MARKET DEVELOPMENT
Edible Oil May Go Onion Way On The Eve of Festivals: ASSOCHAM
Edible Oil May Go Onion Way On The Eve of Festivals: ASSOCHAM
30/07/2013 (India Education Diary) - The Associated Chamber of Commerce and Industry of India (ASSOCHAM) has cautioned the government to take adequate precautionary measures to prevent hoarding otherwise, edible oil may go “onion way” during the festive seasons.
The chamber in a note on “Indian Edible Oil Scenario” has stated that in 2012, India was the largest importer of edible oil, obtaining over 50% of its demand and emerged as the second largest consumers after China.
The Chamber Secretary General Mr. D S Rawat said, India’s overall demand for edible oil touched 15.6 million tonnes last year, as against 27 million tonnes in China. Demand is growing at about 6 per cent per annum and is expected to top 23 million tonnes in about five years.
The edible oil consumption in the country has increased at a brisk pace over the years with growing population and increase in per capita consumption (edible oils taken into account here are soyoil, groundnut, mustard, sunflower, safflower, sesame, coconut oil, rice bran oil and cottonseed oil), adds the ASSOCHAM study.
Due to high growth in income levels, increasing trend in spending and better living standards, India promises to continue high growth in consumption of edible oils, adds Mr. Rawat.
“Heavy demand during the festive period, demand will increase by over 40% and the retail price of edible oil may jump by 20- to 25% if distributive mechanism was not strengthened all over the country”, added Mr. Rawat.
Edible oil usage soars during the festive season in the post-monsoon phase, as millions of people consume sweets, fried delicacies and other stuff during the September-December festive season, said Mr. Rawat.
Also the demand for edible oil by biscuits and snacks manufacturers and restaurants may further increase at the retail level by 20-25 per cent in the festival season due to demand - supply gap.
India imports about 60 per cent of its domestic demand. It imports palm oil from Indonesia and Malaysia and soyabean oil from Brazil and Argentina. Palm oil accounts for the bulk of the imports (73 per cent), with soyoil adding another 20 per cent. The edible oil imports are projected to increase to more than 15 million tonne by 2020, from 11 million tonne estimated in ongoing 2012-13 year, adds the report.
Since the rise in supply is increasingly falling short of demand, the country's dependence on imports is only expected to shoot up, adds the paper.
The ASSOCHAM report says the limited scope for expansion in acreage remains one of the major hindrances for increasing the production of vegetable oils in the country. Area expansion is inhibited by limited availability of cultivable land and stagnation in irrigation facilities. Despite some growth in yield of mustard, lack of increase in irrigation facilities is keeping acreage of mustard, a rabi crop, almost stagnant. Lower profits in oilseeds for the farmers due to poor yields as compared to other crops too contribute towards lack of expansion in oilseed acreage despite various promotional programs of the government.
Unabated edible oil imports and inadequate tariff protection could result in hurting the interest of farmers and the country will never be able to achieve self sufficiency in oilseed production unless a carefully thought action plan is initiated to ensure judicious imports during off-season and at the same time incentivise domestic oilseed production, adds Mr. Rawat.
Analysis of the recent growth in domestic production of soybean should serve as a good model for similar efforts in promoting other oilseeds. Coupled with this there is a pressing need to allocate more fertile and irrigated land to oilseed cultivation, as that will ensure higher returns to the farmer. However, the pre-requisite for this will be development of hybrid/high yielding variety of seeds, which will assure quantum jump in yields from the present levels.
Free Trade Agreements with key vegoil producing countries in Asia should provide an adequate safeguard to domestic oil industry, so that cheap palm oil imports do not trample the domestic industry, adds ASSOCHAM report.
The chamber in a note on “Indian Edible Oil Scenario” has stated that in 2012, India was the largest importer of edible oil, obtaining over 50% of its demand and emerged as the second largest consumers after China.
The Chamber Secretary General Mr. D S Rawat said, India’s overall demand for edible oil touched 15.6 million tonnes last year, as against 27 million tonnes in China. Demand is growing at about 6 per cent per annum and is expected to top 23 million tonnes in about five years.
The edible oil consumption in the country has increased at a brisk pace over the years with growing population and increase in per capita consumption (edible oils taken into account here are soyoil, groundnut, mustard, sunflower, safflower, sesame, coconut oil, rice bran oil and cottonseed oil), adds the ASSOCHAM study.
Due to high growth in income levels, increasing trend in spending and better living standards, India promises to continue high growth in consumption of edible oils, adds Mr. Rawat.
“Heavy demand during the festive period, demand will increase by over 40% and the retail price of edible oil may jump by 20- to 25% if distributive mechanism was not strengthened all over the country”, added Mr. Rawat.
Edible oil usage soars during the festive season in the post-monsoon phase, as millions of people consume sweets, fried delicacies and other stuff during the September-December festive season, said Mr. Rawat.
Also the demand for edible oil by biscuits and snacks manufacturers and restaurants may further increase at the retail level by 20-25 per cent in the festival season due to demand - supply gap.
India imports about 60 per cent of its domestic demand. It imports palm oil from Indonesia and Malaysia and soyabean oil from Brazil and Argentina. Palm oil accounts for the bulk of the imports (73 per cent), with soyoil adding another 20 per cent. The edible oil imports are projected to increase to more than 15 million tonne by 2020, from 11 million tonne estimated in ongoing 2012-13 year, adds the report.
Since the rise in supply is increasingly falling short of demand, the country's dependence on imports is only expected to shoot up, adds the paper.
The ASSOCHAM report says the limited scope for expansion in acreage remains one of the major hindrances for increasing the production of vegetable oils in the country. Area expansion is inhibited by limited availability of cultivable land and stagnation in irrigation facilities. Despite some growth in yield of mustard, lack of increase in irrigation facilities is keeping acreage of mustard, a rabi crop, almost stagnant. Lower profits in oilseeds for the farmers due to poor yields as compared to other crops too contribute towards lack of expansion in oilseed acreage despite various promotional programs of the government.
Unabated edible oil imports and inadequate tariff protection could result in hurting the interest of farmers and the country will never be able to achieve self sufficiency in oilseed production unless a carefully thought action plan is initiated to ensure judicious imports during off-season and at the same time incentivise domestic oilseed production, adds Mr. Rawat.
Analysis of the recent growth in domestic production of soybean should serve as a good model for similar efforts in promoting other oilseeds. Coupled with this there is a pressing need to allocate more fertile and irrigated land to oilseed cultivation, as that will ensure higher returns to the farmer. However, the pre-requisite for this will be development of hybrid/high yielding variety of seeds, which will assure quantum jump in yields from the present levels.
Free Trade Agreements with key vegoil producing countries in Asia should provide an adequate safeguard to domestic oil industry, so that cheap palm oil imports do not trample the domestic industry, adds ASSOCHAM report.