23/10/2007 (Commodity Online), Mumbai -  Discourage use of edible oil for bio-fuel production or face starvation. That is the message of Solvent Extractors’ Association of India (SEA) to the Indian government.

In a letter to Union agriculture minister Sharad Pawar, SEA urged the government to stop promoting the use of edible oils, including rapeseed oil, palm oil and soybean oil, for bio-fuel. If this trend continues, the SEA said, the prices of edible oils will shoot up.

And if the prices go up, the lower middle class would reduce edible oil use resulting in malnutrition.

SEA has mooted that the government should promote use of non-edible oils like jatropha and biomass for energy requirements.

The exporters’ body said any change in the price of edible oil affects consumers and hence, emphasis should be laid on the need to increase production of oilseed and conservation of existing produce.

A recent United Nation’s Food and Agriculture Organisation (FAO) report said India has successfully reached its food and nutrition targets.

In the past years, prices have doubled mainly due to the increased use of vegetable oil for non-food use leading to supply shortfall for food uses.

Soybean oil (Argentina-FOB) shot up by 60 per cent to $863 per tonne from $542 per tonne, while sunflower oil (Argentina-FOB) soared by 132 per cent to $1,350 per tonne from $580 per tonne in the last one year alone. Rapeseed oil (Hamburg-FOB) jumped 50 per cent to $1,177 per tonne from $784 per tonne and crude palm oil (Indonesia-FOB) surged 82 per cent to $795 per tonne from $436 per tonne.

This year, India would be importing 56-58 lakh tonnes of vegetable oils (edible oil, vanaspati and non-edible oils) for Rs 12,000 crore. In the next year, the bill may touch Rs 15,000 crore and Rs 20,000 crore by 2008-09. In India, oilseed production has remained stagnant, while demand has risen by leaps and bounds.

Once vanaspati oil will also be used for biofuel, it will further increase the country’s dependence on imports, which according to SEA, will be a dangerous situation. Meanwhile, supply is likely to remain constant from exporting countries in the coming years.

Global consumption of crude mineral oils is currently at 4,250 million tonnes, while the current global vegetable oil production is at 152 million tonnes constituting 3.5% of the total mineral oil market.

Even if the entire quantity of vegetable oil available in the world (152 million tonnes) is converted into bio-fuel, it will constitute only 3 per cent of the fuel, but withdrawal of 5-10 per cent of vegetable oils (10 million tonnes) for non-food usage will have a serious impact on the price and availability, which the industry has seen in last one year, SEA said.

At present, about 9 million tonnes of bio-diesel is being produced globally against the capacity of about 23.4 million tonnes and many more plants are in pipeline to produce bio-diesel in the next two years.