Mumbai, Sept. 22 With setback to groundnut crop and overall oilseed crop prospects less-than-satisfactory in kharif 2009, uncertainty has gripped the country’s vegetable oil industry and trade. All kinds of reports are floating around. One such report is that an industry major is lobbying for import of oilseeds. Because imported vegetable oil attracts zero customs duty, it is argued that imported oilseeds too should be allowed duty-free. Whether the government will buy this argument is another matter.
While sunflower seed would be an ideal candidate for import, its bulky nature (stowage) would push freight costs up. At the moment, looking at global availability, what can potentially come into India is rapeseed (oil content about 35 per cent).
Allowing rapeseed import at this point of time can potentially affect planting of rabi rapeseed/mustard crop, according to a trader. Soyabean import may be ruled out because of low oil content (18 per cent), he said.
Apart from economics (freight, customs duty and inland transport), what could come in the way of oilseed import is the phyto-sanitary restrictions currently in vogue. The plant quarantine officials have always been averse to allowing oilseed imports for fear that exotic pests and diseases may enter the country. Our ports are ill-equipped in terms of technically qualified personnel and scientific instruments to inspect and clear large parcels of oilseeds from abroad.
Smaller oilseed harvest
If at all, oilseed import will benefit only a small number of crushers who have port-based crushing units. Those located inland will find imports totally unviable. The decision to permit duty-free import of oilseeds will need clearance from various ministries, including Agriculture, Commerce, Finance and Food.
The other matter relates to oilseed production, availability of raw material for the processing industry and oil exports. Acreage under oilseeds during kharif 2009 now stands at 166 lakh hectares, down from 177.7 lakh hectares last year.
Given the emerging situation of a smaller oilseed harvest, especially groundnut, availability of oilcakes and oilmeals is sure to get tighter.
Currently, soyabean crop is tentatively estimated at about 85 lakh tonnes, tons, down from last year’s 99 lakh tonnes.tons. All This is likely to affect availability for crushing and supply of cakes and meal.
The livestock and poultry industry, as also feed millers, are anxious about the emerging situation.
Some representations demanding ban on export of oilmeals have already gone to the government.
The solvent extraction industry is worried about the possibility of restrictions on oilmeal exports. A variation of the theme being discussed is the imposition of export duty on oilmeals.
Meanwhile, the world market is watching India’s moves and possible policy responses. Between November 2008 and August 2009, India’s vegoil imports have aggregated an unprecedented 67 lakh tonnes versus last year’s 42 lakh tonnes during the same period. Clearly, imports volumes have been excessive.
Yet, at this point of time, vegetable oil is not the focus of attention. It is oilseeds and oilmeals. How New Delhi responds to the emerging tight supply situation remains to be seen.
Source : Business Line