9/28/2004 FINANCIAL EXPRESS - India is facing a mismatch in production anddemand of oils and fats. The gap is expected to further widen in 2004-05.The import requirement of oils and fat is forecast at 5.1 million tonne,an increase of 0.6 to 0.7 million tonne on the year.

Addressing the participants at Globoil India 2004, German magazine OilWorld editor-in-chief Thomas Mielke said: "The magnitude of the growth inIndian imports in coming months is still uncertain and depends on the sizeof the upcoming Indian crops. The bulk of this increase will probably becovered with palm oils, imports of which are forecast at 4 million tonneup 0.6 million tonne."

Oil World magazine observed that soyabean oil imports likely to show onlya minor recovery in view of the prospective limited growth in world exportsupplies in 2004-05. According to Mielke, the decision of the Indiangovernment to reduce tariff values for palm and soyabean oil imports by10% from September onward has already shown some of the anticipated effecton domestic and world market prices.

On the Indian wholesale market, RBD palmolein prices fell by 7% betweenSeptember 9 and 21, while soyabean oil remained unchanged so far. "Thismeasure aims at curbing inflation, which was alarmingly high at around 8%recently. In contrast, Malaysian palm oil export prices have strengthenedslightly since early September, partly reflecting the prospective strongIndian import demand," Mr Mielke said.

Import tariffs and tariff values are important parameters decisive forIndian vegetable oil import requirements in coming months. It willdetermine the size of this years kharif oilseed crops and the rabi cropsin early 2005. Kharif crop prospects have suffered a renewed blow recentlyfrom an early withdrawal of monsoon rain in September. This willparticularly decimate groundnut production in Gujarat. The lack ofrainfall has also depleted soil moisture in Rajasthan and some localobserves are concerned that this may affect plantings of the rabi rapeseedcrop if an improvement does not occur soon, the magazine said.

"Without doubt weather conditions this year are much less favourable thanlast season and this will curb oilseed output more or less significantly.Our current estimates see combined Indian oilseed crops declining by 2.6million tonne on the year to around 25 million tonne", Mr Mielke opined.

During the year 2003-04 in India, per capita usage seen rising by 0.2kilos to an average 11.4 kilos and total usage probably up around 0.26million tonne. "For the upcoming season we assume a similar increase,bringing total disappearance of 17 oils and fats to 12.7 million tonne,"he observed.

Being a net importer of vegetable oil, India need to focus onbiotechnology for oilseed crops and should invest in research anddevelopment (R&D) for meet the increasing domestic edible oil demand, sayschief executive, M R Chandran, Malaysian Palm Oil Association (MPOA). MrChandran said: "India should focus on its basic strength rather thanconcentrating on crops which India is not good at. The need of the hourfor India is to concentrate on biotechnology to cope up with theincreasing demand. By 2020, the world consumption of edible oils will bereaching at 180 million tones. India need to focus on biotechnology ratherthan going for hi-tech crops."