acreage was recorded at 99.03 lakh hectares compared to 107.78 lakh hectares last year.
While the government has consistently claimed to be making every effort to increase farmers’ incomes, the reduction in the sown area of pigeon pea, soybean, cotton, and sugarcane—despite a better-than-normal monsoon and rising imports—is not a healthy sign. Meanwhile, the increasing acreage under foodgrains, wheat stock in the central pool at a four-year high, and rice stock exceeding last year’s level indicate that inflation for these commodities will remain under control. However, general inflation still hovers around 4 percent, meaning people are paying more for services like healthcare, transportation, and education. For farmers selling their produce at low prices, this is a double blow.
This year, the monsoon is expected to perform well. From June 1 to July 20, rainfall has been 7.1 percent above the historical long-period average (LPA). Due to a good rabi harvest, the government procured 300.35 lakh tonnes of wheat, the highest in four years. As of July 1, 2025, wheat stocks in the central pool stood at 358.78 lakh tonnes—up significantly from the same time last year when levels had hit a 16-year low. Given this surplus, the government has announced wheat sales in the open market under the Open Market Sale Scheme (OMSS) at prices slightly above MSP.
On the other hand, soybean and pigeon pea prices are hovering around ₹4,300 and ₹6,500 per quintal, respectively, in markets across Madhya Pradesh and Maharashtra—well below their MSPs of ₹5,328 and ₹8,000 per quintal for the 2025–26 Kharif season. This situation prevails despite the country facing shortages of pulses and oilseeds and relying heavily on imports.
In the financial year 2024–25, India imported 72.56 lakh tonnes of pulses and 164.13 lakh tonnes of edible oils—at reduced prices due to zero or lowered import duties. The government has allowed duty-free imports of pigeon pea, urad, and yellow peas until March 31, 2026. Lentils and gram face only a 10 percent duty. As a result, pigeon pea is being imported from African countries at ₹4,600–₹5,100 per quintal, while yellow peas from Canada and Russia are priced at just ₹3,100 per quintal. Furthermore, effective May 31, 2025, the government slashed the import duty on crude soybean, palm, and sunflower oil from 27.5 percent to 16.5 percent—facilitating cheaper edible oil imports.
These measures are all part of the government’s strategy to contain food inflation—at the cost of farmers. According to June data, vegetable prices dropped 19 percent compared to last year. Tomato prices fell 31.5 percent, onion by 26.6 percent, and pulses by 25.1 percent. This helped push inflation to a six-year low. However, it doesn’t necessarily mean production has increased. In many cases, where production is low and import dependency is high, cheap imports have been used as a substitute.
Inflation has been controlled, but at the expense of farmers’ incomes. Economic theories often suggest that rising prices incentivize producers. When crop prices fall below MSP, farmers become disheartened. The drop in acreage despite a favorable monsoon suggests declining farmer interest in several crops—especially oilseeds.
The government’s and RBI’s strategy to control inflation has focused on suppressing agricultural prices through imports and export restrictions. As a result, non-agricultural sectors and consumers enjoy more policy preference than farmers. While a six-year low inflation rate may seem like good news for these sections, it poses a serious challenge for the farming community.
For comparison, inflation in the world’s two largest economies—the US and UK—stood at 2.7 percent and 3.6 percent in June, with food inflation at 3 percent and 4.5 percent respectively. In contrast, India’s food inflation fell to a negative 1.1 percent.