20/02/2008 (The Hindu Business Line), New Delhi - With domestic cooking oil prices on the boil, the Centre has decided to waive the condition requiring the use of a minimum 12 per cent of indigenous oils in the manufacture of vanaspati.

“Vanaspati makers have been given full freedom to use indigenous or imported edible oils, in whichever proportion or combination they find feasible. The earlier orders dated June 12, 2000 and April 21, 2003 —relating to minimum indigenous oil usage — stand rescinded,” official sources told Business Line.

Order relaxed
The June 12, 2000 order made it compulsory for vanaspati manufacturers to use at least 25 per cent indigenous oils by weight. This was relaxed to 12 per cent in the April 21, 2003. Subsequently, on July 3, 2006, the Directorate of Vanaspati, Vegetable Oils and Fats in the Department of Consumer Affairs issued a new order mandating sourcing of 20 per cent mustard oil (obtained from indigenous mustard-seed) in the addition to the 12 per cent of indigenous oils (other than mustard oil).

Never implemented
The July 3, 2006 order was, however, subject to the Centre guaranteeing the supply of the required quantity of mustard oil at pre-determined rates through the processing of mustard-seed stocks held by the National Agricultural Cooperative Marketing Federation of India (Nafed). This order — which was intended to enable the State-owned federation to dispose of its surplus stocks and reduce the interest burden ultimately borne by the exchequer — was never really implemented, even as Nafed’s inventories got depleted on their own with hardening open market prices.

“Now, even the 12 per cent requirement for other indigenous oils (cottonseed, rice bran, sesame, solvent-extracted mustard-cake, etc) has been dispensed with. The Centre was earlier concerned about imported edible oils adversely impacting the interests of domestic oilseed growers. But with both domestic as well as global oil prices shooting up in an election year, the focus has shifted from encouraging processing of locally-sourced oilseeds to protecting the consumer,” the sources added.

Cheap palm oil
Vanaspati is basically hydrogenated vegetable oil, the manufacturing process of which involves addition of hydrogen to any edible oil using a catalyst to produce a fat with semi-solid, granular consistency mimicking desi ghee. Vanaspati makers prefer to use imported palm oil, both because it is cheaper compared to other oils as well having a high melting point (making it naturally semi-solid and requiring little hydrogenation).

The latest move may boost demand for imported palm oil by the vanaspati industry. A tempering factor though could be skyrocketing prices, with import crude palm oil currently quoting at almost $1,200 a tonne, cost & freight.