Saarc Oils & Fats Today- Dcember issue 2012

December 2012, SAARC OILS & FATS TODAY

Contents Chief EDITOR S. Jafar Naqvi Consulting Editors T.V. Satyanarayanan K Dharmarajan Editorial Co-ordinator: Syed M K News Editor : Anwar Huda General Manager: Lalitha V Rajan Production: Mohd. Iqbal Hyderabad 9248669027 mediatodayhyd@yahoo.com Mumbai 9702903993 mumbai.office@mediatoday.in Bangalore 9342185915 bangalore.office@mediatoday.in Pune 9881137397 pune@mediatoday.in Ahmedabad 9727866249 ADMN. & MARKETING OFFICE MEDIA TODAY PVT. LTD. T-30, 1st Fl., KHIRKI EXTN., MALVIYA NAGAR, NEW DELHI - 110017. PHONE : 91-11-26681671, 26682045 TELEFAX : 91-11-26681671 E-mail: MediaTodayMails@gmail.com ANNUAL SUBSCRIPTION India: Rs.1000/-for 1 Year / Rs.1950/-for 2 Years Overseas: US$ 120 for 1 Year / US$ 230 for 2 Years Single Copy Cost in India : Rs. 60.00

Editorial

5

Cover Story Global Edible Oil Market Outlook 2013 A year for Processors and Brands

6

— Dorab E Mistry

Event Report l COOIT’s Golden Jubilee Convention

GM technology to raise oilseed crop yields l Edible oils & Oilseeds sector

Industry & trade view for sustained growth

10

Budget SEA’s Pre-Budget Memorandum Edible oil & oilseeds deserve to be classified under lower tax rate

15

Point of View Industry initiative to augment oilseeds productivity

18

— Sushil Goenka

Olive Oil Rajasthan grows Olive with Israel’s help

22

— Srikanta Tripathy Printed, Published & Owned by M.B. Naqvi, Printed at Everest Press, E-49/8, Okhla Industrial Area, Ph-II, New Delhi -110 020 and published from E-11/47 -A, New Colony, Hauz Rani, Malviya Nagar, New Delhi-110017 (India). Editor : S. Jafar Naqvi

Vol. 15..... ISSUE 3..... December 2012 ‘Saarc Oils & Fats Today’ T-30, Ist Floor, Khirki Extn., Malviya Nagar, New Delhi - 110017 E-mail : MediaTodayMails@gmail.com

SAARC OILS & FATS Today, December 2012

Dairy Amul’s new-age farmers

24

— Harish Damodaran

Retail India allows 51% FDI in multi-brand retail Government Gets Bouquets & Brickbats for a Long-due Move

28

News

32

Editorial

I

sn’t it unfortunate that even four- and- a-half decades after the launch of the much-acclaimed Green Revolution in India, the oilseeds sector continues to get only a little more than lip sympathy for its development? Despite a number of programmes and schemes, including a technology mission for its promotion, performance figures do not instill confidence. The gap between the domestic supply and demand for oilseeds and edible oils keeps widening.

India’s dependence on imports to meet the domestic needs of edible oil now stands at 54 per cent, as against only 5 per cent in mid-nineties. The country has earned the dubious distinction of having become the world’s largest importer of edible oils. Although one reason for increasing imports is the steady rise in per capita consumption of oils in the wake of rising income levels of people, it is noteworthy that India still lags far behind the world average -- almost half -- in per capita consumption.

The bane of the oilseeds and oils sector in this country is the low productivity of oilseed crops, grown mostly in rainfed areas. Whether it is groundnut, soyabean, rapseed-mustard or sunflower seed, the average yield levels in India are well below the world average. It is against this backdrop that the government is trying to promote the cultivation of oil palm, acknowledged as the world’s richest source of vegetable oil. However, the pace of progress of oil palm development programme – now clubbed under the Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize –has been slow. Against 10 lakh hectares identified as suitable for oil palm cultivation in various states, the coverage under the crop now is less than one-fifth of that area.

True, the National Research Centre for Oil Palm, later upgraded as Directorate of Oil Palm Research, at Pedavegi in West Godavari district of Andhra Pradesh has been doing good work by encouraging farmers to

get high yields, particularly in irrigated conditions.

The Directorate, under Indian Council of Agricultural Research, has also a research centre at Palode near Thiruvananthapuram in Kerala. Serving as a centre for conducting and coordinating research on all aspects of oil palm cultivation, like conservation, improvement, production, protection and post harvest technology, the Directorate has been guiding farmers across the country to get good yields.

Progressive farmers have been getting good results by adopting the package of practices developed by these scientists, and interestingly, a woman farmer.

Suma Kumar, from Mysore Taluk in Karnataka, was in limelight in news media for having achieved average production of a little over 53 tonnes per hectare – highest in India – over a period of three years from her oil palm plantation, set up about 15 years ago. At a recent Kisan Mela, the Directorate conferred on her the Best Farmer Award.

If policy makers are serious about giving a .fillip to oil palm cultivation in the country, a series of steps would be necessary. A long standing demand of the farmers is that oil palm should be declared a plantation crop. Most important is that the farmer must be assured of a remunerative price for the crop. It is unfortunate that in Andhra Pradesh and neighbouring states, some farmers unable to get a reasonable price, cut down their plantations in sheer frustration.

Consistency in policy of providing incentives is equally important. The Union budget for 2010-11 allocated Rs. 300 crore to bring 60,000 hectares under oil palm to yield about three lakh tonnes of palm oil annually in five years. However, this year’s budget provides only a token allocation for oil palm area expansion scheme.

One hopes the 12th Plan agriculture development programmes would give greater attention to all oilseeds, including oil palm.

Comments are welcome at: MediaTodayMails@gmail.com Views expressed by individuals and contributors in the magazine are their own and do not necessarily represent the views of “SAARC Oils & Fats Today” editorial board. The magazine does not accept any responsibility of any direct, indirect or consequential damage caused to any party due to views expressed by any one or more persons in the trade. All disputes are to be referred to Delhi Jurisdiction only.

.....Editor

December 2012, SAARC OILS & FATS TODAY

Cover Story

Global Edible Oil Market Outlook 2013

A year for Processors and Brands — Dorab E Mistry, Director, Godrej International Limited

T

hese days, both Indonesia and Malaysia are trying to compete with each other on Refined Palm products through the mechanism of Export Taxes.

I have to say I do not like or approve of Export Taxes but they have become a fact of life. So I shall not comment on them except to analyse how they will influence palm prices in 2013.

First, let me congratulate GAPKI on the success of this annual event in Bali. I have had the honour of speaking at the very first conference and each one since.

It is always a great pleasure to come to Bali and learn new things about this great country and our glorious palm oil industry.

I am proud to say Godrej is a major Indian investor in Indonesia and our experience so far has been most heartening.

Background I shall keep referring to my recent papers at various palm oil conferences and in particular to my paper at the Malaysian POC in KL in March this year and to my most recent paper in Guangzhou in China earlier this month.

Let me say at the outset that I am steadily coming to the conclusion that the days of Super-Normal profits in palm oil cultivation are coming to a close. The end of the Cyclical Bull Market in commodities leads me to believe that profitability in Agriculture and in Plantations will soon revert to more normal levels. Make no mistake, I still expect palm oil plantations to prosper and to thrive and to give investors handsome returns. However, success will now require good management, astute deployment of resources, continuous improvement in yields and containment of costs. The industry had it too easy in these last few years.

It will also mean that the transfer of resources from farmers and plantations

to the government by way of export taxes will have to come to an end.

I also wish to reiterate my view of the macro economy. I believe the USA will successfully avoid or resolve the problem of the Fiscal Cliff. This should give us a Strong Dollar and a rising Stock Market in most western and emerging markets.

World growth in 2013 should be better than in 2012.

Recent developments in Palm In Guangzhou, I said CPO prices on the Bursa Malaysia Futures Exchange needed to decline to 2200 Ringgits on the third position to unleash strong Energy Demand so as to reduce stocks. We reached 2220 Ringgits for one brief day and we did see strong Energy Demand. The market bounced instantly as if we only needed to kiss 2200 once. I am sure palm oil bulls in the BMD know something I don’t and that is why they are confident they can achieve higher exports at higher prices. We live in a free world where free and creative thinking is most welcome!

SAARC OILS & FATS Today, December 2012

Palm production in 2013 Let me say at the outset that current Indonesian CPO production is running ahead of expectation.

Indonesian production is peaking this month in November and looks like exceeding my estimate of 27.5 million tonnes for 2012.

Malaysia will produce 18.4 million tonnes in 2012.

The possibility of an El Nino has now faded away. Based on data available at present and current rainfall, my model suggests we shall start a new soft Low Cycle from about January which should last until about August 2013. The biological cycle in recent two years has tended to be shorter than in earlier years. Since there has been no major weather disturbance in the last one year, I expect the new Low Cycle to be shorter and softer than earlier ones.

After the trees have rested and if rainfall remains normal, we shall move into a good High Cycle once again. What is fortunate is that this new High Cycle will coincide with the seasonal High

Cover Story Cycle also. Therefore, CPO production in the Second Half of 2013 and particularly in the months of September to December 2013 is likely to be at a new all-time high, possibly creating new monthly production records in both countries.

Here I would like to point out that acreage expansion is still underway in Malaysia and I compliment the industry in Malaysia for its resilience and for its adoption of sustainable practices. There is no doubt the world needs more palm oil. We have seen very good expansion of acreage in Indonesia also after the recovery in prices in 2009.

My estimate is that Malaysia will produce at least 19 million tonnes in 2013 and Indonesian production will be between 29.5 and 30 million tonnes. Between Malaysia and Indonesia CPO production will expand 2.5 to 3 million tonnes. The Rest of the World will contribute another 500,000 tonnes of extra palm oil because production is recovering and expanding in Thailand, Central America, Colombia and last but not the least in my own country India.

INDIA Before I go to Incremental S&Ds and discuss the prospects for other oils, let me quickly speak about Indian supply and demand for 2013. India finished the Oil Year 2011-12 with record consumption and imports. Our imports reached 10.2 million tonnes.

India’s Kharif oilseed harvest was somewhat affected by drought. The omens for the winter sown crop are good. If all goes well, India should harvest a Rape-Mustard crop of about 6.5 million tonnes. Overall India’s production of vegetable oils should expand for the next oil year mainly on account of a higher mustard crop. The most important point to note is that India started the new Oil Year on 1 November 2012 with record opening stocks (port stocks plus internal pipeline) of 1.65 million tonnes. My friend Govindbhai Patel of GGN Research confirms this figure.

Indian consumption is also expected to grow at a healthy pace but overall India’s imports will be about the same as the current year.

Imports for the months of November to April may be somewhat higher than 2012 but in the later half, they will be slightly lower.

India will import more palm oil and slightly less soya and sun oils. The break- up of imports is likely to be as follows : 000 tonnes Palm

Nov 2011-Oct 2012

Nov 2012-Oct 2013

7688

8050

Soya

1134

1000

Sunflower

1080

950

Rapeseed

90

-----

Laurics

200

200

The Soya complex Everyone is anxiously watching the progress of soya crops in South America. With each passing week, we get more confident of big or record big soybean harvests in Brazil and then in Argentina.

It is still very early in the season. From January we shall see the gradual removal of risk premium from soybean futures on the CME. There are likely to be many logistical challenges and it can be April or even May before the world can be confident that further price falls are fully justified.

Between now and March there is some chance of weather in South America not being favourable and also some chance of lower yields or delays in harvesting and transportation. Soybean consumers have been very lucky so far this year as prices have fallen

by around 20 % from their peak. However we must be cautious about the proverbial “Sting in the Tail”. A lot will depend on the tonnage of soybeans released by the China State Reserve between now and February. The recent announcement of a suspension of soybean auctions by the China State Reserve is not likely to work in China’s favour in the market place. Chinese officials are extremely astute and they must re-think their strategy.

A factor that has surprised many in recent months is the soft demand for soya meal. For example the soybean crush in India has got off to a poor start because Indian soya meal is not exactly flying away and farmers are not happy to sell beans at current prices.

Soya oil prices have got stronger in the past 2 weeks as Brazil seems to be unable to find material for export. Argentinian farmers are not keen to sell beans because of the uncertainty on the local currency and the generally bleak outlook for the Argentinian economy under current conditions. This is the time of high prices when Argentina should be maximising its exports of soya products. Yet with present confrontationist policies of the government, Argentina may miss out on this bonanza. Later when prices are much lower, they may finally come out to export. It just shows how a bad government can give away a winning hand.

Argentina is a rich country that is cursed with poor government.

When will its politicians realise that you cannot bring social justice and create equality by making everyone poor.

The ratio of corn prices to beans in USA for new crop is in favour of corn at present. However, crop rotation may prevail in the end and that is why I do not believe we shall see a major switch to corn in USA next year.

Overall I am bearish on the soya complex post May 2013 with a gradual erosion of risk premium from as early as February. I also believe we may see further weakness in the Brazilian Real and currency problems in Argentina. The famous short seller Jim Chanos says he is ready to short Brazil! These will all cast a bearish impact on the soya complex.

Sunflower: The latest estimates suggest sun seed crops in Russia and Ukraine actually turned out a bit better than earlier expected.

We have a bigger crop coming up in Argentina this season. On balance, sun oil production in the new Oil Year from Oct 12 to Sept 13 will be about 1 million tonnes lower in view of the smaller crops in Russia and Ukraine. Sun oil has gone to a premium to soya oil.

The factor to watch is the size of sun seed plantings and the eventual crop in the Black Sea region in 2013. Sun seed farmers in this region are switching to better seeds and this is why 2012 crops turned out better than expected despite drought. Logically if we have good weather this year, we could have record crops December 2012, SAARC OILS & FATS TODAY

Cover Story and that would add to the bigger supply of soft oils in the world from the month of August onwards. Another factor to watch will be the weakness of the Ukrainian currency in the months ahead.

Rapeseed: In the next few months the supply of Rapeseed and Rapeseed oil will be tight on account of the lower crop of Canola. This factor is already in the market. The lower use of rape oil in bio diesel in Europe has helped. The biggest effect of lower and more expensive rape oil will be felt in the domestic market in USA where Canola oil has been replacing soya oil in the edible space. Some of that demand may be inelastic and some of that demand may go back to soya oil. It will also create space for more palm oil to be imported into USA in 2013. In Rapeseed too, the big factor to anticipate is the bigger crop in the EU and later in Canada in the summer of 2013.

Lauric oils: Coconut oil production has been recovering and therefore CNO production is likely to be slightly higher in 2013. Palm Kernel Oil production will also expand in line with palm oil production.

The biggest disappointment of 2012 in terms of Demand was the shrinkage in use of vegetable oil for bio diesel by almost 2 million tonnes. In every part of the world except USA, we are not likely to see any growth in such bio fuel demand for the same reasons as last year.

Bio diesel Production As I said in Guangzhou, the biggest disappointment of 2012 in terms of Demand was the shrinkage in use of vegetable oil for bio diesel by almost 2 million tonnes. In every part of the world except USA, we are not likely to see any growth in such bio fuel demand for the same reasons as last year. These reasons were the higher use of Used Cooking Oil, animal oils and greases and Waste Matters and of course the benefit of Double counting for all of these.

In USA, bio diesel blending is likely to expand significantly. It remains to be seen if this will be met by bigger imports of

palm oil or by larger imports of bio diesel itself or by higher imports of sugar-cane based ethanol. Bio fuels are an extremely complicated game and need very dedicated and specialised research. That is why many of us got it wrong last year. I have provided for higher use of vegetable oil for biofuel for 2013 at 500,000 tonnes.

I expect food demand to grow at a healthy 3.5 million tonnes next year. I am optimistic because supply is very good and I expect lower prices which will stimulate consumption.

Hence overall, I am estimating 2012-13 demand to grow by 4 million tonnes.

It will be seen that Incremental Demand will exceed Incremental Supply.

However it must be borne in mind that we start the new Oil Year with the heaviest stocks in history. The massive over-hang from the previous year will cushion the impact of the lower production of vegetable oils in the first half of the new Oil Year. In the second half of the year, from March onwards the recovery in soft oil production and the anticipation of big crops to be harvested will prevent any thoughts of a price rally.

I may also add that if we have good weather and no major weather disturbance, we can harvest massive soya, canola and sun seed crops in the period from July to November 2013. These big crops (which are a supply response to the tightness and high prices of 2012) will be crushed in the first half of the Oil Year 2013-14 and will impact prices in that period.

RSPO and Sustainable Palm Oil Sustainable Palm Oil is making a big headway in Indonesia under both sets of standards – the RSPO and the ISPO. I do hope in the not too distant future we shall find convergence and a common standard.

PRICE OUTLOOK The assumptions for my Price Outlook are as I have stated earlier today. I expect a Strong Dollar and an end of the Cyclical Bull market in commodities. I believe mineral oil prices will gradually decline and Brent will trade in a range of US$ 100 to US$ 115 per barrel. I do not anticipate any new subsidies or encouragement to bio fuels. Above all I am anticipating good –to- normal weather patterns all over the world. I am presuming that China and India will begin to ease monetary policy in 2013 and resume stronger growth.

Overall I expect vegetable oil prices to

We can now see the Incremental S&Ds for 2011-12 and 12-13 000 tonnes

Oct 11 to Sept 12

Oct 12 to Sept 13

Soya oil

+ 600

+ 1,100

Rape oil

------

-300

Sun oil

+ 2,100

-1,000

Gn & Ctn oil

+ 400

-400

+ 2,500

+ 3,300

+ 300

+ 450

Total Increase

+ 5,900

+ 3,150

Demand

+ 1,500

+ 4,000

Palm oil Lauric oils

SAARC OILS & FATS Today, December 2012

Cover Story remain range-bound in the first half of the year and to begin a major bear market in the second half.

PALM – I repeat the BMD futures on the 3rd position need to trade over a period of 4 to 6 weeks at a level of 2200 Ringgits in order to attract massive energy demand so as to reduce and clear stocks. I don’t really expect Malaysian bulls to heed my advice. So I am predicting CPO futures on the BMD to trade in a range between 2300 and 2600 from now until February 2013.

This will ensure high stock levels in both countries but particularly in Malaysia.

However, I suspect there is external support to the Futures market and this Phantom will keep giving money away for a few more months.

If India imposes a 10% import duty on CPO and a 20% import duty on Refined Palm products as I anticipate it will, then Palm futures will break down. We shall have to watch that situation very closely.

Otherwise I expect the 2300 -2600 range to hold for a fairly long period of time.

Once the biological cycle turns around August (or perhaps in anticipation of that

turn) I expect CPO futures on the BMD to break down and trade below 2200 Ringgits. How low they go is very difficult to predict at this stage but it will depend on the level of Brent crude oil at that time and the pressure from soft oils. I shall leave that prognosis for a future paper.

Soybean oil – Old crop soya oil needs to control demand and will therefore remain at a big premium to palm. Chicago bean oil futures are expected to remain in arrange of 48 to 53 cents with flat prices in a range of US$ 1070 to 1150. New crop soya oil from May onwards should see flat prices between US$ 900 and 1020 FOB Argentina.

Sunflower oil: Sunflower oil will remain at a premium to soya oil and should trade initially around US$ 1150 and later around US$ 1050.

Rapeseed oil: I expect Rapeseed oil in Europe to remain premium oil.

Laurics: As I have been saying, the outlook for Lauric oils is Bleak. I expect them to

remain at a discount to CPO. They have very little support from the edible sector.

Supply and Demand are more or less in balance except for the massive opening stocks for 2012-13. I have presumed an almost Goldilocks scenario in terms of weather. If we do not have a major weather disturbance in 2013, the second half could turn out to be quite bearish.

On the other hand, there are forecasters who say we could have a second year of drought in North America next year. That could change my prognosis radically and send consumers running for cover and they may have to resort to Prayer and Divine intervention.

Finally for stock market investors I have one prediction. 2013 will be a year for Processors and for Brands. Primary producers may finally reap a good harvest for their downstream investments.

(Paper presented at GAPKI –8th Indonesian Palm Oil Conferences on 30 November 2012, at Bali International Convention Centre, Nusa Dua, Bali)

December 2012, SAARC OILS & FATS TODAY

Event Report

COOIT’s Golden Jubilee Convention suggests

GM technology to raise oilseed crop yields

T

o tackle the thorny problem of low oilseed productivity in the country, the oil Industry & Trade favours adoption of GM technology that has the potential to raise yield levels.

A recommendation to this effect was made by the Golden Jubilee Convention of Oilseeds and Oils Trade & Industry, organized by the Central Organisation for Oil Industry & Trade (COOIT) in New Delhi.

In view of raging debate in the country on use of G M technology for raising food crops, the convention added a rider, saying the government could look this possibility of growing genetically modified oilseed crops, while ”taking into account the relative economic benefits, bio-safety, environmental concerns and other related issues.”

The convention called for an immediate plan for raising oilseeds productivity by atleast 40 per cent from the current level in the next five years. This, it said, is an achievable target The focus of the convention was on challenges for sustaining the growth and development of Indian industry and trade in the backdrop of world edible oil scenario. The issues discussed included: Oilseed crop production prospects, demand and supply situation, price outlook, foreign trade, Government policies and measures for adequate and equitable supply of edible oils to meet the nutritional requirement at affordable price to all sections of the people.

Following are the recommendations made by the convention.

10

Self-reliance so to meet the nutritional deficit of edible oils in the country in near future Recommendations (i) An immediate plan be prepared for raising productivity of oilseeds by at least 40% from the current level in the next 5 years. This is an achievable target, with use of improved technology and coordinated efforts for raising yields; (ii) Larger allocations in the Budget be made for increasing productivity and production of oilseeds to meet the rising demand for edible oil; (iii) The possibilities of cultivating Genetically Modified oilseeds be looked into in the country to improve oilseed yields and production, taking into accounts the relative economic benefits, bio-safety, environmental concerns and other related issues; and (iv) Short term/medium term/long term measures be taken urgently for equitable availability of input materials, including adequate quantity of good quality certified seeds (for seed replacement), throughout the country at affordable rates, which should be cheaper than the market rates, at the appropriate time for sowing to the oilseed farmers. These measures should include effective implementation of the centrally sponsored Integrated

SAARC OILS & FATS Today, December 2012

Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM) being administered by the Union Ministry of Agriculture.

Need to give a remunerative price to the oilseed farmers (MSP of oilseeds) Recommendations (i) Minimum Support Price (MSP) for various oilseeds be considered for further upward revision in view of the need for giving remunerative price to the farmers, so that they are encouraged to cultivate oilseeds and do not switch over to other crops; and (ii) MSP for oilseeds be revised from time to time in a way to ensure that derived costs of domestic oils obtained from the domestic oilseeds at an appropriate MSP be kept at par with the landed cost of imported oils.

Goods and Service Tax (GST) on Edible Oil & Oilseeds Recommendations (i) The sensitive essential items of mass consumption like edible oils, oilseeds and oil meals be either wholly exempted or taxed at lowest slab rate at par with food grains and pulses under the proposed GST structure and be kept at the same level for all States in the country; (ii) There should not be any other tax

Event Report like entry tax on oilseeds, edible oils and oilmeals; (iii) Besides, oilseeds, edible oils and oil meals be exempted from VAT to make it at par with food grains and pulses; and (iv) Status quo on high sea sale of imported vegetable oils also be maintained. . ‘ Reviewing of Custom duty on Edible Oils Recommendations: (i) In order to address the concern of the vegetable oil trade & industry in the event of the inconsistent domestic production and fluctuating price situation of oilseeds and oils in the country, the Government needs to consider framing a price band for edible oils and regulating the price level through imposition of import duty as and when necessary at an appropriate rate. The import duty would generate the revenue which could be utilized for oilseed development programme and thereby help improve the domestic production of oilseeds and hence of edible oils to reduce import dependence. (ii) Prevailing price situation be reviewed on regular basis and the revision of import duty rate on refined oils be considered accordingly; (iii) Suitable and appropriate mechanism be framed In order to encourage import of crude/raw edible oils instead of finished products (refined oils) so as to improve capacity utilization of domestic edible oil processing / refining industry and thus, value addition in the country.

Re-alignment of Tariff Value for refined oils to protect the interests of domestic edible oil processing / refining industry Recommendations (i) Tariff Value for refined edible oils, including refined palm oil be urgently aligned with the prevailing

international, market price for the edible oils so as to encourage higher capacity utilisation of domestic oil processing industry and thus valueaddition within he country; and (ii) The possibilities of imposing a ban on import of refined palmolein in consumer packs from Indonesia be considered.

Need to lift the ban imposed on free export of edible oils Recommendation: (i) The ban imposed on free export of Edible Oils be lifted so as to help domestic exporters to recapture the lost export market ‘and to help the farmers in higher realization from export of their produce.

Service Tax on commission I Brokerage Recommendations (i) Service tax on Commission Agents and Brokers of edible oils/ÂŹ nonedible oils/ oilcake/de-oiled cake be exempted; OR (ii) Permission be granted to make the payment of service tax by commission agents and brokers on receipt basis as being allowed to chartered accountants, company secretaries, lawyers etc. who have been given exemption from these rules.

Strengthening and effective implementation of the scheme of distribution of edible oils at subsidised rate to poorer sections through State Govts Recommendation In order to achieve the objectives of providing relief to the consumers and poorer sections of the society from the rising prices of edible oils, distribution of subsidized edible oils to them may be continued, strengthened and extended to all States/U.T.s.

December 2012, SAARC OILS & FATS TODAY

11

Event Report

Edible oils & Oilseeds sector

Industry & trade view for sustained growth COOIT President Sat Narain Aggarwal in his speech of welcome at the Golden Jubilee convention of the organization in New Delhi gave a status report of the edible oils sector, raised vital issues concerning it and outlined the demands of the industry and trade for sustained growth.

Extracts from his speech: Importance of oils & fats Edible oils and fats are essential ingredients for a wholesome and balanced diet and are vital items of mass consumption. WHO has recommended that the total fat intake as a percentage of energy should not be less than 15% and should not exceed 30%. Thus, oils and fats have an important role in the food sector.

India’s dependence on imports which was only 5% in 1994-95 has gone up to about 54%. Oilseeds constitute major agriculture crops in India, accounting for 8-9% of world oilseeds production. We are the world’s second largest producer of groundnut, third largest producer of rapeseed and highest producer of castorseed. India is the third largest consumer of edible India and plays an important role in the global edible oil market, accounting for approx.

10.2% share of consumption; 7% share of oilseed production; 5% share of edible oil production and 13.6% share of world edible oil imports and accounting for 11% of global edible oil demand.

In spite of the fact, indigenous production of oilseeds has considerably increased since independence; it is still inadequate to meet our growing demand for edible oils. The main reason for this state of affairs is that oilseed productivity has remained inadequate, while demand has been growing because of improved standard of living resulting increase in per capita consumption and population growth. At about 1193 kg/hectare, Indian oilseed yields are about half of the world’s average and less than one-third of leading producers. More than 50% of our requirement is being met through imports primarily due to low productivity of oilseeds.

Annual requirement According to the projections for oilseeds/edible oils made by the Expert Group constituted under the Ministry of Agriculture by the Planning Commission, 12

the annual requirement/demand for edible oils in the country was 143.75 lakh tons and 149.49 lakh tons in 2010-11 and 2011-12 respectively. Based on growth rate considered by the Expert Group for the annual requirement/demand for oilseeds/edible oils in 2010-11 and 201112, the annual requirement/demand for edible oils in the country during 2012-13 is estimated to be about 155.46 lakh tonnes (555.211akh tonnes in terms of oilseeds).

Oilseeds production According to COOIT estimates, oilseeds production in Oil Year 2011-2012 is estimated to have been 260.15 lakh tonnes consisting of kharif 172.25 lakh tonnes and Rabi 87.90 lakh tonnes. At about 1193 kg/hectare, Indian oilseed yields are about half of the world’s average and less than one-third of leading producers. The oilseed production estimates released by the Ministry of Agriculture for the same period are higher at 300.12 Lakh tons in 2011-2012 (4th Advance Estimates).

The availability of edible oils from all domestic sources as estimated by COOIT was 85.23 lakh tonnes in 2010-11 and 81.24 Lakh tonnes in 2011-12. According to Government’s first advance estimates of kharif season for 2012-13, oilseeds output is estimated at 187.83 lakh tonnes, compared to 207.87 lakh tons in Kharif last year.

Oil imports India has become the largest importer of vegetable oils in the world. Import of edible oils in the oil year 2010-11 was about 83.71 lakh tonnes compared to 88.23 lakh tonnes in the previous year. During the period of Nov.2011-Sept.2012, the import of edible oils was 89.63 lakh tonnes compared to 74.94 lakh tonnes (i.e. up by 19.60%) during the corresponding period of last year.

India’s annual per capita consumption has shown a steadily increasing trend from 4

SAARC OILS & FATS Today, December 2012

kg in the 1970s to 10.2 kg in the late 1990s to current levels of 13.5 - 14 kg. However, it still ranks well below the world average of around 24 kg, thereby signifying the high growth potential of the industry.

Oil palm The Budget allocations made in the last two Union Budgets were Rs. 300 crore to organise 60,000 “pulses and oil seed villages” in rain-fed areas during 2010-11 & Rs. 300 crores during 2011-12 to bring 90,000 hectares under oil palm plantations to yield about 3 lakh tonnes of palm oil annually in five years. In the Budget proposals for 2012-2013, no specific outlays were proposed for increased productivity and production of oilseeds --hence of edible oils.

Under the situation of inadequate availability of edible oil from domestic sources, the COOIT has been suggesting the Government to look into the possibilities of cultivating Genetically Modified Oilseeds in the Country to improve oilseed yields and production taking into accounts the relative economic benefits, bio-safety, environmental concerns and other related issues.

In order to promote oilseeds cultivation, it is imperative that the farmers’ interests are protected for their produce.

Considering the prevailing situation, COOIT suggested to the Government raising MSP for Oilseeds by at least 30¬40% and to ensure that derived costs of domestic oils obtained from the domestic oilseeds at appropriate MSP are at par with the landed cost of imported oils. The Government has broadly accepted the proposals of the COOIT and increased the MSP of Kharif oilseed Crops of 20122013 season, i.e. groundnut from Rs. 2700 per quintal to Rs. 3700 per quintal i.e. an increase of 37.04% and sunflower from Rs. 2800 per quintal to Rs. 3700 per quintal i.e. an increase of 32.14%. This is an important achievement of COOIT. Oil exports Export of edible oils, which were free, has been banned w.e.f. 17.3.2008.

However, w.e.f. 1.4.2008 the export restriction has been partially lifted in respect of coconut oil (through Cochin Port) and certain oils produced from minor

Event Report forest origin. Further, vide Notification dated 20.11.2008 issued by Department of Commerce, export of edible oils has been permitted in branded consumer packs of up to 5 kg subject to a ceiling of 10,000 tons per annum. This restricted permission on export of edible oils in branded consumer packs of up to 5 kg subject to a ceiling of 10,000 tons per annum was extended from time to time and the last such restricted permission was up to 31.10.2012. .

Vide Notification No. 9(RE-2012)/20092014, dated 1st August, 2012 issued by Department of Commerce, permission of export of edible oils, even in branded consumer packs up to 5 kg subject to a ceiling of 10,000 tons per annum has been withdrawn without assigning any substantial reason, affecting adversely the interest of oilseed farmers, industry and trade. In addition, virtually there is no basis to believe that the domestic availability of edible oils from Kharif oilseeds in the current year will drastically fall, whereas supply of edible oils from import sources has been estimated to be higher by 10 lakh tons to 94 lakh tons during November, 2011 to October, 2012 from 84 lakh tons during November, 2010 to October, 2011.

The circumstances under which the ban on free exports of edible oils was imposed on 17.03.2008 do no longer exist and have become obsolete. Even then, the additional exports of edible oils if freely allowed are unlikely to cross 0.50 to 0.60 lakh tons per annum which are negligible in comparison to large import of edible oils from 56 lakh tons during 2007-08 (when ban was imposed) to 82 lakh tons during 2008-09, 88 lakh tons during 2009-10, 84 lakh tons during 2010-11 and 941akh tons (estimated) during 2011-12.

The Govt. has now broadly accepted the proposal of the COOIT and vide Notification dated 19.10.2012 lifted the ban and granted permission for export of edible oils in branded consumer packs of up to 5 kgs subject to a ceiling of 20,000 tons for 12 months’ period ending 30.09 .2013.

Taxation The Empowered Committee of State Finance Ministers is in the process of finalising the tax rates under proposed ‘Goods and Service Tax (GST) which will integrate most the existing indirect taxes prevailing in the country. The COOIT has been giving suggestions which include that the sensitive essential items of mass consumption like edible oils, oilseeds and oilmeals should either be wholly exempted or taxed at lowest slab rate at

per with food grains and pulses under the proposed GST and should be the same for all States in the country.

Ministry of Finance has amended the Point of Taxation Rules, 2011 on 27th June, 2011 by which brokers are liable to pay service tax on brokerage immediately on completion of service irrespective of receiving the brokerage/service tax from the parties concerned which means that the service tax is to be paid on the service rendered even though brokerage is not being received by them. As per the trade practice, the brokerage is paid on periodical basis i.e. once in 6 months or once in a year and not paid on contract-to-contract basis or completion of each contract. The COOIT has, therefore, suggested the Government that either Service tax on commission agents and brokers of edible oils/ non-edible oils/ oilcake/de-oiled cake is exempted or permission is granted to make the payment of service tax on receipt basis as being allowed to chartered accountants, company secretaries, lawyers etc. who have been given exemption from these Rules.

In order to check the instances of under-invoicing of edible oil imports, with effect from 3rd August, 2001, the Government started the practice of fixing tariff values oh import of certain edible oils followed by revisions from time to time in accordance with the variations in the international prices of such oils. The Government reduced the import duty to zero on crude edible vegetable oils and to 7.5’% on refined edible vegetable oils w.e.f.1st April, 2008.

There had been no revision of tariff values on edible oils since 15.09.2006.

The COOIT has been requesting the Government to align the Tariff Value for RBD Palmolein, which was not revised since 15.09.2006., with its prevailing International Market Price so as to save the domestic vegetable oil refining/ processing industry from its closure and thus, value-addition within the country.

Aligning tariff value for RBD palmolein Vide Notification No. 66/2012Customs (N.T.) dated 31st July, 2012, the Ministry of Finance, Government of India has accepted request of COOIT and thus, corrected the situation aligning the Tariff Value for RBD Palmolein with its prevailing International Market Price at US$ 1053 per tones. The COOIT is confident that the process of alignment will continue as was in. the past (pre 15.09.2006). The COOIT has congratulated the Government for such favourable and

encouraging steps towards domestic edible oil sector. But the above Notification dated 31st July, 2012 has incidentally not brought back the Tariff value on all other imported processed/refined (RBD) Palm oil and its fractions at par with its prevailing International price.

The COOIT, therefore, requested the Government to look .into the matter and urgently initiate action.

Crude/raw palm oil (of edible grade), in loose or bulk form, intended for further processing / refining to make the oil fit for human consumption, has beenIis being imported into the country under OGL in accordance with the liberalized policy of the Government. Time and again, consignments of imported crude palm oil (of edible grade) were detained at ports on the pre-text of non-conformity of standards in respect of Acid value/ rancidity prescribed for edible palm oil. Under the law of the land, imported crude palm oil as such can not be edible for human consumption and hence, cannot conform to the quality standards prescribed for edible palm oil under the Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011, until and unless the said imported crude palm oil is refined.

The COOIT has, therefore, requested FSSAI and Department of Revenue to take necessary action in the matter so as to resolve such problems/difficulties permanently and to provide relief to such importers in order to maintain smooth and equitable distribution of edible oils for the benefit of the consumers and eliminate possible dislocation of supply of edible oils.

Distribution to subsidized oils In order to provide relief to the poorer section of the society from the rising prices of edible oils, the Central Government had introduced a Scheme for distribution of 10 lakh tons of edible oils in 2008-09 at a subsidy of Rs. 15/- per kg through State Governments/Uts @ 1 litre per ration card per month with an additional subsidy of Rs 10/- per kg from January, 2009 to March, 2009. The scheme has been extended for further period up to 30.9.2012. The COOlT has been suggesting the Government that in order to achieve the objectives of providing relief to the consumers and poorer sections of the society from high prices of edible oils, distribution of subsidized edible oils to them be continued, strengthened and extended to all States/U.T.s. n

December 2012, SAARC OILS & FATS TODAY

13

Reach Over 11000 APEDA Members

Budget

SEA’s Pre-Budget Memorandum

Edible oil & oilseeds deserve to be classified under lower tax rate

T

he production of oilseeds is characterized by low yields and hovering around 280-300 lakh tonnes only.

The oilseeds are grown mainly on marginal and submarginal lands under low “Input usage. Moreover, less than 25% of the oilseed area is irrigated, rendering cultivation vulnerable to weatherrelated yield risk. This has resulted in slow growth in oilseed production and continued low yields. At about 1000 kgs./ha, Indian oilseed yields are about half of the world’s average and less than one-third of leading producers.

To bridge the gap between demand and supply, country is compelled to import a large quantity of edible oils. India has become the largest importer of vegetable oils in the world. During November, 2011 to October, 2012, country import is likely to be about 97/98 lakh tonnes of edible oil worth as Rs. 50,000 crore, a huge burden on exchequer next to crude petroleum products and gold. It is therefore very essential to increase the availability of vegetable oils from domestic resources by encouraging diversification of land from food grains to oilseeds, increasing productivity of oilseeds encourage oil palm cultivation, place oil palm cultivation under plantation crops and fullest exploitation of non traditional domestic sources. This will improve capacity utilisation, increase production & productivity thereby bring the industry to be fully competitive in the international market. The biggest beneficiaries would be the marginal farmers whose entire livelihood depends upon the meager earnings that they get from a small piece of land.

To achieve this objective we suggest the following measures for consideration in Union Budget for 2013-14.

Review and withdraw Export Duty of 10% on Deoiled Rice Bran In the Union Budget of 2011, export duty at 10% was imposed on only deoiled rice bran out of the entire basket of deoiled meals Sr.No

comprising of soya, rapeseed, groundnut, sunflower etc. India exported 56.0 lakh tonnes of various de oiled cakes/meals worth As. 8,500 crore during 2011-12. The share of deoiled rice bran exported during 2011-12 was a meager 1.75 lakh tonnes, worth Rs. 140 crore or around 3 % in terms of quantity and 1.6% in terms of value only.

The entire quantity of deoiled rice bran exported comes from West Bengal. This is because the dairy and poultry industry is not developed in West Bengal, so there is lack of local demand. Also, due to very high freight cost, it is not viable to supply it to dairies in South & West India. Deoiled rice bran from other states is not exported due to good local demand, hence they are not affected by export duty.

Secondly, Government has recently allowed duty free import of oilcakes and oil meals to augment the supply to feed mills which will benefit the dairy / poultry in the country wherever .there is shortage. In view of this, there is no justification in continuing with export duty on Deoiled Rice Bran.

Thirdly, the price of Rice Bran / Deoiled Rice Bran affects the realisation of farmers in West Bengal as the price paid for paddy is less due to lesser realisation on Deoiled Rice Bran.

The export duty has badly hit the solvent extraction plants of West Bengal but it has not .benefited the dairy & poultry industry of the country in any way, so we request you to immediately withdraw the export duty on Deoiled Rice Bran.

Tariff Revision for Refined Palm Oil & Other Oils Ministry of Finance defreezed the tariff value on imported RBD Palmolein vide Notification No. 662-Customs (N.T.) dated 31st July, 2012. However, the tariff value for other Oils was left unchanged. By keeping the old tariff value for other oils has opened the floodgates and huge quantity of RBD Palm Oil has started getting imported into India, now since the tariff value of RBD Palmolein is much higher.

Chapter I heading I Description of goods sub-heading I tariff item

Tariff Value US $ (Per Metric Tonne)

(1)

(2)

1.

1511 1000

Crude Palm Oil 447 (Le. no change)

(3)

(4)

2.

1511 90 10

RBD Palm Oil 476 (Le. no chance)

3.

15119090

Others - Palm Oil 462 (i.e. no change)

4.

1511 1000

Crude Palmolein 481 (Le. no change)

5.

1511 9020

RBD Palomolein

6.

1511 9090

Others - Palmolein 483 (i.e no change)

7.

15071000

Crude Soyabean Oil

893

580 (L no change)

December 2012, SAARC OILS & FATS TODAY

15

Budget Tariff value of RBD Palm Oil is frozen at US$ 476/tonne while current market price is about US$ 840 per M.T. The whole purpose of increasing the tariff value on RBD Palmolein is nullified since RBD Palm Oil is being imported instead, thereby affecting viability of CPO import. This is hurting the capacity utilization of the domestic Refining vegetable oil Industry, which is already suffering from huge capacity and low utilization.

Government ‘!lay consider to revise the tariff value on RBD Palm Oil and other Oils as being done for RBD Palmolein on fortnightly basis to check the undue advantage.

Import of Copra Cake, Palm Kernel Cake & Rice Bran at ‘Nil’ Customs Duty to Increase supply for domestic and export purpose.

Government allowed import of Soybean meal, Groundnut oil cake/meal, Sunflower oil cake/ meal, Canola oil cake/ meal and Mustard oil cake/meal at ‘Nil’ customs duty vide Notification No.47/2012-Customs dated 21st August, 2012 to increase the oilcake/meal availability in the domestic market.

India is importing small quantity of Copra cake from Indonesia and Philippines and also Palm Kernel cake from Indonesia and Malaysia and also there is potential to import Rice Bran from the neighbouring countries like Burma, Bangladesh and Pakistan.

These three items are also raw materials for the solvent extraction industry and their end products are Copra Meal, Palm Kernel Meal and Rice Bran Extractions which are used in feed formulation for poultry, cattle and aqua feeds. Inadvertently these three items are left out from the basket of import of oilcakes.

Exim Code of these three items are: Exim Code

Commodities

2306 50 10

Oil cake and Oil cake meal, expeller variety of coconut or copra

2306 60 00

Oil cake and Oil cake meal, expeller variety of Palm Kernel

2306 20 20 2306 20 90

Rice Bran, Raw and Boiled

Kindly consider to. allow import of the above items at ‘Nil’ duty which will further supplement the raw material for both solvent extraction industry and feed industry and will increase the overall supply of feed ingredients for domestic and surplus can be exported.

Need to Impose Import duty on CPO (10%) and RBD Palmolein and RBD Palm Oil (20%) to Protect Soybean & Mustard seed Farmers Advance Estimate of Crop Production released by Ministry of Agriculture on 24th September, 2012, indicated the kharif oilseeds production would be 18.78 million tonnes compared to 20.59 million tonnes last year, as area under kharif oilseeds has reduced to 17.33 million hectares compared to 17.86 million hectares last year. However, the late rains in Rajasthan and North India have improved the prospects for Rabi oilseeds particularly 16

SAARC OILS & FATS Today, December 2012

Rape-Mustard, provided farmers are encouraged to expand area in Rapeseed-Mustard.

Good rains in Malaysia and Indonesia and since their oil palm plantation entered into high yield cycle, leading to the record production of palm oil in the current year. Malaysian production of Palm Oil is likely to reach 18 million tonnes, while Indonesian may reach record production of 27.5 million tonnes leading to additional production of 3.2 million tonnes over the previous year. The stocks of Palm Oil both in Malaysia and Indonesia are at the highest level of about 6.0 million tonnes and expected record crop of soybean in U.S.A. and South America, putting a great downward pressure on vegetable oil prices in the International market and its impact is already seen in domestic prices as India is heavily dependent on import of palm oil which can be seen from the following table: Soybean harvesting and sowing of Rapeseed just started.

Fall in palm oil price and its impact is quite visible. Soybean seed average price in August was Rs. 43818, now quoted at Rs. 31,000 and with arrival pressure, may go down below Rs. 25,000 per tonne in few days. Farmers may not get a remunerative price for their produce unless some immediate decision is taken by the Government to protect and encourage them to expand area in Rapeseed during ensuing rabi season.

The steep fall in CPO prices International market will also affect the farmers involved in Oil Palm cultivation. Government has allocated Rs. 300 crore in the last budget to encourage large scale cultivation of Oil Palm. Lower realization on the FFB (Fresh Fruit Bunches) caused due to cheaper imported CPO, will discourage the farmers from propagating further, Oil Palm cultivation.

It will be pertinent to note that the Lahari Commission in 2004 had recommended differential duty of 10% to be made applicable between Crude and Refined oils in order to provide level playing field for the domestic refining industry. It is very pertinent that the Government takes cognizance of this development and impose 10% import duty on crude palm oil and 20% on RBD Palmolein and RBD Palm oil with immediate effect to protect the domestic farmers.

Excise Exemption on Food Grade Hexane The Solvent Extraction Industry uses food grade hexane (2710.12) to process ‘oilseeds’ & oil bearing material to recover vegetable oil and residual product called oilmeal is either consumed locally or exported for cattle/poultry feeds. The industry consumes about 120,000 KL of food grade hexane per annum. Earlier, the solvent extraction industry was exempted to pay excise duty on food grade hexane under L6 License up to March 1994. Subsequently, this exemption was withdrawn and excise duty of 32% was levied which was reduced to 16 percent in July, 2004. Currently, 14% excise duty plus 3% education cess is levied on food grade hexane.

The solvent extraction industry is an Agro Food processing and export oriented industry identified as thrust area by the Government of India. Oil meals export is earning over Rs. 8,500 crore of foreign exchange per annum facing stiff competition in the international market could be given some support by restoring exemption on food grade hexane from excise duty. It is,

Budget

Average Prices of Seeds & Oils Registered for Mumbai Market (Price in Rs./MT.) Commodity

Seeds

MSP July’12 Aug.’12 Sept.’12 Rs./ Quintal

22nd Oct.’12

Change

Soybean seed (Indore)

2200 43604 43818 41071 31000

(-) 12604

Rape/Mustard (Rajasthan)

2500 42411 43921 41682 42470

(-) 59

Oils Refined Soybean Oil

75081 75504 75257 67200 (-) 7881 Rapeseed Oil

83954

85996

82743

81500

(-) 2454

Sunflower Oil

69538

71370

71881

67000

(-) 2538

RBD Palmolein

62131

61761

58890

52200

(-) 9931

RBD Palmolein ($)

1036

1004

960

860

(-) 176

Crude Soya Deaum Oil ($)

1260

1276

1280

1200

(-) 60

Crude Sunflower Oil ($)

1226

1273

1291

1225

(-) 1

Imported Oils-CIF IND US$

Source: SEA Data Bank

therefore, suggested that food grade hexane (No. 2710.12) used in the processing of oilseed and oil bearing material, be exempted from the purview of excise duty or reduce excise duty to 8% from the present level of 14%.

Oilseed Development Programme In the 2011-12 Budget, the Finance Minister had allotted Rs. 300 crore for expansion of area under Oil Palm cultivation.

This allocation will have a very little impact to coup up with the demand in oil seeds in order to make the country self-sufficient in edible oil in near future. We, therefore request the Government to allocate Rs. 1,000 crore per year for next three years to achieve visible impact on oilseeds production and productivity.

Grant General Exemption to Vegetable Oil Refining Industry from the excise duty At present refined vegetable oils and vanaspati is liable to nil rate of excise duty, so the by¬products of this industry are not liable for excise duty by virtue of notification No. 89/95-C.E. dated 18th May, 1995. But still excise authorities at some of the places are demanding excise duty on these by-products. To settle this controversy, we suggest that general exemption from excise duty be granted to “Refining of Vegetable oils and manufacture of vanaspati”.

Grant Excise Exemption to encourage value-addition in Rice Bran Oil Processing Refined Rice Bran Oil is used as premium cooking oil in countries like Japan, Korea, China, Taiwan, Thailand & U.S.A. Besides refined rice bran oil, a number of value-added products including, nutraceuticals are produced from the by-products

generated during the refining of rice bran oil.

Although India is the second largest producer of paddy in the world, but the concept of production of value added products is in the infancy stage in the country. It needs -to be encouraged through appropriate policy measures. At present most of these products attract excise duty at 16%. There is an urgent need to grant general exemption from excise to “Refining of Rice Bran Oil & Processing of its By-Products” with a view to encourage value addition in this area.

Edible Oil & Oilseeds - Exempt or Tax at Lower Rate under Proposed GST The Empowered Committee of State Finance Ministers is in the process of finalising the tax rates under proposed ‘Goods and Service Tax (GST) which will integrate most of the existing indirect taxes prevailing in the country. Edible Oil, an essential commodity is used by all strata pf population as a cooking medium across the country. The essential commodities are highly price sensitive and any inflationary impact is immediately & reflected in the Consumer Price Index apart from creating a problem of adulteration in the country. We understand that two tax rates structure is being contemplated under GST i.e. a lower rate for certain essential goods and standard rate for others. The edible oil & oilseeds deserve to be classified under lower rate as this price sensitive essential commodity affects every common man’s pocket. Moreover, edible oil being an agro based product, it impacts the lives of a large number of farmers. We, therefore request the Government that the sensitive essential items of mass consumption like edible oils & oilseeds should be either exempted or taxed at lower rate under the proposed GST structure and should be the same for all States. n

December 2012, SAARC OILS & FATS TODAY

17

Point of View

Industry initiative to augment oilseeds productivity In a significant gesture to augment the production of oilseeds and improve the supply of edible oils in the country, members of Solvent Extractors Association of India have taken a new initiative. The members have, on a call by the Association, taken keen interest in supplying high-yielding certified seeds to the rapeseed-mustard farmers, free of cost.

Speaking at SEA’s Awards presentation function at the end of the annual general meeting, outgoing President of the association Sushil Goenka said the variety chosen by association members for plantation in the fields is hybrid GM-3 rapeseed. “Slowly but surely such practice will create a green revolution in their own region.”

In his address, Goenka made a few suggestions to the policy makers to increase oilseeds production in the country. He said increasing the level of productivity from the present low level of 1000 kg per hectare to 1500 kg in the next five years – 100 kg increase per year – would help considerably in checking the trend of rising edible oil imports. For this purpose he stressed on the need to popularize the use of good planting material by incentivising research institutions and commercial organizations. Besides, he said, the programme to encourage oil palm plantations needs to be strengthened. The oil yield from one hectare of palm plantation is significantly higher than the yield per hectare of other oilseed crops.

Prof. K.V. Thomas, Minister for Consumer Affairs, Food & Public Distribution, was the Chief Guest at this function, while Dr. D. Bhalla, Jt. Secretary, Dept. of Food & Public Distribution, and. Ajit Chavan, Dy. Secretary, Ministry of Commerce were guests of honour.

Prominent among those present were Rasheed Janmohammed, Nawabzada Shahzad Alikhan, Najib Balagamwala and other members of Pakistan Delegation, Dorab Mistry, Director of Godrej International Ltd, and other dignitaries from India and abroad.

Here are extracts from Sushil Goenka’s address.

A

t the outset, I would like to thank profusely, our Minister for Consumer Affairs and Food for defreezing the tariff value on RBD Palmolein with effect from 1st August this year. The entire vegetable oil refining industry is grateful and feels indebted to the government for taking proactive steps in correcting the tariff value on RBD palmolein to be in line with current market prices.

However, as feared by the industry, the import of RBD Palm Oil has since commenced into the country due to non-revision of its tariff value. Though presently small, this is likely to increase in the months to come into larger 18

volumes thereby hurting the domestic refining industry. It would tend to nullify the corrective measure taken by the Government of revising the Tariff value on RBD palmoilen. We urge the government to kindly recommend revision of the tariff value on RBD palm oil and other oils also, to bring it in line with current market price.

Let me take this opportunity to apprise you of certain critical issues affecting the Vegetable Oil Industry.

Sushil Goenka

SAARC OILS & FATS Today, December 2012

Oilseed Production and Its Impact on Food Security The production of essential food items has failed to keep pace with the increasing demand, resulting in a surge in the prices

Point of View

of these products. It is a matter of deep concern that the agriculture sector, on which the livelihood of a majority (nearly 600 million) of people depends, has not been performing well. The annual average growth in agriculture & allied activities has been a modest 2.2 per cent for over last ten years.

As production trails the growth in demand, India has become a huge importer of a wide variety of food products including vegetable oils and pulses, and occasionally wheat and even sugar. Our Association’s specific and grave concern is about the stagnation in the oilseed production, which does not appear to be on the top of the Government’s agenda. Considering the rising income and demographical pressure, India’s vegetable oil consumption is expected to rise much faster than the domestic production growth. This will lead to a continued increase of import volumes from the present levels. In other words, our import dependence is likely to worsen in the coming years.

Specific suggestions I would like to make some specific suggestions to the policy makers to increase production of oilseeds thereby improving availability of edible oils in the country.

First and foremost is the need to give priority in all policy initiatives to increase the productivity of oilseeds. At present,

our farm productivity is at a miserable low of just 1000/1100 kg per hectare which is about half that of the world average and one third of the three highest in the world.

If we are able to increase the oilseed productivity by just 100 kg per hectare per year, for the next five years, i.e. increase oilseed productivity from 1000 kg to 1500 kg per hectare, we will be able to meet the additional demand in consumption,

I urge the processors of oil seeds and oil cakes to take up oil seed cultivation by creating model farms following good farming practices.

The high yield obtained from such model farms can be showcased to the farmers to demonstrate the benefits of using good planting material and farm practices.

thereby keeping in check the rising import of vegetable oils.

In this regard, we are happy to know about PMO’s initiative to bring about a second phase of green revolution with special focus on oilseeds and pulses.

Planting material There is a major shortage of good quality planting material. In the absence of certified planting material, the farmer is forced to use either spurious seeds or recycle the low yielding oilseed produced by him. This is one of the major reasons for low productivity. Research institutes and commercial organizations should be incentivised to spread widely the availability of good quality certified seeds.

I am happy to mention that our members, at the behest of the Association, have taken keen interest to provide Rapeseed/mustard seed farmers, the certified seeds of hybrid GM-3 variety of Rapeseed, free of cost, for plantation in their fields. Slowly but surely such practice will create a green revolution in their own region.

Oil palm plantation Oil palm is today, the richest source of vegetable oil in the world. Palm plantation gives a yield of about 4 tonnes of vegetable oil per hectare as compared to less than half a tonne per hectare of oil from other oilseeds. The Government of

December 2012, SAARC OILS & FATS TODAY

19

Point of View India has identified 10 lakh hectares of land as suitable for oil palm cultivation.

As against this, hardly 200,000 hectares is presently under oil palm cultivation.

The area under oil palm cultivation is not expanding at the desired pace due to various reasons, one of them being nondeclaration of oil palm as a ‘plantation crop’. If this were done, it would attract both foreign & domestic private companies to make larger investments and introduce the much needed good farming practices, which will give a big boost to the entire oil palm industry. This would go a long way in bridging the demand-supply gap of edible oil in our country.

I would now like to make some suggestions to the government on policy changes that are required.

Sourcing of Refined Oil for PDS from Domestic Refineries: It is a known fact that huge refining capacities have been set up at various ports across India. This building up of capacities is justified, since value addition should happen in India for edible oils consumed within the country.

The Government Agencies / PSU’s are importing Refined Palmolein for PDS purposes. In the process the refining industry outside India are prospering at the cost of underutilization of the capacity of the Indian Refining Industry.

Whilst appreciating the laudable cause of the Public distribution system, it is our earnest request that the Government agencies sourcing Palmolein on behalf of State Governments should be allowed to buy Refined Palmolein from local refineries too.

Refined Palmolein for PDS can be procured through a global tendering process wherein Indian refineries are also allowed to participate. This will enable the government agencies to get the best possible offers from the domestic and overseas producers. By doing so, it will help in improving the capacity utilization of the domestic refining industry.

Ban on Exports of Edible Oils in Consumer Packs The Government had banned exports of all edible vegetable oils in March, 2008, but latter had allowed export of 10,000 tonnes.

20

of edible oils in consumer packs which enabled the industry to serve the niche markets of Indian expatriates. However recently, the DGFT has abruptly stopped the export of edible oils in consumer packs w.e.f 1st August 2012, informally stating that the limit of 10,000 tonnes had been reached. The Association would like to request the Hon’ble Minister to consider allowing export of an additional quantity of 10,000 tonnes of edible oils in consumer packs for the period 1st August to 31st October, 2012 and raise the quota for exports to 25,000 tonnes for next year.

As both crude and refined oils are freely importable under OGL, this will, in no manner, affect the overall availability of oils for domestic use.

Import of Oilcake of Copra, Palm Kernel and Rice Bran I would like to compliment the Government for allowing import of oilcakes & meals of Groundnut, Sunflower, Canola & Mustard and also Soybean meal at ‘Nil’ import duty to augment the supply of raw materials for the feed industry, thereby keeping in check their prices. India is currently importing small quantity of copra cake from Indonesia and Philippines, Palm Kernel cake from Indonesia and Malaysia and also has the potential to import Rice Bran from neighbouring countries like Myanmar, Bangladesh and Pakistan. These products are also used as raw material for the solvent extraction industry and their end products i.e. copra meal, Palm Kernel meal and Rice Bran Extractions are raw material for the feed industry.

Inadvertently, these three items are left out in the Notification. I request the government to consider allowing the import of these items at nil duty to increase the overall supply of feed ingredients.

Multiple Blending of Vegetable Oils As per the Prevention of Food Adulteration Act (PFA) and currently the Food Safety and Standards Regulations 2011, blending of only two oils are permitted. It has been scientifically proven that from health point of view, no single cooking oil can meet the ideal ratio of MUFA/PUFA/SFA and Omega3/Omega6 requirement. Most of the advanced countries encourage the blending of multiple oils to overcome

SAARC OILS & FATS Today, December 2012

the limitations of any ‘one’ cooking oil. Unfortunately in India, the current stipulation restricts the blending of more than two oils. Our Association has suggested that the blending of more than two refined vegetable oil be permitted in order to meet the dietary nutritional requirement. The Association has once again represented to Food Safety Standards Authority of India (FSSAI) to permit the blending of multiple vegetable oils. In the interest of the consumers, I request the Hon’ble Minister to recommend to FSSAI to consider allowing the blending of multiple oils.

Awards Now coming to the main event of the Award Function, I congratulate each of the Processors for their meritorious performance despite the industry passing through very challenging times. I also compliment the exporters who have worked hard to increase India’s share of deolied meals in the International market, that too under stiff competition. I take this opportunity to make a fervent appeal to all the members to strive to increase exports to higher levels and also raise production of vegetable oils in the overall interest of our country’s economy and food security.

Model farms I also urge the processors of oil seeds and oil cakes to take up oil seed cultivation by creating model farms following good farming practices. The high yield obtained from such model farms can be showcased to the farmers to demonstrate the benefits of using good planting material and farm practices.

I firmly believe that achieving higher oil seed productivity through good farming practices should be our prime most concern not only for food security and providing more raw material for the industry, but also for the welfare of the marginal farmers.

Let us appreciate that the livelihood of a marginal farmer depends on the quantum of his produce and through our initiatives, if we can improve his productivity, we are actually helping him in improving the quality of life of his family. I therefore appeal to one and all to make this a part of our business model, an inseparable part of our social responsibility. n

AgriBusiness & Food Industry w December 2011

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Olive Oil

Rajasthan grows Olive with Israel’s help — Srikanta Tripathy

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ast swathes of this arid state Rajasthan are shifting to the cultivation of the Mediterranean fruit. Besides giving an alternative livelihood to farmers, it is also more lucrative than wheat, cotton and bajra.

The small olive fruit has spawned a revolution in vast swathes of the state and given a new lease of life to farmers who were struggling to make ends meet with wheat, cotton and bajra.

Pilot projects on olive cultivation have been on for the last four years in seven districts of the state. Khetaram Phagoria, a farmer from Sriganganagar district, says, “I have pinned my last hopes on olive.

Wheat has taken me nowhere as I can just about make ends meet, while pests have almost consumed my cotton crop this year. Yields are declining but labour costs have surged.”

And though the prices of wheat have risen somewhat, the gains are too meager.

Also, with middlemen taking a cut at every level of the value chain, Khetaram and others like him are left with little to

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sustain themselves. Desperate times call for desperate measures and that’s how he decided to try his luck with olive farming.

He’s already diverted one hectare out 10 for its cultivation.

It wasn’t an easy decision. Olive trees, after all, take four years to bear fruit.

However, their productive age lasts for 70 years and they can survive more than 500 years. It was in 2007 that Rajasthan Olive Cultivation Ltd (ROCL) planted olive trees in seven plantations in seven different agro-climatic zones spread over 182 hectares in the state. The fruits of that labour were borne this year when olives were harvested and led to hope of an alternative type of farming.

A recent sample extraction found that oil content in the fruit grown in Rajasthan was 14.6%, more than the average for a tree that’s four years old. After the success of these pilot projects, ROCL has now opened the crop for commercial cultivation. ROCL, incidentally, is a joint venture between Rajasthan State Agriculture Board, Plastro Plasson of Pune and Israel’s Indolive Ltd. “For these crops to be financially

SAARC OILS & FATS Today, December 2012

viable, the fruits should have about 12% oil content. As the tree matures, this percentage goes up. But seeing the higher oil content in the first crop, ROCL now plans to have 5,000 hectares under olive cultivation within three years,” says Yogesh Verma, manager, ROCL. A cluster approach has been adopted for efficient monitoring and managing the crop. Accordingly, commercial cultivation of olive has now been opened for farmers in Bikaner, Hanumangarh, Nagaur and Sriganganagar where pilot projects have shown promise. Already, 40 hectares have been approved and more farmers are queuing up, says Verma. An olive extraction machine worth Rs 3 crore has been bought by ROCL and it will be set up in Bikaner soon.

What’s more, it could fetch the farmers a handsome remuneration. While they earn about Rs 1 lakh per hectare annually from traditional crops like wheat and bajra, olive cultivation could fetch them double the amount, says Verma. The cost of planting olives is estimated at Rs

Olive Oil 60,000 a hectare, with the government giving a subsidy of Rs 40,000 and an annual fertilizer grant of Rs 3,000 for three years. ROCL has trained professionals to monitor and guide farmers.

There is a groundswell of expectations riding on the success of these projects as weary farmers have been battling harsh summers and water-scarcity here for decades. Although olives are grown in mild climatic conditions, Rajasthan’s cold spells hold the key to the survival of these trees, which require less water and are strong enough to weather scorching summers.

Verma says that Rajasthan shares similar climatic conditions with Israel, which has been able to grow olives successfully. Israeli technology, which uses drip-irrigation and sensors, has been at the heart of this Rs 6 crore experiment. While drip-irrigation uses water effectively, sensors show what and how much nutrient and fertilizer the trees require.

After seeing the success of olive cultivation in Rajasthan, Haryana, Punjab and Orissa too have shown an interest in it. Last month, the Punjab approved a pilot project for olive cultivation.

This could also change the health habits of people. Olive oil has many health benefits and is widely used in the Mediterranean for cooking. It contains high monounsaturated fats and antioxidants which help in bringing down bad cholesterol and prevents cardiovascular problems. While its use is still confined to the health-conscious affluent minority in India, the increasing purchasing power of people is slowly leading to more users.

But the price of olive oil in India is four times higher than traditional oils. Extra virgin olive oil used for cooking costs about Rs 800 a litre and olive pomace oil, Rs 400. But if it is produced indigenously, the prices could well come down.

India currently imports all its olive oil from leading olive producing nations such as Spain, Italy and Greece. “Olive oil consumption is growing fast in India and imports have surged from 4,300 metric tonne in 2010-11 to 7,500 tonne in 2011-12.

It is projected that in the current financial year, the imports will touch 12,000 metric tonnes,” says V N Dalmiya, president of Indian Olive Association (IOA).”

Courtesy: TOI

Olive oil imports expected to rise by 45% in FY’13

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ndia’s olive oil imports are expected to rise by 45 per cent to 10,000 tonnes this fiscal on the back of rising consumption in metro cities like Delhi and Hyderabad, a top Indian Olive Association official said.

The country had imported 6,900 tonnes of olive oil, 80 per cent of which is sourced from Spain and Italy, in the 2011-12 fiscal.

“In April-June 2012, olive oil imports were 2,300 tonnes and Indian Olive Association (IOA) is optimistic that total imports during the year would cross 10,000 tonnes,” IOA President V N Dalmia said.

Table olive imports were broadly stable in 2011, but are showing rapid growth in 2012. Imports were 637 tonnes in 2010, 625 tonnes in 2011 but have already touched 616 tonnes during JanuaryAugust 2012, he added.

On the increasing consumption of olive oil, Dalmia said the main demand is from North India. “Broadly speaking, North India is the largest consumer of olive oil and the split is 50:50 between Delhi and the rest of North India. It is followed

by South India where Hyderabad is the biggest consumer followed by Bangalore and Chennai. In West India, Mumbai is the largest consumer,” he added.

On the challenges being faced by the industry, Dalmia, who is also the Chairman of Dalmia Continental, said

that the main challenge faced by the industry is the outmoded trade standards in use by Food Safety and Standards Authority of India (FSSAI).

“Despite the passage of four years since the issue was brought to FSSAI’s notice, Indian standards have still not been aligned with international standards such as CODEX or those of the EU or the International Olive Council,” he said.

That apart, table olive consumption in India is restricted by high import duty rates which, at 44 to 51 per cent, are among the highest in the world despite the fact that there is no domestic production of table olives, he added.

India largely imports olive oil from Spain, Italy and Turkey. There is some import from other olive oil producing nations like Greece, Syria and Tunisia also.

According to industry estimates, in value terms, the size of the olive oil market in India, which is one of the world’s largest vegetable oil consumer, is around Rs 180 crore and can grow up to Rs 400 crore by 2013.

The top 3 brands in the domestic market, which together control more than 60 per cent of retail sales, are Leonardo, Figaro and Borges (including Cesar). Some other prominent brands include RS, Bertolli, Del Monte, Fragata, Colavita and Athena.

December 2012, SAARC OILS & FATS TODAY

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Dairy

Amul’s new-age farmers — Harish Damodaran

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or decades, from the time of Tribhuvandas Patel and Verghese Kurien, Amul has been synonymous with the small farmer or landless labourer deriving subsistence income from selling a few litres of milk to the village cooperative society.

In 2011-12, the dairy unions affiliated to Amul — that is, Gujarat Cooperative Milk Marketing Federation (GCMMF) — procured an average of 97 lakh litres of milk daily from nearly 32 lakh producermembers. Assuming only three-fourths to be active pourers, it would work out to just 4 litres each.

But this picture of a cooperative exclusively for poor producers has been undergoing a subtle change in recent times. A small, yet steadily rising, share of milk that the Amul unions are collecting is 24

Harish Damodaran

coming now from farmers keeping ten or more milch animals.

Such dairy farms, considered ‘large’

by Amul standards and known as tabelas, number over 4,600. Of them, an estimated 4,000 have individual herd sizes of 10-25 cows or buffaloes, while 550 are in the 2650 and 54 in the 51-75 animals range. Even bigger are the 14 producers (7 pouring to the Kheda union, 4 to Mehsana, 2 to Surat and one to Banaskantha) keeping 76 to 100 animals, and 11 who have more than 100 (7 in Kheda and 4 in Mehsana).

MILK IN BULK The above tabelas, put together, are currently reckoned to account for about 85,500 animals. If 50,000 or so are ‘in milk’ at any given point, producing 10 litres each, Amul’s procurement from these farms would average 5 lakh litres a day.

SAARC OILS & FATS Today, December 2012

That could see a significant increase over time.

Take Shirishbhai Vithalbhai Patel from Chikhodra, 4 km from Amul’s Anand dairy. This 47-year-old farmer has 200 cows and 60 heifers, and sells 1,800 litres daily.

His animals are entirely machinemilked at a parlour, operating from 5:30 to 8:30 in the morning and likewise in the evening. The parlour consists of 12 ‘Vansun’ milking machines, from where the milk is conveyed via pipelines to a 3,100-litre ‘Serap’ bulk cooler that chills it to 4 degrees Celsius.

Shirishbhai is formally a member of the Chikhodra village society, but that is basically for accounting purposes: The milk from his bulk cooler is lifted directly by the Amul dairy tanker.

Shirishbhai started off in 1982 by

Dairy selling 90 litres daily from 15 buffaloes, which he raised to 60 over the next five years. In 1990, he bought 15 cross-bred Holsteins, which was the precursor to dispensing with buffaloes totally.

“Buffaloes take 45 months for their first calving, whereas it only 28-30 in cows. Although buffalo milk fetches a better price due to higher fat content, production falls heavily in summers and you cannot run a large dairy farm with them”, he observes.

Shirishbhai has invested almost Rs 16 lakh in the parlour: Rs 7.2 lakh on the bulk cooler, Rs 3.6 lakh on milking machines, Rs 3 lakh on basic construction and Rs 1.8 lakh on pipelines.

Where the money is bonus “I now get paid Rs 20.8 a litre. Half of it goes to meet cattlefeed costs, while fodder (20 per cent), labour (15 per cent), electricity (5 per cent) and interest-cumdepreciation (10 per cent) take up the rest.

The profit I earn is from the bonus that the society distributes out of its surpluses after the year-end settlement of accounts with the union. That comes to roughly 18 per cent or an additional Rs 3.6”, he adds.

According to Girishbhai Jethabhai Patel from Davalpura in Petlad taluka of Anand, the viability of large-scale dairying depends largely on managing labour and fodder costs. Besides, there is electricity.

The high horsepower motors in milking parlours require three-phase supply, which is available only at commercial rates of Rs 8-plus and not at Rs 3-3.5 a unit for farm use.

Girishbhai too originally reared buffaloes, before shifting to cows from 2006. Today, he supplies up to 2,200 litres daily from a herd of 210 cows and 100 heifers. The 38-year-old has also installed an integrated ‘DeLaval’ parlour costing Rs 14 lakh, capable of milking 12 animals at a time over 5-10 minutes.

Both Shirishbhai and Girishbhai own land on which they exclusively grow green fodder — jowar and bajra after monsoon, and maize and lucerne during winter — harvested after 50-60 days. “My 25 acres generates 75 per cent of my fodder requirement. The balance I have to purchase at Rs 5/kg”, explains Girishbhai.

The feeding, cleaning and milking of animals is done mainly by womenfolk...

Milking machines are one way to reduce drudgery and free-up their labour for other purposes.

— R. S. Sodhi M.D. GCMMF

THE PATEL COMETH HOME But not everyone has so much land.

Shirishbhai’s 20 acres have come from his grandfather, Bhikhabhai Lallubhai Patel.

“He had only two sons — my father, Vithalbhai, and uncle, Ravjibhai. My brother, Ravindrabhai owns a convenience store in South Carolina, while my uncle’s one son has the same at Chicago and other son a motel in New Jersey. So, this land is mine”, he says in a matter-of-fact tone.

Shirishbhai engages 13 workers in his dairy farm and another 15 for fodder cultivation. Tabela owners typically entrust the job of labour management to amukadam (contractor).

Girishbhai’s mukadam, Musafir Yadav, is from Bihar, who gets Rs 5,500 per month along with a Rs 750 commission for every labourer he brings.

The labourers themselves are paid Rs 5,500 a month plus a litre of milk daily.

Yadav being around helps Girishbhai to also attend to his other businesses of a roadside restaurant and a banquet hall.

“Milk gives only 18-20 per cent return, but it is safe since there is somebody (Amul) to take care of marketing”, Girishbhai points out. That explains why even some expats — especially those of Patidar stock — are getting attracted to it.

One such man is Sandip Kantibhai Patel, who left India in 1991 and went on to establish two convenience stores in New Jersey, now being managed by his brother, Nitin. Sandip returned early this year and has just bought seven cows, with plans to increase it to 100.

“I have three acres of my own and will lease in more to grow fodder. I am already selling 80 litres daily to the Kavitha milk society (in Anand’s Borsad taluka)”, informs Sandip.

SMALL TENDS TO LARGE But will not the likes of Shirishbhai, Girishbhai and Sandip compromise the character of Amul? “Not really. The tabelas and small producers can coexist”, asserts R.S. Sodhi, Managing Director, GCMMF. Sodhi terms the tabelas as “secondgeneration” producers, who approach dairying more as a business than as subsistence activity. “I see nothing wrong in that. The small producer will continue to remain our mainstay. But even they, with time, may graduate to 10-12 animals that are machine-milked”, he notes.

GCMMF is, in fact, consciously encouraging this transition, with some unions extending up to 50 per cent subsidy on milking machines. Already, some 4,000 machines — normally costing Rs 50,000 for a standard double-bucket system — have been distributed through this route.

“The feeding, cleaning and milking of animals is done mainly by womenfolk.

With education, they would be not as willing to start milking even before sunrise. Milking machines are one way to reduce drudgery and free-up their labour for other purposes”, avers Sodhi.

Courtesy: Hindu Businessline

December 2012, SAARC OILS & FATS TODAY

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News

There is a limitation in milk processing capacity, says Vipul Chaudhury

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ipul Chaudhury, who was unanimously elected as Chairman of Gujarat Cooperative Milk Marketing Federation (GCMMF), in August, is unleashing several initiatives and plans to augment milk procurement and supply apart from bringing other cooperatives on a single platform. The head of Rs 11,670-crore turnover entity speaks on key issues concerning Amul and dairy industry. Excerpts: Strengthening the Amul brand The Amul model is a three-tire structure where village societies procure milk, district-level dairies process it and state-level federations market it. It is time to create a fourth level where the Amul group coordinates and takes care of surplus milk of other state milk cooperatives.

Today, GCMMF enjoys a strong retail network nationally but lacks procurement and processing infrastructure. The group can form alliances with other state cooperatives to reduce competition among us, the state co-operatives. It will benefit farmers, dairy cooperatives and keep private players such as Britanniaand Nestle away.

But private players are providing varied services to farmers such as milk collection, electronic weighing and coolers apart from remunerative rates.

It’s not service but a concept. Why don’t they come here (to Gujarat) and run the shop? We are the taste of India, procuring 130 lakh litres milk daily as on date. There is a huge potential that we hold.

Alliance with cooperatives We are yet to work it out but the Amul group is open to any kind of model.

Nevertheless, there will be no compromise 26

Govt asks Amul to submit DMS takeover proposal

on Amul brand and quality. Amul is a common brand for all Gujarat-based cooperative dairies and the same model can be adopted nationally in partnership with other state federations. We have already conveyed our intentions to state federations of Rajasthan (Saras), Madhya Pradesh (Sanchi, Shakti and Sneha) and Haryana (Vita).

We have to take certain initiatives to strengthen the cooperatives. We are looking ahead for encouragement and co-operation from National Dairy Development Board (NDDB). We expect NDDB to promote the co-operative model or finance our initiatives. At GCMMF, board members have unanimously agreed to pay tribute to Dr Kurien by expanding the Amul model at the national level.

We have a huge potential but there is limitation in processing capacity.

Augmenting milk processing capacity The Amul group, consisting of 17 district unions in Gujarat, has a capacity to process close to 140 lakh litre of milk a day. We need to expand it to 200 lakh litre in the next couple of years at an investment of close to Rs 600 crore.

We are a farmer organisation and do not have this kind of reserve. To make matters worse, our expansion projects are not gettting the priority sector lending tag from NDDB and other institutions.

The Amul group will have to make this investment from the funds to be raised at market rate.

SAARC OILS & FATS Today, December 2012

he Government has asked the Gujarat Cooperative Milk Marketing Federation (GCMMF), which owns the Amul brand, to submit a detailed proposal for taking over operations of loss-making Delhi Milk Scheme (DMS).

DMS, which comes under the Agriculture Ministry, has been running losses for the past several years. The Ministry had moved a Cabinet proposal for corporatisation of DMS. “The Chairman of GCMMF has written to the Government proposing to take up the operation of DMS. However, GCMMF has been requested to submit a comprehensive and detailed proposal,” Agriculture Minister Sharad Pawar said in a written reply to the Lok Sabha.

The co-operative has to submit the proposal giving details of proposed valuation and monetisation of DMS, pending legal and liabilities, infusion of equity and terms of engagement of employees among others, he added.

Amul is keen on signing a long-term lease arrangement with DMS because it feels buying assets worth hundreds of crores of rupees would not be viable.

It also thinks the issues related to employees need to be addressed, too.

Besides Amul, Bihar State Cooperative Milk Producers’ Federation (COMFED) that owns the Sudha brand had also showed interest in acquiring processing and distribution units of the DMS on rental basis.

The DMS has milk production and packaging capacity of five lakh litres a day, besides a network of 1,298 outlets in the NCR. The Government-owned dairy unit has 800 employees, but the milk production is only about 2.5 lakh litres a day.

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News

Extractors not deterred by poor sowing of mustard

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he sowing of mustard oilseed, the majorrabi oilseed crop in the country, has begun on a sluggish note. Mustard seed acreage is still down by 4.35 lakh hectares as of November 15, 2012 as against last year. Oilseed acreage in Rajasthan, the largest producer of mustard oilseed in the country, is hovering around 19.58 lakh hectare as compared to 23.26 lakhhectare.

Oilseed acreage in Uttar Pradesh is also on the lower side. As against 6.11 lakh hectare sown till November 15 last year, sowing this year has been around 4.8 lakh hectare in Uttar Pradesh. The harvesting of the latekharif crop has pushed back oilseed sowing in parts of Gujarat.

Despite a lower acreage in the first phase of sowing, the oil extraction industry is expecting a 20% rise in rabi output this year. Mustard output is pegged at 6.5 million tonne against last year’s 5.5 million tonne as a late revival in monsoon has created a conducive atmosphere for rabi crops.

“Mustard sowing area will be higher this year as the moisture level is good.

Maharashtra, Gujarat and Rajasthan will benefit from the late monsoon as far as the rabi oilseed production is concerned,” said Angshu Mallick, COO, Adani Wilmar, which owns the Fortune brand.

Added BV Mehta, executive director, Solvent Extractors Association of India: “Farmers are waiting for the temperature to come down. Sowing will pick up in the next two weeks and will be completed by the end of November or early December.”

The sowing of oilseeds in Andhra Pradesh, Haryana and Karnataka has picked up and already surpassed last year’s acreage.

Mustard oil prices are expected not to go up in the next three months. “Demand for mustard oil will be higher between November 15 and January 15. The stock position is not much but we do not see a sudden price rise in mustard now. The ex-Alwar price of mustard is hovering around Rs 850 to Rs 860 per 10 kilo, which is a good price in the present scenario. If mustard acreage increases, it will push

down prices,” said Mallick.

However, there is still an apprehension whether mustard oil acreage will increase or not. “A crash in palm oil prices globally has pulled down prices of the edible oil complex. This may discourage farmers to bring larger areas under oilseed sowing,” said Mehta. Incidentally, crude palm oil price have climbed down to $760 per tonne from $1,000 per tonne two months ago.

Mehta said the import of oil may go up in the present oil year (November 1, 2012-October 2013) as consumption in India is rising by 5%-6% annually. In the 2011-12 oil year, India imported 100 lakh tonne of edible oil, up from 86 lakh tonne in the previous year.

Vegetable oil imports touch 10 MT mark

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egetable oil imports increased 18 per cent to 10.2 million tonnes (mt) in the oil year ended October. Besides lower prices, the demand was largely driven by sharp fall in oilseed output and rise in demand.

The overall vegetable oil production was down by 0.7 mt due to reduced oilseed crop. The domestic vegetable oil consumption increased by 0.7-0.8 million tonnes due to increase in per capita consumption and population growth.

In October, the country’s vegetable oil imports were the highest in last 12 months at 1,036,107 tonnes. It was up 16 per cent compared with last year. Edible oil imports were up 16 per cent at 1,018,113 tonnes (877,799 tonnes), while that of nonedible oil increased 11 per cent at 877,799 tonnes (16,246 tonnes) in October.

INVENTORY Closing stock of imported vegetable oil as of last month end increased by 0.2 mt to 1.57 mt. As of November 1, edible oil inventory at various ports is estimated at 0.92 mt and about 0.65 mt in pipelines.

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consumption increased by about 1.25 mt, leading to higher import during the year.

In oil year 2011-12, import of refined oil was up 46 per cent at 1.57 mt (1.08 mt).

Import of crude oil was also up 15 per cent at 8.40 mt (7.28 mt).

The stock at ports includes crude palm oil 600,000 tonnes, RBD palmolein 95,000 tonnes, degummed soya oil 125,000 tonnes, crude sunflower oil 85,000 tonnes and canola rape oil 15,000 tonnes.

RISE IN OFFTAKE Malaysia and Indonesia pushed the palm oil export into India during the year to reduce their inventory. Import of RBD palmolein from Indonesia increased substantially during the year due to inverted export duty structure. The overall

SAARC OILS & FATS Today, December 2012

EDIBLE OIL IMPORTS Palm oil imports increased to 7.7 mt compared with 6.5 mt during the last year and soft oil import also increased to 2.3 mt, consisting of 1.07 mt of soya oil, 1.13 mt sunflower oil, 91,000 tonnes of rape oil and 7,000 tonnes of other soft oils compared with 1.82 mt during the same period last year. Non-edible oil imports in 2011-12 were down 29 per cent at 0.21 mt (0.29 mt) due to increased domestic production.

Read Online SAARC Oils & Fats Today www.MediaToday.in

News

Gemini Edibles aims Rs 50-cr expansion plan

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emini Edibles and Fats India Private Limited, a vegetable oil refiners and trading company, is planning to spend Rs 50 crore on capacity expansion and modernisation of its refineries at Kakinada and Krishnapatnam ports.

Post-expansion, the refinery capacity of the company would grow to 1,300 tonnes a day from 1,100 tonnes a day. This is expected to contribute an additional Rs 300 crore to the turnover.

“We are planning to double the capacity at Kakinada refinery to 400 tonnes a day by middle of next calendar year. This will require an expenditure of Rs 25 crore. At Krishnapatnam, we are planning to automate the processes and install some power capacity,” Pradeep Chowdhry, Managing Director, said.

The company would meet one-third of the capex budget through internal accruals, with rest coming from banks

as term loans. The company, which registered a turnover of Rs 1,350 crore in 2011-12, is hoping to cross the Rs 1,500crore in the next financial year.

“We have prepared a plan for the expansion plan. We will be sending it to the board for approval. We are planning to complete the expansion plan in the next 6-8 months,” he said.

The three-year-old firm invested Rs 135 crore to build the Krishnapatnam plant with a capacity of 800 tonnes a day and acquired the 200-tonne capacity plant at Kakinada.

COMMODITY BIZ “We are running on full capacity now.

Seventy per cent of turnover comes from brands and speciality products, with the resting coming from loose and bulk oil.

Our immediate target is to reduce the lowmargin commodity business. This will

(From left) Sumant Kumar Razdan, DirectorOperations; Pradeep Chowdhry, MD, & P. Chandrasekhara Reddy, VP-Sales & Marketing, Gemini Edibles and Fats displaying the HACCP and FSSC 22000 certification for their Krishnapatnam plant.

help us shore up our margins,” he said.

He said the company received HACCP (Hazard Analysis and Critical Control Points) and FSSC 22000 certifications for its Krishnapatnam plant. These certificates conform to global safety standards.

Kamani oil to launch rice bran oil in more states

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amani Oil Industries Pvt Ltd, which has launched its Riso brand of rice bran oil in three cities in Maharashtra, including Pune, is aiming at a 25 per cent share in this segment over the next twothree years.

“After Maharashtra, we will launch in Gujarat and Rajasthan where we already have a distribution network,” Rajiv Behere, Assistant Vice-President, Kamani Oils says. The oil will be rolled out across the country over the next two or three

years, he adds.

The rice bran oil market in India is pegged at around 9 lakh tonne per annum, of which the consumer segment is 7,500 tonne and growing at 15-20 per cent per annum. Kamani has invested Rs 20 crore in setting up current capacity of 1,200 tonnes per annum at its existing Khopoli facility and to market the product.

“We can take this up to 3,600 tonnes, and will enhance this with further investment as demand grows,” Behere

says. “In the western region, the total market size for rice bran oil in the consumer segment is about 700 tonnes. Of this, we expect to capture 25 per cent in the next two to three years,” he adds.

Rice Bran Oil is value-added cooking oil extracted from rice bran, a by-product of the rice milling industry and being rich in Oryzanol, a natural anti-oxidant, is pegged as amongst the healthiest edible oils.

Milk co-op asks farmers to focus on green grass cultivation

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armers engaged in dairy farming should focus on green grass cultivation, according to an office-bearer of milk cooperative union.

Speaking at the 59th cooperative week celebration in Mangalore on November 16, Raviraj Hegde, President of the Dakshina Kannada Milk Producers’ Cooperative Union Ltd, said that dairying in Dakshina Kannada and Udupi districts is heavily dependent on fodder. Drought in several parts of the state has led to the increase in the prices of fodder.

Following this, the cost of milk

production is considerably high in these two districts as the demand for fodder is two times more than the rest of the state.

In such a situation, farmers should focus on green grass cultivation, he said.

The Dakshina Kannada Milk Producers’ Cooperative Union Ltd offers Rs 24 a litre to farmers for the milk procured from them. The procurement price of milk in Dakshina Kannada and Udupi districts is almost 85 per cent of the selling price.

This is one of the best prices offered to the farmers in the State, he said.

The total production of the milk in

these two districts is 2.35 lakh litres a day.

However, the cooperative sells more than 3 lkah litres a day of milk, he said.

B.V. Satyanarayana, Executive Director of the milk union, said that the cooperative has set a turnover target of Rs 435 crore during the current financial year. It did a turnover of Rs 367 crore in the last fiscal. The cooperative has been celebrating the cooperative week with the release of a new value-added product for the past 12 years.

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