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Informist, Monday, Jul 22, 2024

 

By Afra Abubacker

 

NEW DELHI – The Solvent Extractors' Association of India has urged the government to allocate 250 bln rupees over the next five years under the National Mission on Edible Oils to reduce dependence on imports, the association's pre-budget memorandum accessed by Informist showed. Upon operationalising the mission, edible oil imports can be cut to 25-30% by 2029-30, from the current 65%, SEA said in the memorandum. 

 

In the Interim Budget, Finance Minister Nirmala Sitharaman said that the government would formulate a strategy to achieve self sufficiency in the production of oilseeds. However, the government has not yet announced any funds for the programme. India is the top importer of cooking oil and bought a record 16.47 mln tn edible oil, worth $17.65 bln in 2022-23 edible oil year (Nov-Oct). 

 

"They have only announced and acknowledged the need for the mission. Nothing has taken off," said an SEA official.

 

In 2021, the Centre rolled out the National Mission on Edible Oils, but it focused on oil palm and had a total outlay of 110.4 bln rupees till 2025-26. "Oil-palm (mission) is different. Now, they are also going for oilseeds," the official said. 

 

Sitharaman said the strategy will focus on improving the production of mustard, groundnut, sesame, soybean, and sunflower. "This will cover research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance," she said in the Interim Budget speech in February.  

 

Though the mission on oil palm is ongoing, industry experts say it is dragging due to long gestation period, cash flow crunch in initial years, and poor post-harvesting infrastructure in the northeast. Against a target of 1 mln ha area under oil palm by 2025-26, India has only achieved 400,000 ha so far, according to Sougata Niyogi, chief executive officer, oil palm plantation, Godrej Agrovet. 

 

"...200,000 ha out of this is lending, and 200,000 ha got added in the last four years. So, I don't think that it has yet come into producing age," Niyogi said at the Veg Oils Vision 2030 conference on Thursday. 

 

"NME-OP (National Mission on Edible Oils-Oil Palm) is a stimulus...there was good momentum after the launch due to good prices," Niyogi said. However, subsequently, lower prices, shortage of saplings, and low returns for farmers in the initial growth stages dragged down production growth, he added. 

 

Experts say India is unlikely to be self-sufficient in edible oils even by 2047, according to NITI Aayog member Ramesh Chand. "India is likely to see a long-term (edible oil consumption) growth rate of 1.3%, slightly higher than the population growth rate, which in the long run is expected to be 0.6-0.7%," Chand said at the conference. 

 

India can only attempt to freeze edible oil imports at current levels, as consumption growth is seen outpacing domestic output by 2030, according to Sunvin CEO Sandeep Bajoria. By 2030 consumption will rise to 29 mln tn from 26 mln tn. Meanwhile, domestic production is seen growing to 12 mln tn from 10 mln tn, he added. 

 

DUTY TWEAKS

 

SEA has also asked the government to increase the import duty difference between crude and refined palm oils to at least 15% from the current 7.5% to check imports of refined oils. Currently, crude palm oil attracts a 5% duty and a 12.5% duty is levied on refined bleached and deodorised palm oil. 

 

Major palm oil producers, Indonesia and Malaysia have imposed a higher export duty on crude palm oil than refined bleached and deodorised palmoil. "We feel a 15% duty difference would help improve capacity utilisation and employment generation in our country," it added.

 

The association has also called for a uniform duty structure for crude oils. "Crude rice bran oil and crude pomace olive oil are currently subjected to 35% basic customs duty, while crude palm oil, crude soybean oil, and crude sunflower oil enjoy NIL basic customs duty," it said. 

 

LIFT RESTRICTIONS

 

SEA has asked the government to lift the ban on exports of de-oiled rice bran and not extend it beyond Jul 31. Following a sharp rise in domestic prices of dairy products, the government imposed a ban on the export of de-oiled rice bran with effect from Jul 28, 2023 and has been extending it since. The latest extension is set to expire on Jul 31.

 

De-oiled rice bran, obtained after oil extraction from rice bran, is an important ingredient for cattle, poultry, and pig feed. Citing the falling prices of de-oiled rice bran and rising milk prices, SEA argues that the cost component of the cattle feed in milk price is very nominal. De-oiled rice bran prices have fallen to 13,500 rupees this July from 18,000 rupees per tn last year, and are likely to fall further, it added.

 

The association has also asked to relaunch futures contracts of mustard, soybean, and their derivatives as these provide price signals to farmers and allow traders to hedge against volatility. In 2021, the Securities and Exchange Board of India suspended futures and options trading for a year in a host of agricultural commodities such as wheat, chana, mustard seed, crude palm oil, moong, paddy (Basmati), soybean and its derivatives. Last year, SEBI extended this ban till December 20, 2024.  End

 

Edited by Deepshikha Bhardwaj

 

 

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