Home / Agri News / India’s edible oil producers fighting against cheap palm oil imports

India’s edible oil producers fighting against cheap palm oil imports




  • Rajesh Agrawal had built two large oilseed crushing mills in central India, betting on rising local consumption of edible oils. But now after 30 years of soaring demand and good business, his main mill is shut and covered in grass. Agrawal’s shuttered soyabean plant highlights the malaise gripping Indian crushers, who have been forced to use a fraction of their capacity as the domestic market stays awash with cheap rival palm oil from top producers Malaysia and Indonesia.

    Now with Malaysian palm oil prices near 6-1/2 year lows, imports could rise even more, undermining Prime Minister Narendra Modi’s efforts to make the country self-sufficient in edible oils, overseas purchases of which exceed $10 billion per year – India’s third-highest such spend after oil and gold. “In the next year, palm oil imports could rise up to 10 million tonnes from around 9.3 million tonnes this year. At the current price level other oils can’t compete with palm oil,” said Nitesh Shahra, president of the refinery division of Ruchi Soyaa, the country’s biggest edible oil refiner.

    “Already our import dependency has gone up from 30 percent to nearly 70 percent in the last few years. It will go up further unless we make oilseeds remunerative for farmers by increasing import duty,” he added. Massive imports have driven down Indian soyabean prices by 20 percent in four months, discouraging farmers from expanding oilseed area. But despite this, local soyaoil is still 50 percent costlier than imported palm oil.

    “Oilseed cultivation is not profitable. There is no guarantee of prices and yield,” said Mukesh Patel, who cultivates soyabeans in Dewas, a district in the central Indian state of Madhya Pradesh. “Next year I will switch to corn. It costs less and gives better returns,” he added. In the past 20 years, India’s edible oil output has risen only about a third whereas imports have surged twelve times to 14.4 million tonnes to keep pace with growing consumption, making it the world’s top buyer of cooking oils.

    While India does have a crushing capacity of more than 30 million tonnes, utilization is at below 30 percent due to a scarcity of oilseeds, said Pravin Lunkad, president of industry body the Solvent Extractors’ Association of India. Earlier this year crushing plants were operating at around 45 to 50 percent. “India has become the dumping ground for palm oil,” said Davish Jain, chairman of the Soyabean Processors Association of India. “Our oilseed and edible oil production will not rise unless we restrict cheaper imports.”

    The finance ministry is looking into requests for a hike in import duties on crude edible oils to 25 percent from 7.5 percent, and to 45 percent on the refined variety from 15 percent, government sources said. India has said it plans to spend $1.5 billion over three years to help farmers grow oil palm trees. It has already been considering directly buying oilseeds from farmers and boosting state support for rapeseed, soyabeans and peanuts. But as of now, it is a Catch-22 for farmers and millers. “We can’t sell edible oils at higher prices due to cheaper imports and oilseed farmers are not ready to accept lower prices,” said the miller Agrawal.

    Source

    About Staff

    This post is published by AgriHunt staff member. If you believe it should have your name please contact md@agrihunt.com

    Check Also

    rabi-festival-brochure-1-638

    Rabi festival and goat show UAF schedule 2016

    Report Issue: * Suggest Edit Copyright Infringment Claim Article Invalid Contents Broken Links Your Name: …

    Leave a Reply

    Be the First to Comment!

    Notify of
    avatar

    wpDiscuz