23/10/2012 (Postnoon) - At 13 kg per annum, India’s per capita consumption of edible oils is below the global average of 20 kg — offering a great potential for growth.

“The consumption of edible oils are growing with the population and higher disposable incomes. The growth in consumption of food at bakeries, pizza outlets and other restaurants is also adding to increasing demand. There is also tremendous growth in the sale of packed foods like namkeen, sweets and biscuits driving the growth of edible oil industry. Despite, the growth of consumption at five per cent year-on-year for last 20 years, the per capita consumption is around 13 kg per annum, which is much below the global average. For instance, the per capita consumption in western countries is around 40-45 kg where as the world average is around 19-20 kg,” said Pradeep Chowdhry, MD, Gemini Edibles and Fats India.

On edible oil production, he said, “the extent of land under cultivation is shrinking. The growth of edible oil-based crops will come at the cost of cultivation of other food crops. The farmers are deciding on the crop based on the returns. It is not so attractive for farmers to grow edible oil crops. The productivity or yield is also low due to reasons like small holdings and lack of quality fertilisers or pesticides.

“If you see Europe and the US, there are huge subsidies given to farmers to encourage agriculture. However, in India, there is so much bad talk for the amount of subsidies given to farmers on power and fertilisers.”

Contradicting the popular perception of growing edible oil prices, Chowdhry said, “If one sees the price of edible oils in the last 20 years, the prices of edible oils have not gone up compared to other commodities like food grains and pulses. If one excludes the inflation factors and take the foreign exchange in to account, the prices of edible oil might have declined over time.”

On consumption trends, he said, “Despite the influence of cultural factors in choosing the type of edible oil, there is also consumer shift to healthier oils. Vanaspathi consumption has declined due to health factors. However, people in the lower levels of income, who don’t really bother about type of oil are shifting to palm oil. Palm oil consumers are shifting to sunflower and the sunflower oil users want to consume olive oil. This is enabling the growth in volumes in each segment contributing to the overall growth of the industry.”

Talking about the prices and future of the industry he said, “India’s current consumption of edible oil is around 17 million tonnes. This consumption will grow up to 22 million tonnes in next three to five years, which necessities more industries and capacities to process these oils. The prices of edible oils will not go so much relatively to any other food commodities in next five years.

“With the huge cultivation of palm in Malaysia and Indonesia, the production of palm oil will continue to increase in coming years satisfying the world demand of edible oils.”