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Low Rainfall to Increase India's Edible Oil Imports to $14 Billion this Year, Says Assocham

17 June 2014

INDIA - India’s edible oils import bill is likely to shoot up to $14 billion in the current financial year from $9.3 billion in 2013-14 as deficient monsoon rains - as predicted this season - will hit production of oilseeds by at least 8-10 per cent.

As per the initial indications, the rainfall in the edible oil growing states of Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Karnataka, Tamil Nadu, West Bengal and Andhra Pradesh would be deficient due to El Nino factor hitting the output, which in turn will result in higher import dependence on the edible oil, the Associated Chambers of Commerce and Industry of India paper on ‘India’s likely tryst with Edible Oil: Impact of El Nino factor’ released on June 12, 2014 said.

“The demand of edible oil will continue to grow by 15 per cent per annum due to increasing income levels and fast changing eating habits in rural India.

"The demand for edible oil is likely to touch 20.35 million tonnes during 2014-15. Import bill may also touch around $14 billion, resulting in a hike of domestic prices if adequate and timely corrective measures were not taken,” D S Rawat, secretary general said.

The country imported edible oils worth $9.3 billion during the 2013-14 fiscal year, a fall from $11.2 billion during 2012-13. Despite increase in production of edible oils in the country, close to half of its domestic requirements are being met by imports, the paper said.

Rawat said that India faces drought prospects every fifth year, the last one being in 2009, indicating a possible drought in 2014 in areas potentially receiving less than 10 per cent rainfall.
El Nino conditions lead to either delay in the arrival of monsoons or deficient rainfall in the beginning of kharif season (June-September).

India has been heavily dependent on imports for vegetable oils and pulses. It produces soybean, rapeseed, mustard and groundnut.

Gujarat, Rajasthan, Madhya Pradesh, Maharashtra, Karnataka, Tamil Nadu, West Bengal and Andhra Pradesh states are the key producers of oil seeds in India, the paper adds..

The paper said that India’s oilseed processing sector has been plagued by a slew of technological and policy issues culminating in the existence of a processing sector low in efficiency and capacity utilisation.

If the oilseed cultivators have to be linked in an economically viable and sustainable manner to the oilseed value chain, the role of oilseed processing units cannot be underestimated.

The Indian oilseeds processing sector is fragmented, small-scale and suffers from low capacity utilisation, the paper said.

Assocham further suggested that the edible oil industry should take initiatives to increase oilseed production by promoting contract farming in this sector, co-ordinate the modernisation of oilseed production, processing, and the marketing of vegetable oils, oilseeds, and by-products, in areas covered by the project.

The chamber further said, procure and market imported and indigenously produced vegetable oils in such a way as would contribute to the stabilisation of supplies at levels that will be fair to consumers and growers.

Allocated funds required for the establishment of a modernised oilseeds and vegetable oil industry based on oilseed growers' co-operatives, which will put the functions of oilseeds processing and marketing into the producers own hands.

TheCropSite News Desk

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