chapter - iii profile of the edible oil industry and study...

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CHAPTER - III

PROFILE OF THE EDIBLE OIL INDUSTRY AND

STUDY AREA

3.1 INTRODUCTION

Many varieties of oilseeds along with tree origin are cultivated in India.

Among these, the major oilseeds are soybean, cottonseed, groundnut, sunflower,

rapeseed, sesame seed, copra, linseed, castor seed and palm kernels. India

occupies the place of pride as the world's largest producer of groundnuts,

sesame seeds, linseeds and castor seeds.

3.2 IMPORTANCE OF EDIBLE OILS IN THE COUNTRY’S

ECONOMY

Oilseeds and edible oils are two of the most sensitive essential

commodities. India is one of the largest producers of oilseeds in the world and

this sector occupies an important position in the agricultural economy and

accounting for the estimated production of 28.21 million tonnes of nine cultivated

oilseeds during the year 2007-08. India contributes about 6-7 per cent of the

world oilseeds production. Export of oil meals, oilseeds and minor oils has

increased from 5.06 million tons in the financial year 2005-06 to 7.3 million tons

in the financial year 2006-07. In terms of value, realization has gone up from

Rs. 5514 crores to Rs.7997 crores. India accounted for about 6.4 per cent of

world oil meal export.

3.3 MAJOR FEATURES OF EDIBLE OIL ECONOMY

There are two major features, which have very significantly contributed to

the development of this sector. One was the setting up of the Technology

Mission on Oilseeds in 1986. This gave a thrust to Government's efforts for

augmenting the production of oilseeds. This is evident by the very impressive

increase in the production of oilseeds from about 11.3 million tonnes in 1986-87

to 24.8 million tonnes in 1998-99. There was some setback in 1999-2000

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because of the un-seasonal rain followed by inclement weather. The production

of oilseeds declined to 20.7 million tonnes in 1999-2000. However, the oilseeds

production went up to 27.98 million tonnes in 2005-06 and was 24.29 million

tonnes during 2006-07. As per the 3rd advance estimate by Ministry of

Agriculture, the production of nine major oilseeds is estimated to be about 28.21

million tonnes during 2007-08. The other dominant feature which has had

significant impact on the present status of edible oilseeds or oil industry has been

the programme of liberalisation under which the Government's economic policy

allowing greater freedom to the open market and encourages healthy competition

and self regulation rather than protection and control. Controls and regulations

have been relaxed resulting in a highly competitive market dominated by both

domestic and multinational players.

Sunflower oil is produced from the seeds of sunflower, a tall plant known

for its showy flowers. Sunflower seeds are rich in protein and yield a high quality

vegetable oil used in making margarine and cooking oil. Sunflower oil has a light

taste, is suitable for frying and has some health benefits.

3.4 WORLD VERSUS INDIAN OIL SEEDS

The conventional basket of major oilseeds comprises of soyabean (57 per

cent), cottonseed (12 per cent), rapeseed (12 per cent), groundnut (8 per cent),

palm kernel (3 per cent), sunflower seed (7 per cent) and copra (1 per cent).

These figures are for 2007-08. The share of soybean production in the world‟s

total oilseed production has varied between 55 and 60 per cent – the highest

being 59.4 per cent in 2002-03, and the lowest being 55.6 per cent in 2003-04.

The growth of soybean in terms of area, yield and production for major producers

of the world and that for India is shown in the following table.

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Table 3.4.1 Growth of soyabean in terms of area, yield and production

Particulars

World

(%)

USA

(%)

Brazil

(%)

Argentina

(%)

India

(%)

Area 27.75 5.65 43.73 57.89 61.13

Production 35.34 14.5 49.43 66.67 80.09

Yield 5.94 8.38 3.96 5.56 11.77

Yield 2009-

10

2,531

2,958

2,918

2,872

1,006

Source: India‟s edible oil industry in a global perspective 25th

July-2011

It is interesting to note that the spectacular percentage growth in soya

area as well as production in Argentina, Brazil, and even in India. The

percentage yield increases have been the highest in USA and India, but in

absolute terms, India has a very poor yield per hectare. India‟s share in world

soyabean production has been 3.8 per cent in 2009-10.The details of soyabean

production in India and world depicted in the following table.

Table 3.4.2

Soyabean production in India and world

Year and percentage World USA Brazil Argentina India

2008-2009 211.96 80.749 57.80 32.00 9.308

As percentage of world - 38.1 27.3 15.1 4.4

2009-2010 258.00 98.417 68.00 54.00 9.725


2010-2011 250.13 90.083 65.00 50.00 10.10



July- 2011

All major producers of soyabean have surplus soybean, oil and meal for

export. However, India exports soyabean meal and imports soybean oil. India‟s

share in the world‟s soyabean meal export was 8 per cent in 2008-09, which

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declined to 3.8 per cent in 2009-10, due to its uncompetitive pricing in relation to

suppliers, and also the aggressive marketing by the USA in the backdrop of

bumper crop harvested by them is presented in the following table.

Table 3.4.3

Backdrop of bumper crop harvested in India and the world

Year and percentage World USA Brazil Argentina India

2008-2009 52.15 7.718 12.15 21.80 4.17


2009-2010 54.97 10.16 12.04 29.00 2.11


2010-2011 56.62 7.98 11.86 29.30 4.50



July - 2011

China has been the world‟s biggest importer of soyabean with 55.3 per

cent share in 2009-10. China, it can be stated, has become the country which

dictates and decides the pace and fate of world trade in soyabean and its

products, because of its insatiable appetite for soybean seed, oils and other

agro-commodities. Europe imported 41.7 per cent (2009-10) of world‟s soyabean

meal export. Other major soya meal importing countries are Vietnam (4.9 per

cent), Indonesia (4.7 per cent) and Thailand (4.1 per cent). Annual SBM export

ranged from a low 2.11 mt (2009-10) to a high of 4.18 mt (2008-09). Annual total

meal export ranged from a low of 3.22 mt (2009-10) to a high of 5.44 mt (2007-

08). The domestic consumption of SBM in India has also risen with the following

features:

Average consumption has doubled in the last 5 years, together with an

increase in the soya crop size, thus leaving the surplus disposable meal available

for export. The year 2009-10 has been a typical one in terms of substantial

decrease in meal export numbers because of lower crush as a result of

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continuous disparities in the crush right from the beginning of the season. USA‟s

bumper crop has taken away this traditional share of Indian soya meal.

India has gained importance in the world over the last few years by virtue

of becoming the world‟s number one importer of edible oils and an exporter of

protein meals. The relatively cheaper logistics cost of supplying vegetable protein

to the importing countries in the Asian area has given India an edge over other

exporting countries like from South America. Also its non-GMO protein has been

able to attract a premium. Today, China and India are the two countries that the

world is scrutinizing with very keen interest. This is particularly on the agricultural

fronts as both countries are big importers of edible oils. China is also the biggest

importer of seeds and grains. India, however, still exports protein despite a huge

protein deficiency in the diets of the 40 per cent of the population that live below

the poverty line.

Table 3.4.4

Production ranking and global market share of Indian Agriculture

Segment Rank (by

production) Share ( percentage of

world production)

Cereals 3 10

Sugar crops 2 15

Fruits and vegetables

2

9

Roots and tubers 4 5

Milk 1 15

Meat 6 2

Oil seeds 5 7

Pulses 3 24 Source: India‟s edible oil industry in a global perspective 25

th July - 2011

It is recognized from the above table that India is one of the top three

producers of the world‟s major agricultural commodities. It is number one in milk

with 15 per cent of the market share, third in the production of pulses with 24 per

cent share, and fifth in the production of oilseeds with 7 per cent share. India

consumes about US$ 200 billion worth of food per year. The country is self

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sufficient in food grain needs and is able to feed its over one billion inhabitants.

India is currently producing about 240 million tonnes of food grains, and this shall

grow by at least 25 per cent by 2020.

India has the highest percentage of arable land – 57 per cent versus 16

per cent average in the rest of the world. Unfortunately, however, the productivity

is very low. Indian farmers and the administration are both seriously perturbed by

this matter and are taking measures to amend the situation. Agriculture

administrators toured Argentina to study soybean cultivation and farm practices,

so that the productivity of the Indian soya crop could be increased from its

present dismal state.

Table 3.4.5 Per capita consumption of edible oil in India vs. World

(Kg per annum) S. No Year India World

1 2000-2001 11.1 18.95

2 2001-2002 11.8 19.37

3 2002-2003 11.3 19.80

4 2003-2004 11.5 20.24

5 2004-2005 11.8 21.13

6 2005-2006 11.7 22.18

7 2006-2007 12.2 22.84

8 2007-2008 12.6 23.46

9 2008-2009 14.0 23.89

10 2009-2010 13.3 24.54

Source: Oil world annual

3.5 EDIBLE OIL SCENARIO

The Indian edible oil sector has many typical characteristics distinctly

different from other countries – especially those in the western hemisphere. The

oil basket available to the consumers has many varieties – major domestic oils

are: groundnut, mustard or rapeseed, cottonseed, soybean and sunflower. Minor

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domestic oils are: rice bran, mahua (Madhuca longifolia), sesame, safflower and

coconut.

Imported oils are mainly palm, soybean and sunflower. About 60-70 per

cent of groundnut and mustard oil, and almost 100 per cent of coconut oil is

consumed in crude form without refining because of their distinct flavours and

aroma, all other oils are marketed only after refining. Market shares of raw oil,

refined oil and Vanaspati (partially hydrogenated vegetable oil) are respectively

42 per cent, 43 per cent and 13 per cent.

The government has frozen the tariff value on import of oils and the

present rate of duty is nil on crude oils and 7.5 per cent on refined oils. This

policy has remained unchanged since 2008. Thus, the Indian market is being

flooded by imported oil – mainly palm, soyabean and sunflower. The South

American industries for soybean oil, Malaysia and Indonesia for palm oil have

discovered India as a dumping ground for their produce. India still has an

insatiable appetite for edible oil as the income levels rise.

Over the past decade, world class edible oil refineries have been set up in

India where superior quality refined oil is produced at a low processing cost. The

days of small sized batch refineries of 50 ton per day capacities are over.

However, the capacity utilisation of Indian refineries is still at a meager 35 per

cent of installed capacity. Refined soyabean oil is actively traded on futures

exchanges and accounts for their biggest turnovers. Thus, the Indian edible oil

situation is going to persistently influence the world demand and supply to a large

extent.

3.6 EDIBLE OIL CONSUMPTION IN INDIA

India is a leading player in edible oils, being the world‟s largest importer

(ahead of the EU and China) and the world‟s third-largest consumer (after China

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and the EU). Each year, India consumes over 10 million tons of edible oils.

Edible oils have a high penetration of 90 per cent in India.

However, per capita consumption of edible oils is around 11 kg per year.

This is considerably lower than in most developed countries. Palm oil (mainly

imported) and soya bean oil account for almost half of total edible oil

consumption in India, followed by mustard and groundnut oil. In India, most

vegetable oil is purchased by household or industrial buyers (food processors,

restaurants and hotels) for frying or baking needs and is sold as loose oil or

vanaspati (partially hydrogenated vegetable oil). Only a small percentage of

edible oils are sold in branded form at the retail level.

Notably, India‟s annual current per capita consumption of about 12.7

kilogrammes is well below the world average of 20 kilogrammes, thus providing

growth opportunities for the Indian edible oil industry. These opportunities have

attracted investments from some of the world‟s leading global players.

Figures pertaining to estimated production of major cultivated oilseeds,

availability of edible oils from all domestic sources and consumption of edible

oils (from Domestic and Import Sources) during the last 10 years is given in

table 3.6.1.

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Table 3.6.1 Net availability of edible oil from all domestic sources

(In lakh tonne)

S.No

Year

Production of Oilseeds*

Net availability of edible oils from all domestic sources

Availability of Edible Oils (from domestic

and import sources)**

1 2000-2001 184.40 54.99 96.76

2 2001-2002 206.63 61.46 104.68

3 2002-2003 148.39 46.64 90.29

4 2003-2004 251.86 71.40 124.30

5 2004-2005 243.54 72.47 117.89

6 2005-2006 279.79 83.16 126.04

7 2006-2007 242.89 73.70 115.87

8 2007-2008 297.55 86.54 142.62

9 2008-2009 277.19 81.83 166.39

10 2009-2010 248.83 88.23 167.69

Source: (i) Production of oilseeds: Ministry of Agriculture (ii) Net availability and consumption of edible oils: Directorate of Vanaspati, Vegetable Oils and Fat

3.7 CONSUMPTION PATTERN OF EDIBLE OIL IN INDIA

India is a vast country and inhabitants of several of its regions have

developed specific preference for certain oils largely depending upon the oils

available in the region. For example, people in the South and West prefer

groundnut oil while those in the East and North use mustard/rapeseed oil.

Likewise several pockets in the South have a preference for coconut and sesame

oil. Inhabitants of northern plain are basically hard fat consumers and

therefore, prefer Vanaspati, a term used to denote a partially hydrogenated

edible oil mixture. Vanaspati has an important role in our edible oil economy and

its production is about 1.2 million tonnes annually. It has around 10 per cent

share of the edible oil market. It has the ability to absorb a heterogeneous variety

of oils, which do not generally find direct marketing opportunities because of

consumers‟ preference for traditional oils such as groundnut oil, mustard oil,

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sesame oil etc. For example, newer oils like soyabean, sunflower, rice bran and

cottonseed and oils from oilseeds of tree and forest origin had found their way to

the edible pool largely through vanaspati route. Of late, things have changed.

Through technological means such as refining, bleaching and de-

odouraisation, all oils have been rendered practically colourless, odourless and

tasteless and, therefore, have become easily interchangeable in the kitchen.

Newer oils which were not known before have entered the kitchen, like those of

cottonseed, sunflower, palm oil or its liquid fraction (palmolein), soyabean and

rice bran. These tend to have a strong and distinctive taste preferred by most

traditional customers. The share of raw oil, refined oil and vanaspati in the total

edible oil market is estimated at 35 per cent, 55 per cent and 10 per cent

respectively.

3.8 TYPES OF OIL COMMONLY USED IN INDIA

India is fortunate in having a wide range of oilseeds crops grown in its

different agro climatic zones. Groundnut, mustard or rapeseed, sesame,

safflower, linseed, nigerseed or castor seeds are the major traditionally cultivated

oilseeds. Soyabean and sunflower have also assumed importance in recent

years. Coconut is most important amongst the plantation crops. Efforts are being

made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu in addition to

Kerala and Andaman Nicobar Islands. Among the non-conventional oils, rice

bran oil and cottonseed oil are the most important. In addition, oilseeds of tree

and forest origin, which grow mostly in tribal inhabited areas, are also a

significant source of oils.

3.8.1 Sunflower oil

Sunflowers originated in North America and were then introduced into

Europe. They are believed to have been grown first in Mexico by the native

Indians as far back as 3000 B.C. The seeds were ground or pounded and used

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in flour for bread making. Spanish explorers introduced this exotic plant into

Europe around middle of sixteenth century.

Still, it was greatly used for ornamental purpose, until it was cultivated by

the Russians for oil. The Russians cultivated sunflowers for its oil in the middle of

the eighteenth century, and production on a commercial basis started only in the

nineteenth century. Two varieties were grown, the oil yielding type, and another

one for direct consumption.

Sunflower seeds were taken back to America around this time, where

new, high yielding hybrids were grown. In the 1950‟s, sunflower oil was

popularized as an important vegetable oil all around the world. Sunflower oil is

very popular in Europe and it is the third most important vegetable oil of the

world.

Sunflower oil is especially suitable for frying, as it does not smoke even at

high temperatures. It can also be used for shallow frying and as salad dressing,

as it has a light texture and taste. One important non food use of sunflower oil is

use as an ingredient in skin care products, as it is easily absorbed by the skin. Its

use ranges from use in lotions and creams to soaps, because of its light texture.

Also, the high linoleic acid content favours its use in soaps, as this gives it

a skin softening quality. Therefore the details of production, Availability and

consumption sunflower oil is depicted in table 3.8.1.

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Table No.3.8.1

Production of sunflower seeds, net availability and consumption of sunflower oil

(In lakh tonne)

S.No Year Oil Seeds Oils

1 2000-2001 6.60 2.18

2 2001-2002 8.7 3.0

3 2002-2003 9.10 3.0

4 2003-2004 10.86 3.58

5 2004-2005 12.24 4.04

6 2005-2006 14.88 4.91

7 2006-2007 12.28 4.05

8 2007-2008 14.63 4.83

9 2008-2009 12.52 4.13

10 2009-2010 10.78 3.54

Source: The Solvent Extractor‟s Association of India, Mumbai

3.8.2 GROUNDNUT OIL

Groundnuts have many uses. They can be eaten as straight food, used in

recipes, made into solvents and oils, used in make-up, medicines, textile

materials, peanut butter, as well as many other uses. Popular confections made

from groundnut include salted peanuts, peanut butter (sandwiches, peanut candy

bars, peanut butter cookies, and cups), peanut brittle, and shelled nuts

(plain/roasted). Peanuts, served by them, are one of the most popular nuts in the

world.

They are often eaten as snacks, served at cocktail parties and are

sometimes added as a nutritional side dish with lunch. Salted peanuts are usually

roasted in oil and packed in retail-size plastic bags or hermetically sealed cans.

Dry roasted, salted groundnuts are also marketed in significant quantities.

Groundnut is often a major ingredient in mixed nuts because of their

inexpensiveness compared to Brazil nuts, cashews, walnuts, and so on.

Although peanut butter has been a tradition on camping trips and the like

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because of its high protein count and the fact that it resists spoiling for long

periods of time, the primary use of peanut butter is in the home, but large

quantities are also used in the commercial manufacture of sandwiches, candy,

and bakery products. Boiled peanuts are a preparation of raw, unshelled green

peanuts groundnut boiled in brine and eaten as a snack in the United States.

More recently, fried peanut recipes have emerged - allowing both shell and nut to

be eaten. Peanuts are also used in a wide variety of other areas, such as

cosmetics, nitroglycerin, plastics, dyes and paints.

Groundnut is often used in cooking, because it has a mild flavour and a

relatively high smoke point. Due to its high mono unsaturated content, it is

considered healthier than saturated oils, and is resistant to rancidity. There are

several types of peanut oil including: aromatic roasted peanut oil, refined peanut

oil, extra virgin or cold pressed peanut oil and peanut extract. The production of

groundnut seeds net availability and consumption of groundnut oil is depicted in

table 3.8.2.

Table 3.8.2

Production of groundnut seeds, net availability and consumption of groundnut oil

(In lakh tonne) S. No Year Oil Seeds Oils

1 2000-2001 64.10 14.74

2 2001-2002 70.07 14.00

3 2002-2003 43.63 10.04

4 2003-2004 83.32 19.17

5 2004-2005 70.24 16.16

6 2005-2006 78.67 18.09

7 2006-2007 48.64 11.19

8 2007-2008 91.83 21.12

9 2008-2009 73.38 16.88

10 2009-2010 45.28 14.33


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3.8.3 SESAME OIL

Sesame oil (also known as gingili oil or til oil) is an edible vegetable oil

derived from sesame seeds. Besides being used as a cooking oil in South India,

it is often used as a flavour enhancer in Chinese, Japanese, Korean, and to a

lesser extent Southeast Asian cuisine.

The oil from the nutrient rich seed is popular in alternative medicine - from

traditional massages and treatments to modern day fads. Ancient Indian medical

system perceives sesame oil to pacify stress related symptoms and on-going

research indicates that the rich presence of anti-oxidants and poly-unsaturated

fats in sesame oil could help in controlling blood pressure. The oil is popular in

Asia and is also one of the earliest known crop-based oil, but world-wide mass

modern production continues to be limited even today due to the inefficient

manual harvesting process required to extract the oil.

In the Tamil language of India, Sesame Oil is called "Nalla Ennai" (and in

Malayalam language it's called "Nalla Enna", both literally translated in English to

"good oil". In the Telugu language of India, Sesame Oil is called "Nuvvula Noone"

(Nuvvulu means sesame and Noone means oil) or "Manchi Noone" (Manchi

means good and Noone means oil). In the Kannada language of India, Sesame

Oil is called "yellenne" (from "yellu" for sesame) and "Ollenne" meaning "good

oil". It is also called as Gingelly Oil in India. In Marathi it is called Teel Tel .In Sri

Lanka Sinhalese called it "Thala Thel" (NEI itself means oil in Tamil (common

name for any type of oil). Since this oil is made from ELLU, it is also called ELLU

NEI. In short ELNEI. In Bengali it is Teel Tel.

Sesame oil is reputed to penetrate the skin easily and is used in India for

oil massage. In Maharashtra, Sesame oil (Teel Tel) is specially used for

massaging the foot. It is also used for hair and scalp massage. Sesame oil is

used in the manufacture of ayurvedic drugs. In Hinduism, sesame or "til" oil is

used deepa or oil lamps kept in front of shrines for the deities. Sesame oil is used

for performing puja in Hindu temples. Also, particularly in South India, sesame oil

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is applied to the stone deities in the temple's shrines. It is only used on deities

made of black granite. The production of sesame oil seeds, net availability and

consumption of sesame oil is given in table 3.8.3.

Table 3.8.3

Production of sesame oil seeds, net availability and consumption of sesame oil

(In Lakh tonne)

S. No

Year

Oil Seeds

Oils

1 2000-2001 5.40 1.67

2 2001-2002 7.90 2.6

3 2002-2003 4.34 1.35

4 2003-2004 8.15 2.53

5 2004-2005 7.11 2.20

6 2005-2006 6.97 2.16

7 2006-2007 6.18 1.92

8 2007-2008 7.57 2.35

9 2008-2009 7.33 2.27

10 2009-2010 5.52 1.71


3.8.4 CASTOR OIL

Castor oil has a long history of traditional medical use dating back to

ancient Egypt. Derived from the castor bean (Ricinus communis), the oil was

once used internally as a laxative but is now primarily used externally due to its

potential toxicity. Castor oil has been used therapeutically in ancient India, China,

Persia, Egypt, Africa, Greece, Rome, the Americas, and in 17th century Europe.

This oil is also known as Palma Christi or the "Palm of Christ". Edgar Cayce

mentions castor oil many, many times in his readings. Today it is used as an

emollient and skin softener, treatment of gastrointestinal problems, lacerations,

and other skin disorders such as psoriasis. Also used to boost our immune

system and it is also found in many skin care products.

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Castor oil is a vegetable oil obtained from the castor bean (technically

castor seed as the castor plant, Ricinus communis (Euphorbiaceae), is not a

member of the bean family). Castor oil (CAS number 8001-79-4) is a colourless

to very pale yellow liquid with mild or no odour or taste. Its boiling point is 313 °C

(595 °F) and its density is 961 kg/m. It is a triglyceride in which approximately 90

percent of fatty acid chains are ricinoleic acid. Oleic and linoleic acids are the

other significant components. The Production of caster seeds, net availability

and consumption of castor oil is shown in table 3.8.4.

Table 3.8.4 Production of castor seeds, net availability and

consumption of castor oil (In lakh tonne)

S. No Year Oil Seeds Oils

1 2000-2001 9.00 3.60

2 2001-2002 6.00 2.50

3 2002-2003 4.28 1.71

4 2003-2004 8.01 3.20

5 2004-2005 8.26 3.30

6 2005-2006 9.67 3.87

7 2006-2007 7.62 3.05

8 2007-2008 10.53 4.21

9 2008-2009 11.15 4.46

10 2009-2010 9.46 3.78


3.9 DEMAND FOR EDIBLE OIL

Demand for edible oils vegetable oil consumption in the country is

continuously rising and has sharply increased in the last couple of years to

roughly 11.2 kg per head per year. This is still lower than the world average

consumption level of 17.8 kg and that in neighboring countries like Pakistan (16.1

kg). The developed western world has a per capita consumption of 44 to 48 kg.

per year. According to projections from the National Council of Applied Economic

Research (NCAER), per capita consumption of edible oils is likely to reach 13.95,

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14.83 and 16.17 kg by 2009-2010 in per capita income grows by 4 per cent, 5

per cent and 6 per cent respectively. The details of edible oil demand is shown in

table 3.9.1.

Table 3.9.1

EDIBLE OIL DEMAND

ESTIMATE/YEAR 1999-2000 2004-05 2009-10 2014-15

Per Capita *

Low estimate

9.81

11.55

13.95

16.00

Medium estimate 9.89 11.63 14.83 18.16

High estimate 9.97 12.10 16.17 22.60

Total Demand**

Low estimate

10.10

13.30

17.40

22.80

Medium estimate 10.20 13.90 19.00 25.90

High estimate 10.30 14.60 20.70 29.40

Source: The Solvent Extractor‟s Association of India, Mumbai *in Kg per annum ** in million tones

3.10 IMPORT AND EXPORT OF EDIBLE OIL

3.10.1 Import of edible oil

The gap between demand and production of edible oil in India has

increased sharply in recent years. Since 2000-01, production of oilseeds grew at

the rate of 4.7 per cent per annum, but edible oil consumption increased at the

rate of 6.5 per cent per annum. Additionally, further increase in areas under

oilseed cultivation is a challenge due to lack of arable land and competition from

grains and other cash crops. "Under normal circumstances, oilseeds compete

with food grains for acreage. However, due to government policies favouring

production of competing crops over oilseeds, a higher share of irrigated land has

gone to grains and cereals crop,” said Pawan Kumar, Rabo India Analyst. He

further added, “Low quality seed, low access to inputs, poor farming practices,

and the fact that much of India's oilseed crop is cultivated in unirrigated areas is

the reason for oilseed productivity to be lower than the global average.”

Therefore it is essential to import the edible oils from other countries. Particulars

of edible oil import is given in table 3.10.1.

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Table 3.10.1

Quantities of edible oil imported during the last 10 years

S. No Year Import of edible oils

Quantity

(in Lakh tones)

Value

(Rs. in crores)

1 2000-2001 41.77 5976.53

2 2001-2002 43.22 6464.97

3 2002-2003 43.65 8779.64

4 2003-2004 52.90 11683.24

5 2004-2005 45.42 10755.65

6 2005-2006 42.88 8960.99

7 2006-2007 42.17 9580.53

8 2007-2008 49.03 10298.68

9 2008-2009 67.20 15,837.46

10 2009-2010 80.83 26,483.33

Source:*DGCI&S, Kolkata, and Ministry of Commerce & Industry

3.10.2 Export of edible oil and oilseeds

India has been a major importer of edible oils historically. The country

used to meet around 30-40 per cent of its needs through imports till 1980s.

However, the government then launched the 'Oilseeds Technology Mission‟

(OTM) in 1986. The programme was aimed at making the country self sufficient

in the production of oil seeds. Along with other incentives, the programme also

relied on strict quantitative restrictions on edible oil imports and offering relatively

higher increase in minimum support price for edible oils compared to wheat and

rice. The programme worked well and the area under edible seeds as well as the

yield started increasing during early 1990s.

As a result of the OSM programme, India witnessed consistent increase in

total output and from importing 30-40 per cent of annual requirements in early

1980s, India turned into net exporter of the commodity by mid 1990s. The

situation, however, did not last long. In order to fulfill its obligations towards the

GATT, India started to reduce the import restriction towards later 1990s. All

quantitative restrictions were done away and edible oil was brought under Open

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General License, which meant that imports could be made freely after paying

duty.

This led to a serious slump in the domestic oil seeds market as the prices

fell sharply in line with the low international prices prevailing at that time. As a

result, the tremendous growth in acreage and production witnessed in oil seeds

under the OTM program vanished by the turn of century. Thus, the Indian edible

oil industry has lived through a complete cycle by the start of last decade. In the

last decade, total production has been a function of international prices and its

impact on area under cultivation along with monsoon scenario and its impact on

yield (output per hectare). The details of export of oil seeds and edible oil is given

in table 3.10.2.

Table 3.10.2 Export of oilseed, and edible oil-

(Qty.in lakh tonne) (Value in Rs.Crores)

S.No

Year Oil Seeds Oils

Qty. Value Qty. Value

1 2000-2001 3.23 837.7 2.32 843.8

2 2001-2002 3.73 860.4 2.09 581.3

3 2002-2003 2.10 591.6 1.65 530.7

4 2003-2004 3.85 1287.3 2.62 1096.6

5 2004-2005 3.66 1261.2 2.60 1027.7

6 2005-2006 4.18 1314.5 1.84 635.97

7 2006-2007 5.23 1825.26 1.89 668.96

8 2007-2008 6.03 2756.0 1.99 914.0

9 2008-2009 5.27 2797.48 3.11 1851.4

10 2009-2010 2.92 1573.01 3.47 1793.41 Source: Solvent Extractors‟ Association of India, Mumbai

3.11 PROFILE OF NAMAKKAL DISTRICT

Namakkal District is a newly formed district from Salem District. It has

been functioning since 01-01-1997. It consists of 4 Taluks namely Namakkal,

Rasipuram, Tiruchengode and Paramathi Velur. The district is bounded by

salem on the north, Karur on the south, Trichy on the east and Erode on the

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west. The geographical area of the district is 3363. 35 K.m. This lies between

11.00 and 11.360 North Latitude and 77.280 and 78.300 East Longitude.

For administrative purposes the district has been divided into 2 revenue

divisions, 4 taluks. Since it produces major part of eggs sent to all over other

parts of our country, and is also called “poultry town” as it contains quite

a number of poultry farms hence it is called “egg city”. Namakkal finds a place of

importance in the map of India because of its Lorry body building industry, a

unique feature of the town. More than 150 Lorry body building workshops and

with a number of subsidiary industries of auto body works are operating since

1960‟s. There are many lorries, trailers and L.P.G. and tanker lorries in

Namakkal district. Therefore it is otherwise called as „transport city ‟.

The formation of Railway route Salem to Karur is soon to be completed by

end of this year 2012. One of the most famous Government Veterinary College is

also situated near by Namakkal Town. More and more private educational

institutions are coming up in recent years which blossomed for the district. The

famous Anjaneyaswami Statue which has its height of 6.7 Mts. was built in 996

AD. The Narasimma Samy temple along with Amman temple is situated behind

the west of the rock fort in the heart of the town.

chapter - iii profile of the edible oil industry and study...

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