23/10/2007 (Business Standard) - The Solvent Extractors’ Association of India (SEA) has urged the government to discourage the use of edible oils, including rapeseed oil, palm oil and soybean oil, for biofuel as it would lead to a price rise in edible oils. 
 
“If the prices are high, the lower middle class would reduce edible oil usage resulting in malnutrition, controlling which would be a daunting task,” said SEA’s letter addressed to the Union Agriculture Minister, Sharad Pawar. 
 
Instead, SEA has suggested the usage of non-edible oils such as jatropha and biomass for energy requirements. 
 
Any change in the price of edible oils affects consumers and hence, emphasis should be laid on the need to increase production of oilseed and conservation of existing produce, the letter said. 
 
According to the recent United Nation’s Food and Agriculture Organisation (FAO) report, India has successfully reached its food and nutrition targets. 
 
In past year, prices have doubled mainly due to the increased usage of vegetable oil for non-food usage 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) perked up by 132 per cent to $1350 per tonne from $580 per tonne in the last one year alone. Rape oil (Hamburg-FOB) jumped 50 per cent to $1177 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 the letter, 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, the letter said. 
 
Currently, 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 pipelines to produce bio-diesel in the next two years.