Saarc Oils & Fats Today- May Issue by Media Today Pvt. Ltd.

May 2012, SAARC OILS & FATS TODAY

Contents Chief EDITOR S. Jafar Naqvi Hon. Advisory Board Dr. A. K. Vasishtha Dr. I. A. Siddiqui G.G. Patel Ajay Tondon O. P Goenka Dr. S. K. Saxena Consulting Editors T.V. Satyanarayanan K Dharmarajan Editorial Co-ordinator: Syed M K General Manager: Lalitha V Rajan

v Editorial

v Cover Story Pawar flags off National Dairy Plan

v Biofuel Jatropha: Gone with the wind?

v Agro Economy Role of oilseeds sector in India’s agro-economy Needs forward-looking vision

v FEED INDUSTRY Export of Animal Feed to Vietnam

v BUDGET REACTION l Budget -2012-13 Oilseed Sector Disappointed

v l

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 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

ISSUE 8 Vol. 14 May 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, May 2012

futures traiding Oil processors seek probe into `Misuse’ of commodity exchanges SOPA & SEA write to Food Minister — SEA’s Letter to K V Thomas

l Crop report Actual planted acreage of US Soyabean may be higher — G. Chanrashekhar

v Health & Nutrition Indian diet is too oily: Study

v Dairy l Pak’s dairy industry touches $26 billion Engro Foods cashes in on the boom

l Yoghurt: A healthful indulgence — Shailaja Sharma v RESEARCH Using Enzymes as Catalysts v News

Editorial I

ndia Meteorological Department is optimistic about a normal South West monsoon, for the third consecutive year, in 2012, although global forecasters had expressed their reservations earlier. In its first forecast for this year, the weather bureau in India reckons the chances of a normal monsoon at 47 per cent, lower than last year’s 50 per cent. The probability of a deficient monsoon stands at 24 per cent. South West monsoon, vital for Kharif production, could be bountiful this time due to the absence of any strong signal that could inhibit occurrence of good rainfall, according to IMD’s Director General L S Rathore. He feels the apprehensions that El Nino would adversely impact the monsoon are misplaced, as this weather pattern is likely to emerge only towards August end. Besides, El Nino, linked with poor rains, is only one of the many factors that come into play. While hoping for the best, the Union Agriculture Ministry, however, does not want to take any chances in the wake of global weather forecasts by organizations like Japan Agency for Marine-Earth Science & Technology, International Research Institute for Climate at Colombia University and UK’s meteorological office, all of whom are skeptical about rainfall being plentiful this time. UK’s Met office places the probability of India getting above normal rainfall this year at only 40 per cent. The Ministry is planning to instruct all state governments to prepare alternative plans in case the monsoon shows up its familiar fickle nature. According to IMD, rain between 94-104 per cent of a 50-year average of 89 centimetres is considered normal. South West monsoon, which normally hits the Kerala coast on June 1, is crucial for Indian economy since it is during its four-month period that the country receives 70 per cent of the total moisture received in a year. About 60 per cent of the cultivable area in the country, having no assured irrigation facilities, is almost totally dependent on rainfall for growing major crops like rice, cotton, coarse cereals, oilseeds and pulses.

One of the main factors responsible for the country’s record harvest of foodgrains in 2011-12 was a favourable monsoon. The second advance estimates of crop production for the year released by the agriculture ministry showed that the output of both rice and wheat touched a new high, although the production of oilseeds and pulses was a little lower than that in the previous year. The government would do well to announce the MSP for Kharif crops well before the sowing season, so that the farming community can take judicious decisions on cropping plans. A good news for agriculture planners is the successful launch of India’s first indigenously built Radar Imaging Satellite (RISAT -1), with unique capability to capture images in all weather conditions. Developed by the Indian Space Research Organisation, the satellite, weighing 1858 kg, has applications ranging from agriculture to natural disaster management. Among the wide range of tasks that the satellite can perform are paddy monitoring in Kharif season, when cloud-covered atmosphere is common, crop estimation and mapping of forestry biomass. Certainly, a lot more fine-tuning has to be done to improve the medium term monsoon forecasting system and short term weather forecasts. The Union Cabinet Committee for Economic Affairs has, therefore, taken the right step by giving the green signal for a National Mission to improve the accuracy of monsoon forecasts. Under the project, scientists would work on two models, already available with UK’s Met office and the US National Centre for Environment protection. The Mission would help IMD to come out with predictions based on a dynamic forecasting system, an improvement over the current forecasts based on a statistical model. Hopefully, this initiative would help reduce considerably the margin of error in the forecasts and give greater confidence to the farming community.

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

May 2012, SAARC OILS & FATS TODAY

Cover Story

he National Dairy Development Board (NDDB) has rolled out its ambitious, 15-year National Dairy Plan, envisaging an outlay of Rs 17,300 crore. Its first phase was flagged off by Union Agriculture Minister Sharad Pawar in Anand, the place synonymous with the first White Revolution decades ago. The Gujarat Chief Minister Narendra Modi was the chief guest at the ceremony, held at the NDDB headquarters. The Plan is widely acclaimed as India’s Second White Revolution. Stating that the NDP would solve the milk shortage in the country, Pawar said: “As per the outlay of the phase-I, Rs 2,242 crore has been approved by the Centre and in the Sixth Five-Year Plan (2012-17) it is to be implemented in 14 milk producing states.” These states are: Uttar Pradesh, Punjab, Haryana, Gujarat, Rajasthan, Madhya Pradesh, Bihar, West Bengal, Maharashtra, Karnataka, Tamil Nadu, Andhra Pradesh, Orissa and Kerala. Pawar said the scheme will be largely financed through International Development Association (IDA) of the World Bank and implemented by NDDB through End Implementing Agencies (EIAs) located in the States. He said through NDP, productivity of milk producing animals will be increased to meet the rapidly growing demand for milk in the country. This can be accomplished through a scientifically planned multi-state initiative. Pawar asserted that the plan will provide India’s 70 million small-holder rural milk producers greater access to the organised milk sector. “The demand for milk is projected to be around 200 million tonnes in 2021-22

Pawar flags off National Dairy Plan

as against the production of 122.8 million tonnes in 2010-11,” said Pawar. “It is therefore necessary to maintain an annual growth of over four per cent in the next 15 years, which can be achieved through NDP”.

While admitting that private sector milk producers are gaining strength at the expense of the cooperatives, particularly in the northern states controlling 70 per cent of milk production, Pawar said: “NPA will target at strengthening village based milk procurement systems which will ensure long term benefits for the milk producers at the rural level. This will also strengthen the cooperatives’ base.” IDA will give Rs 1500 crore while the Central Government will contribute Rs 175 crore for the 1st phase of the Plan. The balance (Rs 567 crore) will come from the beneficiary states. The aim of the Plan is to increase output from the existing 122.8 million tonnes to 200 million tonnes by 2021-22. n

Private dairy sector wants share in Rs 17,300-cr NDP

rivate dairies have alleged discrimination in not being made part of the Rs 17,300 crore National Dairy Plan (NDP) that was formally launched by the Government in April, 2012. Ten years ago, co-operatives procured 16.5 million litres a day (MLPD) of milk that was more than the 12.5 MLPD procured by organised private dairies in the country. The situation has completely 6

SAARC OILS & FATS Today, May 2012

reversed now, with private procurement zooming to 40 MLPD. While co-operatives have also increased their procurement to 25.9 MLPD, much of their growth has come from just two entities – Gujarat Co-operative Milk Marketing Federation (Amul) and the Karnataka Milk Federation (Nandini). “If the Government is really serious about NDP, it should also include us (private sector) in its plans. That would be

a truly inclusive strategy,” said Rajendra Singh, Managing Director of the Delhibased VRS Foods (Paras Dairy). Ten years ago, there was only one private sector player – Nestle India Ltd – that was handling more than one MLPD of milk. Today, there are eight others: Hatsun Agro Product, VRS Foods, Tirumala Dairy, Heritage Foods, Sterling Agro Industries (Nova), Bhole Baba Dairy Industries (Krishna), Dynamix

Cover Story Dairy Industries and Parag Milk Foods (Govardhan). Another six dairies including Dodla Dairy, Keventer Agro, SMC Foods (Madhusudan), Creamline Dairy (Jersey) and Gopaljee Dairy procure over five lakh litres a day. Out of their total 26 MLPD today, over 9 MLPD is accounted for by Amul and almost 4 million by Nandini. The 15-year NDP, being implemented by the National Dairy Development Board in 14 States, seeks to augment milk production in the country by improving productivity of milch animals and provide rural milk producers greater access to the organised milk processing sector. Such a move is expected to help plug the projected shortfall in milk production by 2020. The demand for milk is projected to rise 7 per cent by 2020, while the production is growing at 4 per cent

Ten years ago, there was only one private sector player – Nestle India Ltd – that was handling more than one MLPD of milk. Today, there are eight others: Hatsun Agro Product, VRS Foods, Tirumala Dairy, Heritage Foods, Sterling Agro Industries (Nova), Bhole Baba Dairy Industries (Krishna), Dynamix Dairy Industries and Parag Milk Foods (Govardhan). Another six dairies including Dodla Dairy, Keventer Agro, SMC Foods (Madhusudan), Creamline Dairy (Jersey) and Gopaljee Dairy procure over five lakh litres a day

resulting in an estimated shortfall of 3 per cent. Milk demand is set to touch 200 million tonnes by 2020, up from 122.8 million tonnes in 2010-11. Such demand from private players assumes significance as they have played a key role in development of dairy sector in Uttar Pradesh and Tamil Nadu. They have developed their own network of milk production centres and have been investing in the required infrastructure. “In spite of the excellent growth recorded by private sector, the Government policies have always been favouring co-operatives. Further, for all policy discussions, private diaries are ignored,” said R.G.Chandramogan, CMD, Hatsun Agro Food. “The preferential duty concessions, both for export and import, must be equally extended to the private sector at par with co-operatives,” he said.

Amul to launch 9 new plants Rs. 3,000 crore expansion plan on card

he Gujarat Co-operative Milk Marketing Federation Ltd (GCMMF), makers of Amul brand dairy products, will be setting up nine new plants in the next four years at a cost of Rs 3,000 crore and also expand the capacity of the existing plant, to a top GCMMF official said. Managing Director of GCMMF R S Sodhi said the dairy products maker has plans to touch Rs 30,000 crore turnover by 2020. "In the next four years, we are investing around Rs 3,000 crore in setting up nine new plants and the capacity of

the existing 40 plants will be increased," Sodhi said during the launch of Amul Pro, a protein-rich beverage in Andhra Pradesh market. "We have 14.5 million liters per day capacity and it will reach to 18 million liters per day after the expansion," he added. Sodhi said they increased the milk procuring price by almost 50 per cent in the last three years to farmers in order to keep the activity lucrative. He said current generation of farmers is not finding milk business as viable and the situation may lead to depend on

imports like other Asian countries. "So we thought if we do not take up this seriously India will become like other Asian countries such as Pakistan which depend on import of milk. We took a lead and increased price to farmer," he explained. According to Sodhi, the GCMMF currently pays including bonus Rs 34.40 for buffalo milk and Rs 22.50 for cow milk. Replying to a query on exports to European Union, Sodhi said, and conditions such as using machines for milking is deterrent for exports.

India's Largest Exhibition on Dairy Products & Technologies Tel.:+91-11-26681671 / 2045 E-mail:dairytechindiamtpl@gmail.com

www.dairytechindia.in

25-26-27, August 2012 Gayathri Vihar, Palace Ground, Bangalore May 2012, SAARC OILS & FATS TODAY

Cover Story

Dudhiyas stand between

Mother Dairy and Farmers

or the last three months, Mother Dairy Fruit & Vegetable, a wholly owned subsidiary of National Dairy Development Board (NDDB), has been laughing all the way to the bank. Its monthly earnings are anywhere between Rs 72 crore and Rs117 crore, more than those of rival Gujarat Cooperative Milk Marketing Federation (GCMMF), which makes and markets the Amul range of products. That’s because Mother Dairy has been procuring milk at prices that are Rs 4 to Rs. 6.50 per litre lower than the Rs 31 that GCMMF pays its farmers-members. Unfortunately, this has been at the expense of small farmers in North India who now get Rs 17 for every litre of milk they sell to Mother Dairy compared with Rs 30 earlier. But Mother Dairy hasn’t changed the sale price of milk of Rs 37 per litre (doubletoned sells at lower prices). The Mother Dairy management, however, refutes procurement is at Rs 17 a litre. “It is the dudhiya, the middleman, who sources milk at Rs 17. Our farmer prices are between Rs 24.50 and Rs 27 a litre,” said a senior official. But that doesn’t change the fact that a wholly owned subsidiary of a government body is milking additional profit - if you just compare the procurement prices of last year. That’s in sharp contrast to what has been happening in the co-operative sector. In western India, farmers continue to get the old price of milk, and the price to consumers remains the same. GCMMF, on the other hand, recently increased by Re 1 per litre the price it pays to its member-farmers for each litre of milk it procures (it now pays Rs 31). And the selling price still remains the same at Rs 38 (for the whole milk grade). In south India, where the government has introduced a minimum support price (MSP) for milk procurement, the consumer price fluctuates from time to time. As a result, companies such as Hatsun (sales 8

SAARC OILS & FATS Today, May 2012

of around Rs 1,600 crore) have found the going quite rough. A similar situation confronts north Indian milk companies such as Paras (sales: Rs 896 crore) and Gopalji (sales: Rs 500 crore), who feel being squeezed out — though some have tried to make a dent in Delhi by undercutting Mother Dairy. Unfortunately, there is no price support mechanism in the north. “That’s because the dhudhiyas have powerful political backing. They block our vehicles and prevent us from collecting milk,” said a spokesperson for Mother Dairy. While that may be the case, the increased spreads of Mother Dairy show which way the benefits are flowing. “Mother Dairy also enjoys having kiosks at strategic locations to sell milk without any significant rental expenses. It enjoys the privilege of being a cooperative without functioning like one,” said an industry source. Compounding the woes is the ban on exports of milk by the ministry of agriculture in February last year. Not that India’s milk exports are large — they comprise a little over 1 lakh tonnes a year, or 1 per cent of milk and milk product exports. To be fair, the ban did have a psychological effect, cooling prices a touch. But it was at that time that NDDB made a request to the government to allow it to import, duty-free, 50,000 tonnes of skimmed milk powder (SMP), which it is believed to have got at quite attractive rates. NDDB was also allowed to import, duty free, 15,000 tonnes of butter oil too. This, however, did not please the industry. On November 11, 2011, at a meeting chaired by the secretary, dairy and animal husbandry, ministry of agriculture, industry players tried persuading NDDB to desist purchasing milk from overseas suppliers and offered 20,000 tonnes of SMP too. Not surprisingly, prices at the farmer level in non-co-operative sectors of north India crashed, instead of merely cooling.

Mother Dairy is selling milk at Rs 37 a litre, but cattle breeders get only Rs 17 a litre. Dudhiyas (Middlemen) pocket the huge margin

Retail prices to consumers in many parts of north India from non-Mother Dairy outlets have also fallen, but have made little impact because they do not have the branding and distribution clout of a Mother Dairy. However, some cooperatives such as Saras in Rajasthan and Vita in Haryana have been more fair in reducing consumer prices for milk when procurement prices fell. Mother Dairy has not done so. Not surprisingly, there has been a renewed clamour for the removal of the ban on exports. The removal of the ban could ease some of the problem. There is also an increased discomfort at the close relationship between NDDB and Mother Dairy. There is a third demand as well. Ever since NDDB decided to get the government to grant it the status of a deemed financial institution, many believe that NDDB has begun working more as a financier than as a development institution that it was meant to be. It recently informed the media that the World Bank would soon approve the first phase of the Rs 17,000 crore National Dairy Plan worth around Rs 2,000 crore. NDDB hopes to promote some joint venture companies and new-generationcooperatives. Analysts fear that instead of promoting the co-operative sector and small farmers, NDDB could actually hurt the interests of both small farmers and the cooperative movement. Analysts said milk procurement in the north has plummeted by half over the past five years. At UP cooperatives, it has dropped from 10 lakh tonnes to barely about 5 lakh now (much of the milk goes to private players, and Mother Dairy, a private company though owned by NDDB, also tries to procure from the same pool). Contrast this with Gujarat where the GCMMF saw its procurement swell from 75 lakh tonnes to 140 lakh tonnes during this period. n

Cover Story

Second White Revolution Possibilities & Challenges — G. Chandrashekhar

he launch of a Rs 17,000-crore National Dairy Plan (NDP) to enable India's milk production to meet a projected demand of 200 million tonnes (mt) by 2021-22, is a timely initiative. With output last year estimated at 125 mt, the target calls for raising our annual yield by 7.5 mt, as against the average 4 mt achieved over the last 10 years. That makes it an extremely ambitious considering the growing pressure on fodder and feed resources, besides rising opportunity cost of rural labour: Grazing, feeding, cleaning and milking buffaloes daily is not an enticing proposition for today's workforce, including those from agricultural families. But the fact that Indians are voracious milk drinkers and there is no other food item registering as much increase in consumption from higher incomes — one reason why its prices have shot up disproportionately in recent times — presents few alternatives to significantly augment domestic production. It means investing hugely in scientific breeding, artificial insemination, animal nutrition, fodder development and farm-level mechanisation. These interventions certainly require programmes of the scale and scope of the NDP. The problem with the NDP, though, is its being implemented by the National Dairy Development Board (NDDB), which is formally mandated to work only with cooperatives. This may have made sense in the Operation Flood days, when only a handful of organised private dairy players existed. Further, they were all regarded as ‘Polson' — a dairy that symbolised exploitation of farmers in the 1940s. But this reputation has lost meaning, especially in the last ten years that have seen milk procurement by organised

private dairies more than treble to 15 mt. Cooperatives, during this period, have managed to increase their procurement by only 60 per cent, to 10 mt. Moreover, two-thirds of this growth has come from just two already-entrenched cooperatives: Amul and Nandini. The problem may not be of NDDB's making as the poor governance structures in some of these states where NDDB is yet to make a mark, are also to be blamed. Nevertheless, the fact remains that NDDB's performance in nurturing cooperatives in recent years, especially in the Hindi heartland states with the maximum milk production potential, has been dismal. That being the case, it is legitimate to ask why NDDB has been made the implementation agency for the NDP. More important, what is the logic of excluding private sector from such an ambitious programme, when much of the milk procurement growth and establishment of fresh milk processing capacities is now coming from it? The time has come, perhaps, to even change NDDB's charter to enable it to finance private dairies, at least for the milch animal productivity

improvement and other backend extension activities being undertaken by them. The case for revisiting NDDB's role becomes stronger if one looks at its own subsidiary, Mother Dairy. The latter is today effectively a private company that competes with Amul or Nandini and is not even obliged to table its annual report in Parliament! It is time, indeed, come for the Government's dairy policies to reflect the new ‘post-Polson/post-Operation Flood' realties.

May 2012, SAARC OILS & FATS TODAY

Biofuel

Jatropha:

Gone with the wind?

Many players of the Big Bang Game, having pocketed millions of dollars, are now trying to give a decent burial to the whole Jatropha episode. Who, then, will raise the voice against this global wastage of public money?

atropha rush was a worldwide madness. Investment of billions of dollars on it has benefited neither man nor environment. Initially it hit like a hurricane, shaking many governments and gas guzzling companies of the world, who entered into alliances and made noisy announcements about various new projects to produce what they believed was a harmless and cheaper fuel. Both governments and private companies sought big investments to join the revolution seeking to tackle the growing global energy crisis. They took pains to make attractive websites and hired bio scientists and environmentalist to publish articles and research papers on Jatropha. Their efforts paid rich dividends and millions of dollars were invested. Lull after the storm Then, everything fell into a lull. Many players of the Big Bang Game, having pocketed millions of dollars, are now trying to give a decent burial to the whole Jatropha episode. Who, then, will raise the voice against this global wastage of public money? Nobody denies the ability of Jatropha to produce biofuel, as oil from Jatropha curcas seeds is being used for making bio diesel in Philippines and Brazil. But there, it grows naturally. In India, Jatropha prospect was promoted as an easily grown biofuel crop in a number of projects throughout the country. Large plantings and nurseries have been undertaken in India by many research institutions, and by women’s self-help groups who use a system of micro-credit to ease poverty among semiliterate Indian women. The railway line between Mumbai and Delhi is planted with Jatropha and the train itself runs on 15-20 per cent bio-diesel. Need for Renewable Energy The need for a renewable energy resource is obvious in a country like India, which has a population of more than a billion and faces problems to meet the growing demand for fuel to meet the requirements of sectors like 10

SAARC OILS & FATS Today, May 2012

transportation and industry. The country now imports more than two-thirds of its petroleum requirement. Widely fluctuating world price of oil have long been a destabilizing element for country’s balance of payments. The petroleum import bill has been gong up year after year. Alongside, vehicular pollution in the country, particularly in the cities, has reached intolerable levels. . Improper land use as also population pressure over several years has led to extensive degradation of agricultural land. Of the estimated 130 million hectares of waste land in India, about 33 million hectares are available for reclamation through tree plantation, according to Planning Commission figures. The answer to the above requirement is to search for an alternative to the natural resources of the fossil fuel that could be produced by mankind and that too on waste lands or lands that cannot be used for food production. It was against this backdrop that Jatropha was identified as a renewable source for production of clean fuel. More losers than winners Studies, however, show that the Jatropha boom has produced more losers than winners. Many projects have floundered as seed production has failed to meet expectations, and India, China, and other countries have rolled back plans for additional planting.

Farmers have discovered that while Jatropha can indeed grow on barren land, it doesn’t flourish there, says Promode Kant, director of the Institute of Green Economy in New Delhi and co-author of a report titled The Extraordinary Collapse of Jatropha As a Global Biofuel. “Without moisture it does not seed, or it seeds extremely poorly.” Indian experience Citing the Indian experience, a report published in a leading Indian business daily says: The hype about the jatropha shrub was that it could grow on marginal land unfit for agriculture, that it needed very little water, and yielded abundant oilbearing seeds. None of these assumptions has proved wholly true. Yes, the plant will grow even in harsh conditions; but its seed yield is not sufficient unless agronomic conditions are favourable. The experience of jatropha plantations in states like Assam, with good rainfall, as compared to those in relatively drier Jharkhand and Orissa, bears this out, says the report. A recent experiment by the Hyderabad-based International Crops Research Institute for the Semi-Arid Tropics (Icrisat) found that jatropha plantations in Andhra Pradesh succumbed to a disease called black rot in the summers of 2009 and 2010. And, as far as energy-yield efficiency goes, studies have indicated that jatropha requires nearly as much water per unit of energy as sugarcane or maize.

Biofuel The question then arises: How did so many governments and companies buy into jatropha without conducting agronomic trials or undertaking pilot projects? India’s case, the report goes on, is truly bizarre, given that a section of the agricultural scientists had cautioned the government in advance. The contrast with Bt brinjal, where the scientific community was overwhelmingly in favour of the plant but the government exercised unnecessary caution, is stark. There were more fundamental questions about jatropha’s suitability in India, too. A land-based renewable fuel production strategy does not really fit a country like India where land is not abundantly available. That sane counsel went unheeded. Since past mistakes cannot be undone, lessons must be learnt instead. India must wait and watch until reliable technology is generated and sturdy and high-yielding varieties or hybrids of this plant are made available. Even then, it will be far more prudent to fully ascertain jatropha’s economic viability through pilot projects in different agro-ecological zones before giving it a state-assisted push, it says. Jatropha in Africa In Africa, cultivation of Jatropha is being promoted and it is grown successfully in countries such as Mali. In the Gran Chaco of Paraguay, where a native variety (Jatropha matacensis) also grows, studies have shown the suitability of Jatropha cultivation and agro producers are starting to consider planting in the region. Jatropha curcas is a tropical shrub. Over the past decade, Jatropha was planted on millions of acres across Asia and sub-Saharan Africa after research showed that oil from its crushed seeds makes an excellent biofuel. Because Jatropha can tolerate dry, rocky soil unsuited to agriculture, scientists said, subsistence farmers could grow it as a cash crop with no adverse effect on food production. And with governments worldwide pushing renewable fuels, investors in Jatropha-oil ventures looked set to win, too. However, some Jatropha ventures appear to have harmed the environment and the poor people they were supposed to help. In 2006, 11 villages in Tanzania agreed to let BioShape, a Dutch company, develop a Jatropha plantation in exchange for jobs and aid. BioShape logged the land but planted Jatropha on only a small

portion of it, then shut down in 2010, says Stanslaus Nyembea, an attorney with the Lawyers’ Environmental Action Team, an advocacy group representing BioShape workers who lost their jobs. “The company was not interested in Jatropha, they were interested in the timber,” Nyembea says. BioShape’s telephone in the Netherlands has been disconnected. A spokesman for Dutch utility Eneco, a major backer of the project, declined to comment. In limbo Other Jatropha ventures in Tanzania and Mozambique were left in limbo when Sun Biofuels, a British company that had planned to produce biodiesel for aircraft, ceased operations last fall after failing

Qantas flies on biofuel

midst reports of research results questioning the economic viability of jatropha for biofuel, comes some encouraging news to cheer to green fuel enthusiasts. In April, 2012, Australian airliner Qantas flew the country’s first commercial biofuel flight between Sydney and Adelaide using a mix of conventional fuel and refined cooking oil. John Valastro of Qantas said the flight was a commercial first in Australia, and would have produced far less carbon emissions than if conventional jet fuel were used. “We are talking about a 60 per cent reduction in overall life cycle of the fuel, so that is a substantial improvement”. The biofuel component of the fuel used for the flight was from refined cooking oil. The report said flight cost more than four times an equivalent flight using normal fuel, partly because of the shipping distance involved since the fuel came from Houston. Qantas said it absorbed the one-off cost because it was keen to highlight the need for a biofuel source, at a time when airlines and passengers are dealing with high jet fuel and carbon emission costs. Qantas chief executive Alan Joyce said government had given them $500,000 to fund a study into the feasibility of alternative aviation biofuels.

to obtain financing. Lion’s Head Global Partners, a London investment fund that acquired Sun’s Tanzanian assets, wants to restart operations but is having trouble finding investors, says Christopher Egerton-Warburton, a partner in the fund. Lack of fund derailed plans by another British company, Viridas, to develop Jatropha plantations in Brazil. According to its London Stock Exchange filings, Viridas has shifted its focus to mining. Investors have suffered, too. Shares of Jatropha companies Gem BioFuels, a planter in Madagascar, and D1 Oils, which had a joint venture with oil giant BP, now trade as penny stocks in London. Last year, a British court convicted seven men of running a scheme to sell shares in Worldwide Bio Refineries, which they fraudulently claimed to be producing biodiesel from Jatropha. Still, potential customers remain keenly interested. Aircraft Experiments According to an expert prediction, by 2018 Jatropha-based aircraft fuel could be produced for 86¢ per liter, about the same price as conventional jet fuel today, and far less than fuel made from soybeans or palm. In August 2011, a Boeing 777 aircraft owned by Aeromexico made the first intercontinental flight powered by a Jatropha-based fuel, from Mexico City to Madrid. And Airbus has teamed with airline TAM to grow Jatropha in Brazil. Jatropha’s commercial future could hinge on plant science. SG Biofuels, a San Diego company, is developing hybrid strains that it says will produce more seeds. In January the company received $17 million in venture capital to expand Jatropha research and planting in Brazil, Guatemala, and India. “We are in fullcourt commercial mode,” says SG Chief Executive Officer Kirk Haney. Not for small farmers It’s unlikely though, that small farmers will ever strike it rich growing Jatropha on otherwise barren land. “Jatropha remains promising only with adequate water, and the collection of seeds is very costly,” Indian researcher Kant says. In the tropical latitudes where the shrub grows, just a handful of countries only will be able to produce Jatropha economically, he said. “I see it only as a possibility in a very large plantation, not for subsistence farmers.” Until further research establishes the economic viability of growing the crop to produce biofuel, farmers and investors would have to keep their fingers crossed. May 2012, SAARC OILS & FATS TODAY

Agro Economy

Role of oilseeds sector in India’s agro-economy

Needs forward-looking vision

t is widely acknowledged that spectacular growth of India’s oilseeds sector in a short time span of 25 years or so has come as a boon to India’s agroeconomy. From a subsistence economy it has transformed itself into a remunerative one, thanks to its well-begun and well sustained export of oil meals, with soya meal leading the pack. Today India’s oilseeds sector stands at cross-roads of history. After an initially sustained rapid growth over two decades, it seems to have reached a plateau in terms of oil seeds production. It may rank 5th largest producer in the world next only to USA, Brazil, Argentina and China, but its share is static at 3.8% or so. Production and productivity Raising output in existing areas and exploring new areas are inextricably intertwined with the challenge of increasing productivity, which is regrettably half the global average and well ¬below that of the top four viz., USA, Brazil, Argentina, and China. How long should the industry remain complacent, with Government not yet realizing the gravity of the situation? Even setting up an Oilseeds Fund for development has remained on paper except for some initiatives of industry-Government joint experimental confluences in M.P., Rajasthan, Maharashtra etc. Results of even such limited initiatives were promising, but have not been earnestly pursued. The sector urgently needs a result- oriented realistic five-year plan to raise both output as well as productivity. This would not get a start off without active supportive role of the central as well as concerned State Governments. 12

SAARC OILS & FATS Today, May 2012

Share of major countries in soya production, mmt

World

USA

2008-09

211.96

2009-10 2010-11

as % of world -> 258.00 as % of world -> 250.13 as % of world ->

Brazil Argentina

India

80.749

57.80

32.00

9.308

38.1

27.3

15.1

4.4

91.417

68.00

54.00

9.725

35.4

26.4

20.9

3.8

90.083

65.00

50.00

9.5

36.0

26.0

20.0

3.8

Yields of soyabean in kgs/ha

World

USA

Brazil Argentina

India

2009-10

2531

2958

2918

1006

Urgency to focus on oilseeds and pulses A few years back, when great agrovisionary Dr. M.S. Swaminathan called for a Second Green Revolution focusing on oilseeds and pulses, he was supported by none other than our renowned economist Prime Minister Manmohan Singh. But even planning for starting the process has not begun. It is time for the Government to revive the spirit of Rajiv Gandhi’s timely initiative of launching the Technology Mission on Oilseeds and Pulses (TMOP) and its implementation by Union Ministry of Agriculture. That mindset needs to be revived again and now without delay. Planners in the Government of India have been assiduously endeavoring to retain around 8% GDP growth even in present troubled scenario. Unfortunately, the growth rate of agriculture is still lagging behind the target. With the fate of 70% of India’s population linked with farm growth, the urgency of launching a second Green Revolution focusing on oilseed & pulses

2872

is all too clear. The urgency is further strengthened by this year’s performance by the oilseeds sector, with the output likely to be even below last year’s by a sizeable 20 lakh tonnes. GMO varieties for accelerated growth Planning for future brings to mind also our concentration so far --- for very justifiable reasons --- on highly proteinrich non-GMO varieties, for which India is the coveted source. But raising prospects of additional output and availability of oilseeds is imperative in the context of increasing demand, both globally and nationally, refined edible oil as well as animal feed for poultry, fisheries dairy and associated demand-oriented sectors in a competitive global scenario. Hence looking at the long term considerations, it seems imperative to accept GMO varieties, for domestic production of Soyabean and other major oilseeds. The welcome results with BT Cotton should open the doors to GM crop technology. . Prime Minister’s most recent

Agro Economy statement welcoming GMO varieties is encouraging and should help in clearing the way. The industry needs to follow this up.

Planners in the Government of India have been assiduously endeavoring to achieve a high GDP growth even in present troubled scenario. Unfortunately, the growth rate of agriculture is still lagging behind the target. With the fate of 70% of India’s population linked with farm growth, the urgency of launching a second Green Revolution focusing on oilseed & pulses is all too clear

Edible Oil Scenario: Coping with rapidly increasing domestic demand A vitally connected and relevant aspect is the increasing need to meet the rapidly rising domestic demand for edible oils. In the last ten years alone per capita consumption has leapfrogged even among middle and lower-middle classes and people at the bottom of the economic pyramid. Government showed concern and found easy and readymade answer in allowing import of edible oils, mainly palm oil. Statistics are unnerving as is clear from the following table. In the last 6 years import has jumped from 44.17 lakh tonnes to 83.71 lakh tonnes — almost matching domestic output at 85.231 lakh tonnes — making total availability for consumption increasing from 127.33 lakh tonnes to 168.94 tonnes. Estimated production of nine cultivated oilseeds, net availability of edible oils from all domestic sources, import of edible oils and total availability and consumption of edible oils (from domestic and import sources) during the last few years have been as under: With our estimated 10 percent fall in availability from domestic sources, imports of vegetable oil may well reach around 9.3 MT. This may have come perhaps as a boon to Malaysian and Indonesian farmers, but

has in the ultimate analysis worked to the detriment of Indian oilseeds farmers who are also among mass consumers of edible oil. It is equally imperative that oil palm farmers of India, who may be affected due to large imports, deserve more support from the Government to maintain / enhance the growth in edible oil sector. India has all these years, welcomed the export-orientation and foreign exchange earning aspect of oil meal exports which even today fetch over Rs. 10000 crore per annum. In the initial days of foreign exchange scarcity, soya meal export earnings were a prized achievement and many leading soya meal exporters among them notably PRESTIGE Group were honored by the Union Ministry of Commerce with decorations like ‘Large Scale Trading House’ and ‘Star Export House’.

Danger of increasing import dependence As against Rs. 10,000 crore export earnings, import bill for edible oil stands at a staggering figure of Rs. 50,000 crore. The industry is not against imports as long as domestic edible oils are unable to meet increasing domestic demand. But can the industry afford to have such a static perspective? Sooner than later, the domestic output must be increased to minimize, to the extent possible, the huge import bill of edible oils. Edible oils are for mass consumption and it is essential to strengthen the domestic base of output, since per capita consumption will go on increasing as part of India’s own growth story. The time to act is now, otherwise edible oil would become almost totally dependent on the vagaries of import — much like crude oil crisis we face today. Promoting Indigenous Palm Plantations In addition to raising output of oilseeds, the Govt. needs to realize the urgency of setting up more and more palm oil plantations in coastal areas. The industry should urge the Planning Commission to incorporate it even in the ongoing 5-year plan on a priority basis in order to enhance .domestic production of palm oil, and to that extent, lessen increasing dependence on imports. Budget proposals for 2011-2012 allocated of Rs. 300 crores to bring 60,000 hectares under oil palm plantations This scheme should be energetically and vigorously pursued.

Year

Production of Nine cultivated oilseeds*

New availability of Import of edible oils*** edible oils from all

Total consumption of edible oils

2005-2006

279.79

83.16

44.17

127.33

2006-2007

242.89

73.70

47.15

120.86

2007-2008

297.55

86.54

56.08

142.62

2008-2009

277.19

84.65

81.83

166.39

2009-2010

248.82

79.46

88.23

167.69

2010-2011

254.40

85.23

83.71

168.94

2011-2012

99.00

(Estimated) Source: *Ministry of Agriculture May 2012, SAARC OILS & FATS TODAY

Agro Economy Lopsided Food Security concept The Central Government has earnestly taken up the question of food security. It is a welcome thing, but food security cannot & should not be narrowed down to increasing production of wheat, rice and cereals. The country also seeds more oilseeds and pulses. There is enough wheat & rice to meet our present needs. Whenever we get a bumper crop, a good part of it perhaps remains in insecure warehouses and gets spoilt. In a sense, cereals have not been responsible for increasing our food bill and food inflation. One reason for the inflation is the rising demand of edible oil, fresh vegetable and fruits. It is feared that strident rise in crude oil prices is likely to lift vegetable oil prices globally. Increasing role of value added products on food security Food security must help India to fight rampant malnutrition, and abysmal lack of protein in a common man’s diet. The industry needs to pay urgent & serious attention to evolving Indian-palateacceptable soya food and popularizing it among the masses. Meaningful research Agricultural Universities & Oilseeds associations have so far published many research papers, but innovative approach is needed to link research to the needs of mass consumers. Only a few years back,. soya oil or soya milk had very few takers, but now they are widely accepted. Some progress was made for soya ‘Dal’, but it is yet to take off. Research leading to practical results alone is the answer. Such research was done years back in USA and China. The result is seen in availability of a wide variety of protein-rich items acceptable for human consumption. Indians also welcome this in Chinese dishes. Why not use them in easily adaptable Indian dishes? Oilseeds Industry’s marketing approach should be made more and more consumerdemand oriented as well as palateoriented. This would earn for soya meal value-added products the brand value of consumer-satisfaction and consumerdelight, as it is the case all over China and South East Asia and even in some 14

SAARC OILS & FATS Today, May 2012

FSSAI

CENTRAL

LICENCE

of our northeastern states. Our Apex Associations like SOPA and COOIT have articulated these concerns, but it now needs to be done in a much more earnest and organized manner by associating the voice of our agricultural and food security experts’ agricultural strategists both in the Government as well as private sector. New perspectives The second Green Revolution needs to focus on raising production and productivity of oilseeds and pulses, coexistence of GMO with non-GMO varieties, accelerated steps to evolve and popularize oilseeds‘ added value products for mass consumption, assigning a prime place to protein-rich oilseeds and their derivatives in the food security and balancing export earnings with importexpenditure for items related to oilseeds economy. Thus, a new thrust is needed to promote innovative ideas. Clearly, industry cannot do it all by itself. . PPP model (public-private partnership) should be forged with Government planners leading the innovation campaign, just like they did in the eighties under the banner of TMOP mission on oilseeds and pulses. A flourishing industry can fade away in due course in the absence of timely research inputs or rationalization of technology and implementation of new innovative techniques. . In a short time, through publicity alone, if consumer demand for ‘fairness creams’ can jump by leaps and bounds, why can’t it happen for new protein-rich consumer products like soya dal, soya bari, soya milk, soya flour and so on. Needed: a bold new approach A bold new approach is called for. And this needs to be pursued with vigour,

STATE

REGISTRATION tenacity, and conviction. Only then would we be able to assure that oilseeds economy will become a strong economy. Periodic upswings and downswings should not upset our calculations and assumptions. The industry has shown the capacity to grow continuously despite constraints and limitations. However time has come now for a jump-push ahead. The industry must raise its collective voice to persuade the Government to mould its policies from static assumptions towards giving dynamic thrust to this great agro-industry, which if properly nourished could transform India’s agriculture into a flourishing, industry — spreading fruits of progress and prosperity to farmers, producers, traders, exporters and, above all, consumers alike. The world is once again in an economic and financial turmoil which threatens to envelope even emergent economies of countries like India and China. The Government wants to maintain the level of GDP growth at 8% or above. This year it is estimated to come down. Against this back drop, the dismal fact of agricultural growth averaging at 2.5-3% should be even more disturbing. And this can be steadily increased to 4%, 6% or even 10% in the near future, if urgent and effective steps are taken by the government . in consultation with the Industry. COOIT and SOPA need to mount an all out effort to drive home to the government the imperative need for taking both short term as well as long term steps to safeguard and promote the long term interests of oilseeds economy, which is inextricably linked with the needs of mass consumers in the country and needy importers of Indian proteinrich products abroad in over 40 countries of Asia and Africa, where they have found a receptive market. n

Feed Industry

Export of Animal Feed to Vietnam Delegation visit sorts out quality issues

gainst the backdrop of noncompliance notifications received from Vietnam and the prospect of a Vietnamese ban on import of animal feed commodities from India on grounds of weevil infestation, an Indian delegation visited that country to sort out the problems. The discussions centred on interception of some animal feed consignments exported from India to Vietnam. The Vietnamese Plant Quarantine authorities said they had found infestation of Trogoderma granarium (Tg) In the consignments. The Indian delegation, which was on a five-day trip early February, comprised officers of Department of Agriculture & Cooperation, Department of Commerce, and Representatives of Solvent Extractors’ Association of India. The seven-member delegation comprised the following: Sarvesh Rai, Director (PP), Department of Agriculture & Cooperation; Ajit B. Chavan, Deputy Secretary, Ministry of Commerce; Dr J P Singh, Deputy Director (Ento.), National Plant Quarantine Station, New Delhi;. Dr Jasvir Singh, Deputy Director (Ento.), Regional Plant Quarantine Station, Chennai; C.B. Kotak, Deputy Director, Export Inspection Council of India; Dr. B.V. Mehta, Executive Director, Solvent Extractors’ Association of India; and Ashok Sethia, Ex-President, SEA. One of the highlights of the delegation’s visit was the signing of a bilateral agreement on plant quarantine cooperation. After the return of the delegation, a series of recommendations were finalized on the basis of the discussions with the Vietnamese officials. Recommendations 1. Fumigation will be jointly supervised by the representative of exporter as well as a Plant Quarantine officer deputed

by PSC issuing authority and both will certify that fumigation was done, as per prescribed dose and duration, in their presence. 2. PSC issuing authority will arrange drawl of sample for checking purposes after completion of fumigation treatment, whether carried out in the depot or godown or in vessel. 3. Godown or depot of the exporter will be maintained pest-free. 4. Fumigation agency and PSG issuing authority shall be primarily responsible for meeting phytosanitary requirement of importing countries. In case of noncompliance notification from importing country, the fumigation agency concerned will be suspended immediately pending inquiry as per provisions of NSPM 12. The concerned PSG issuing authority and the exporter will also be asked to explain the reason for non-compliance. In case of second notification of non-compliance, PPA will institute comprehensive inquiry against concerned PSG issuing authority. Appropriate action needs to be taken against delinquent PO officials. In

respect of the exporter concerned (with second notification of non-compliance), the Department 0: Commerce will be requested to withdraw the Import Export Code. 5. Custom House Agents (CHAs) of exporters will be provided adequate orientation or training by the PSG issuing authority. In case of repeat noncompliance, Department of Revenue, Customs will be approached to withdraw the license of CHA. 6. PPA will arrange, through regional PO in-charge, regular meeting with exporters, fumigators and CHAs. 7. Used gunny bags are potential source of infestation with Tg. Therefore, invariably fresh jute bags should be used. 8. PPA will constitute a Committee to prepare Standard Operating Procedure (SOP) for export of animal feed to Vietnam. SOP will cover all stages of export including pest free storage in godowns, fumigation treatment, transportation after fumigation, cleanliness of containers and vessels, post treatment inspection May 2012, SAARC OILS & FATS TODAY

Feed Industry and issuance of PSC. The Committee will submit its report within one month. 9. PSG issuing authority delegated to State Government officials, State Agricultural Universities etc. needs a thorough review (within two months). Only those authorities who are found to possess requisite technical expertise, manpower and equipments should be allowed to function as PSG issuing authorities. 10. AII PSG issuing authorities should have clear direction from PPA to issue PSG on standard stationery supplied by the Dte. of PPQS. PSG issuing authorities should ensure that the PSG issued by them has all requisite security features. 11. Exporters will ensure appropriate quality including dryness of export consignments. The Solvent Extractorsâ&#x20AC;&#x2122; Association of India, a Trade Promotion Organisation (TPO) recognized by Ministry of Commerce, representing Animal Feed Business be empowered by granting Export Promotion Council status and made responsible to ensure compliance by the exporters and dispute resolution between buyers and sellers. 12. The audit for fumigation agencies shall be made more stringent and random surprise audit (in at least 10% cases) be carried out by senior officials from Directorate of Plant Quarantine. 13. Department of Commerce may consider some kind of regulation/control on trade of maize to ensure that quality issues are addressed. Meetings Indian embassy in Vietnam played key role in organizing and facilitating meetings with officers of Plant Protection Department of Vietnam. The officers of embassy were also present in all meetings during the visit. Counselor Ravi Shankar, First Secretary John H. Ruolngul, Pham Thang were present during meetings in the Hanoi leg of .the tour. The Ambassador, Shri Ranjit Rae was also present in the meeting with importers in HanoL Consul General Abhay Thakur and Consul R. Gururaj were present during meetings in Ho Chi Minh city. Following are the details of meetings and joint inspections with officers of Plant 16

SAARC OILS & FATS Today, May 2012

Protection Department of Vietnam, and importers of animal feed: First Day (i) Meeting with the Vietnamese delegation led by Hoang Trung, Deputy Director. General, Plant Protection Department, Ministry of Agriculture and Rural Development (MAR D): Initiating the discussion, Hoang gave details of non-compliance notifications by Vietnam in respect of animal feed consignments exported from India during last one year. He expressed concern over a number of non-compliance cases and conveyed the intention of Vietnam to impose higher level of protection measures in case of further nonÂŹ-compliance. From Indian side, Counselor Ravi Shankar, Counselor mentioned strategic relations between the two countries. He also highlighted growing trade between the two countries and potential for further increase in trade. Sarvesh Rai informed about following measures taken during last one year to strengthen the phytosanitary system of India: l Keeping in view growing trade in agriculture commodities, India has started online processing of import as well as export applications through Plant Quarantine Information System. Presently, more than 95% of work is being done online. l In view of the shortage of staff, around 600 posts have been created at different levels. l The regulation relating to accreditation of fumigation agencies (NSPM 12) has been amended recently to provide for regular audit of fumigation agencies. It also provides for suspension of fumigation agencies related with treatment of noncompliant consignments. A number of fumigation agencies have been suspended in recent past. A detailed presentation on export certification system of India was made by Dr. J.P. Singh, Deputy Director, NPQS. Subsequently, draft Arrangement on Plant Quarantine Cooperation between the two countries was discussed, article wise, and finalized. The title of the draft was changed from Phytosanitary

Arrangement (PA) to Arrangement on Plant Quarantine Cooperation (APQ). Art. 6 was amended to provide for joint investigation within the territory of either party (earlier draft provided for inspection within the territory of exporting countries only which was amended on the suggestion of our own team to provide for joint inspection in the territory of either party). Further, some minor changes were made in other Articles. Both parties agreed on all changes. (ii) Meeting with Ambassador of India to Vietnam Ranjit Rae: The delegation briefed the Ambassador about the meeting with Plant Protection Department of Vietnam in the morning session. The Ambassador conveyed the concerns of Vietnamese Government as well as importers on the issue of noncompliance due to Tg infestation.. (iii) Meeting with Phung Huu Hao, DDG, National Agro-Forestry Fisheries Quality Assurance, MARD Phung wanted to know the annual updated national food safety monitoring program for food safety including monitoring of pesticide residue. He informed that a number of countries had already provided requisite information and got registered with Vietnam. If India could provide this information, India would be registered as an exporting country for food stuff. Ajit Chavan, Deputy Secretary (DoC) explained in detail the functioning of Food Safety and Standards Authority of India (FSSAI) and legislative provisions relating to food safety. He informed that monitoring for food safety for domestic consumption is the responsibility of FSSAI. Certification of food safety in export consignments is the responsibility of Export Inspection Council (EIC). Regarding update on monitoring program of FSSAI, he assured Vietnam to provide requisite information soon. C.B. Kotak, Deputy Director (EIC) explained export certification system of EIC. Regarding monitoring of pesticide residue, Sarvesh Rai, Director (DAC) provided executive summary of the Central Sector Scheme, Monitoring of Pesticide Residue at National level (MPNRL). The Vietnamese authorities assured the delegation that they would expeditiously get India registered under the new system as soon as inputs, as

Feed Industry solicited by them are provided by India. (iv) Interactive meeting with Vietnamese Importers organized by Vietnam Animal Feed Association and The Embassy of India, Hanoi: At the outset, the Ambassador Ranjit Rae gave an overview of trade relations between two countries and highlighted potential for increasing trade between the two countries. Sarvesh Rai briefed the importers about discussions held with Plant Protection Department of Vietnam in the forenoon. Importers of Vietnam expressed deep concern on continued interceptions on grounds of detection of Tg. Some of them had suffered huge losses due to re¬fumigation/re-export of infested consignments. Some of the importers had also suffered losses due to unethical practices such as non-delivery of consignment after taking money in advance by Indian exporters. Dr. B.V. Mehta, Executive Director, Solvent Extractors Association of India and Ashok Sethia explained that importers of Vietnam should do business with only known exporters of proven credentials. Vietnamese importers suggested a MoU between India’s exporters and them to address uncertainties. Dr. Mehta asked them to come up with a draft: Second Day (I) Meeting with Huong, Director, Regional Plant Quarantine Station, No1, Hal Phong: Indian delegation briefed Vietnamese side about various improvements in Plant Quarantine System of India during last one year. Vietnamese side expressed concern on number of interceptions as well as problems relating to documentation. Vietnamese side showed some PSCs which needed to be verified. Dr. J.P. Singh and Dr. Jasvir Singh checked those PSCs under UV lamp and found that two PSCs did not contain the security feature (water mark). These PSCs have been issued by P.O. Hathod, Deputy Director of Agriculture, Jamnagar, Gujarat. These PSCs need to be further checked by DPPQ&S from the officer concerned to ascertain whether these are fake PSCs or issued by the officer on faulty PSG form or any other reason. (ii) Inspection of maize consignment

Imported from India at Hal Phong sea port: Both sides jointly inspected the maize consignment lying in port, PSG for which had been issued by RPQS, Mumbai. Samples collected from the consignment showed presence of live storage pests (Corcyra cephalonica and Sitophilus oryzae). Trogoderma granarium (living or dead) was not found. PSC for this consignment had been issued by RPQS Mumbai. Presence of live pests in maize consignment indicates failure of fumigation treatment. Vietnamese side showed a larva of Tg collected from a cotton consignment (which had been released). Third Day Closing meeting with NPPO, Vietnam led by Dr. Nguyen Xuan Hong, Director General, PPD, Vietnam Indian delegation briefed NPPO of Vietnam about the joint inspection. Indian delegation acknowledged issues relating to documentation as well as fumigation and assured NPPO of Vietnam to address all the issues. Arrangement on Plant Quarantine (APQ) between India and Vietnam was signed by Dr. Nguyen Xu an Hong, Director General for the Plant Protection Department, Ministry of Agriculture & Rural Development, Government of Vietnam and Sarvesh Rai, Director (Plant Protection) for Department of Agriculture & Cooperation, Government of India. Departure to Ho Chi Minh City Fourth Day Meeting with Naguyen Van Nga, Director, Regional Plant Quarantine Station, No-II, Ho Chi Minh City: Indian delegation briefed the Vietnamese side about the discussions and signing of agreement on plant quarantine cooperation in Hanoi leg of the tour. Indian delegation also briefed the Vietnamese side about improvements in India’s phytosanitary system during last one year. Vietnamese side made a presentation on interception of live pests in consignments of animal feed coming from India. Inspection of maize consignments

imported from India at Catlai Port Joint inspection of two maize consignments from India was carried out. Both consignments had come from Mumbai. There were live storage pests in both consignments. Though live Tg was not found, one dead beetle was found in one of the consignments. Live infestation clearly indicated failure of fumigation. Interactive Meeting with Plant Quarantine Officials, Animal Feed Exporters & Importers: Consul General Abhay Thakur made introductory remarks giving an overview of the state of trade between the two countries and potential to increase the trade further. He also informed the importers that India has taken the issue of non-compliance notifications very seriously and assured the importers that the issues will be resolved. Dr. J.P. Singh made a presentation on India’s. export certification system. Vietnamese importers expressed deep concern on continued interceptions due to Tg infestation and losses suffered by them due to re-fumigation and re-export. They wanted an assurance that there would be no further interception. Indian delegation assured them that a better understanding had developed between both NPPO’s. The agreement on Plant Quarantine cooperation would facilitate exchange of information and visit of experts which would help resolve the issue. Dr. B. V. Mehta and Ashok Sethia requested Vietnamese importers to do business with only those Indian exporters who had a good track record. Vietnamese importers may consult Solvent Extractors Association of India in this regard if required. Fifth Day Meeting with Director, Head Export! Import Division, Regional Plant Quarantine Station, Ho Chi Minh City and visit to Plant Quarantine Laboratory, Ho Chi Minh City: Dr. J.P. Singh and Dr. Jasvir Singh visited the plant quarantine laboratory at Ho Chi Minh City and observed the samples collected from maize consignments. The laboratory tests confirmed that the live pests found in maize consignments were storage pests and not Tg. – TVS

May 2012, SAARC OILS & FATS TODAY

Budget Reaction

Budget 2012-13

Oilseed Sector

Disappointed to food security and the country can ill afford to depend so heavily on import of such an essential food item. In view of this, SEA had made various suggestions including following: 1. Pulses & Oilseed Villages – Greater Allotment 2. Weighted Deduction for Oilseeds Extension Programme 3. Re-alignment of Tariff Value for Edible Oils 4. Import Duty on RBD Palmolein to nullify the disadvantage faced by local vegetable oil refiners due to Indonesian inverted export duty structure. 5. Withdraw the export duty on deoiled rice bran

he Oilseeds production in the country is stagnant at around 27-28 million tonnes and the productivity at 950/1000 Kg. per hectare. The country is heavily dependent on import. Last oil year (2010-11), country had to import 87 lakh tonnes of vegetable oils at the cost of over Rs. 40,000 crores. During the current oil year (2011-12), we will be forced to import over 90 lakh tonnes of vegetable oils valued over Rs. 50,000 crores to bridge the gap between the demandsupply. Our dependence on import of vegetable oils has increased to over 55%. It is a matter of grave concern with regard

SAARC OILS & FATS Today, May 2012

It is welcome to note that the Hon’ble Finance Minister has focused on agriculture sector and has proposed 150% tax deduction for agricultural extension activities. It is unfortunate that in the budget Hon’ble Finance Minister has not proposed any new measures to reduce our dependence on burgeoning imports of edible oils. With no change in tariff value in RBD Palmolein, the effective rate of custom duty will continue to be at around 3% as against the intended custom duty of 7.5%. Also, there is no incrase in custom duty on import of RBD Palmolein, which was requested for by the Association to

counter the inverted duty structure of Indonesian Government for CPO (16.5%) RBD Palmolein (8%). This is evident from the fact that import RBD Palmolein already jumped up from monthly average of 1,00,000 tonnes to 3,00,000 tonnes in the month of Feb. This will surely call a death knell for Indian domestic vegetable oil refining industry. This will also cause unemployment of more than 1 lakh persons directly and affect more than 5 lakh people of ancillary industries. Apart from this, huge investment of nearly Rs.10,000 crores will be forced to remain unproductive. This will also cause a major shortage of the byproducts obtained from Palm oil refining, which are used extensively in the manufacture of soaps and other oleochemical products, thereby affecting seriously, the future of those industries and also the consumers of these products. The Industry is greatly disappointed with the budget proposals as no concrete measures have been suggested in the union budget for improving the oil seed production or its productivity and also no measures have been taken to ensure safety of the domestic vegetable oil refining industry against large scale import of finished good i.e. refined palmolein. SUSHIL GOENKA President

Futures Trading

Oil processors seek probe into ‘Misuse’ of commodity exchanges SOPA & SEA write to Food Minister SEA’s Letter to K V Thomas

he Soyabean Processors Association of India has sought a government probe in the alleged speculation and circular trading in soyabean, refined soyaoil and mustard futures. “Some group of people who profited in guar operations has now started similar operations in mustard seed, soyabean and soyaoil besides hoarding of other farm commodities. This has resulted in price rise of over 40 per cent in both mustard and soyabean,” the Association said in a letter to the Food and Consumers Affairs Minister K V Thomas. The Association said soyabean processors were unable to run their units as raw material prices were ‘fictitiously high’ and processors were unable to recover costs by sale of by-productssoyaoil and soyameal. The Solvent Extractors Association of India also asked Consumers Affairs Ministry to prevent misuse of futures trading on commodity exchange. SEA’s

movements, to check any unusual price behavior. However, the problem the industry is facing today is being caused by unrealistic high volumes in futures trading exchanges, leading us to believe, that the future exchanges are being used by speculators who are causing artificial price movements in absence of adequate safeguards against price manipulations. It is ironical that one side, the Government is imposing stock limits on oilseeds and oils on Indian producers and traders, where as on the other side Government is allowing to stock goods through exchanges, by keeping stock & hedging the same in forward market. This practice of stocking/playing in exchanges creates artificial shortage for the crushers, resulting in distortion of prices, thereby affecting the consumers. Mustard seed prices have risen so high that oil millers and solvent extraction plants are unable to procure and crush the same in parity in their processing units resulting in

letter to minister followed the one from Indore-based Soyabean Processor Association of India. Suggesting corrective measures, SEA president Sushil Goenka said three per cent penalty on any default by sellers in the futures market should be changed to zero. In compulsory delivery contracts, the situation tends to favour the buyer. Therefore, contracts should be made seller’s option delivery. Extracts from SEA’s letter: Commodity futures exchanges provide a very good tool for price discovery and risk management through hedging, which are their basic objectives. However, when demand is far in excess of supply from domestic sources, there is always risk of futures trading being used more for speculation than for its real purpose, unless the contracts have enough built-in safeguards and the market regulator keeps watch on price

Largest Exhibition in India for Grains, Cereals, Spices, Oil Seeds, Feeds, Products & Technologies

3rd

25-26-27, August 2012 Gayathri Vihar, Palace Ground, Bangalore, India

www.graintechindia.com May 2012, SAARC OILS & FATS TODAY

Futures Trading slow down of processing. This needless to mention is affecting the interests of consumers. This can be very well observed from the following table and Annexure (enclosed). Crushing of Mustard in the current season (2011-12) is reduced considerably due to Excessive volatility and speculation in the price movement. The main reason for this significant reduction in mustard seed crushing is due to continuous disparity or meager margins for the oil milling sector. This has lead to lower production of the domestic mustard seed oil, leading to higher imports of vegetable oils at higher prices thereby pushing up the food inflation. To overcome this situation, we would like to request your Ministry to kindly take the following corrective steps to prevent misuse of Futures/Commodity Exchange: 1. Make the Contract at Seller’s Option Delivery One of the draw back in the structure of the futures contract for mustard seed is 3% penalty on sellers defaulting to give delivery. Had the penalty been Nil or

It is ironical that on one side, the Government is imposing stock limits on oilseeds and oils on Indian producers and traders, where as on the other side Government is allowing to stock goods through exchanges, by keeping stock & hedging the same in forward market

negligible, this situation may not have taken place. 3% penalty on sellers itself attract the buyer to take huge position in the market. Practically in the futures market the percentage of delivery is negligible or very low. People shift their position to other contracts when the contract is nearing expiry date and that is the ideal condition for any futures contract. In a compulsory delivery contract, stocks appearing in exchange warehouses and Open Interest to volume ratio trends to

be inclined in favour of buyer as seller has to put out 100% money towards delivery while buyer has to bring in just 5-7% margins. Under Seller’s option, the Sellers have trading strength becomes equal to buyers as wider. Also in Seller’s option, penalty is lower and there is no commercial incentive for buyer to pull up the markets. It may be noted, Future contracts in Soybean were launched in the year 2004. Since inception, the soybean contract were always traded

PRICES OF MUSTARD COMPLEX NCDEX RMSEED APRIL FUTURE Jaipur Kanchi Rapeseed Closing Volume Open Delivered Ghani Oilcake Price Interest Physical Mustard Date 42% Mustard Oil Jaipur seed price Rs/100 Kg. Rs/100 Kg. MT MT Rs/10 Kg. Rs/100 Kg.

Processing Parity/ Disparity Rs. Per MT of RMSEED *

01-02-12

3296

91420

132080

3240

713

1035

-174

04-02-12

3291

79780

133370

3275

723

1035

-151

10-02-12

3394

227390

162780

3425

742

1100

-523

15-02-12

3391

112500

175560

3375

731

1080

-561

21-02-12

3593

310070

212920

3600

776

1120

-872

25-02-12

3699

252420

229710

3670

787

1155

-937

29-02-12

3588

314720

232130

3480

745

1150

-642

05-03-12

3595

161880

240930

3465

747

1195

-136

10-03-12

3665

129060

244620

3570

764

1295

15-03-12

3729

214220

235320

3625

780

1345

446

20-03-12

3872

348830

213450

3775

805

1380

107

24-03-12

3921

183360

171230

3870

825

1420

158

*processing change taken at Rs.1250/tonne considering most efficient plant, however most of the oilmills processing cost is Rs.1500/1600 per tonne and in that case disparity will be higher than shown above. 20

SAARC OILS & FATS Today, May 2012

Futures Trading as seller’s option contract. However in the month of January, 2010 the soybean contracts were converted from seller’s option to compulsory delivery contract, which resulted in disconnect between the spot and future market due to the penalty structure and other problems associated with the compulsory delivery option contracts. Due to this reason the soybean contracts were further revised from compulsory delivery option to seller’s option contract in July, 2012 and till date the contracts have been running smoothly with good convergence with the spot market. It is therefore desirable to have the contract at seller’s option and the penalty should be fairly reasonable. This step will discourage unhealthy speculation and reflect fair prices. 2. Reduction of Validity Period on the Exchange Platform from 9 to 3 months It is suggested that revising down the validity period of mustard seed, which comes under exchange delivery system, from current 9 months to 6 months from the date of deposit, will help in reducing the bullish trend that is building up due to investment funds of non hedgers in

purchase of mustard seed from spot market for delivery under exchange system and rolling it into subsequent future months contract to earn the inter month spread. Current validity structure causes low availability of mustard seed for actual users and industry users. Such investments is getting attracted to mustard seed because of the recent change of validity structure from 6 months to 9 months. Forward Markets Commission (FMC) may consider revising the validity structure from even 6 months from the date of deposit to 3 months from the date of deposit, so as to ensure smooth and regular availability of mustard seed to industry users and processors & mustard oil to consumer. 3. Margin Money Margin money is imposed by the exchange for risk management. Based on the price movements the margin deposits are revised from time to time. In order to curtail unhealthy speculation exchanges may levy one side margins on buyer or seller based on the movement of the market. If the market is one sided and bullish then additional special margins are imposed on the buyers to curb unhealthy

speculation to prevent unwanted or unreasonable price hike in the market. Similarly additional special margin be imposed on sellers when the market is bearish. In the current situation, FMC should direct the exchanges to impose additional special margins on buyers since the market is moving one side and hamper the equilibrium of the market. 4. No Trading on Saturdays International Exchanges like KLC, CBOT, Dalien and also Indian Stock Exchanges remain closed on Saturdays. However, our Commodity Exchanges are working on Saturdays. It is argued that in India, since Mandies are open on Saturdays, the exchange should also operate on Saturdays. The fact is the volume on Saturdays is very low but there is heavy fluctuations on Saturdays as International Exchanges are not operating on Saturdays and disturb the market position. Also, Saturdays working puts lot of pressure on Operators and Brokers. FMC may review the present system and consider to have trading from Monday to Friday only in line of International practice.

Crush Report of Mustard of Seed - Jaipur Delivered 42% Sr.No. MUSTARD OIL

Kachhi Ghani

Expeller

3845

Mustardseed Delivered to processor - 42% Rs./100 Kg.

Mustardseed per MT

38450

Crushing Expenses

1250

1000

(─) Benefit of Lab result & wt. tolerance

250

(─) Discount @ 1%

385

Cost (2 + 3 - 4 - 5)

39066

38816

Mustard Oil Rs./10 Kg. (excluding tax)

829

809

Oil realisation @ 37% recovery

30673

29933

Oilcake price - Rs/100 Kg. (Ex. Sellers’ Factory)

1410

Oilcake Realisation @ 63% recovery

8883

Total realisation (8 + 10)

39556

38816

Crush margin Rs/T. (11 - 6)

491

Crush Margin in $ Per Ton

9.6

0.0

Oil-share (8/11x100)

Spot exchange rate 1USD = INR

51.31

May 2012, SAARC OILS & FATS TODAY

Crop Report

Actual planted acreage of US Soyabean may be higher â&#x20AC;&#x201D; G. Chanrashekhar

n the face of it, the US Department of Agricultureâ&#x20AC;&#x2122;s prospective planting and stock report released recently appears bullish for new crop soyabean, the plantings of which were estimated at 73.9 million acres for 2012, down one per cent from last year. Coming as it does in the wake of lower South American soyabean crop, it is sure to signal further price strength. If anything, the market was hoping for a higher US soyabean acreage that could have helped avoid a tighter global market condition. Yet, the projected acreage is by no means final. The actual planted acreage could well vary; and there is high probability that it will â&#x20AC;&#x201C; on the higher side. It is necessary to remember that during the survey period for the prospective plantings report, the soyabean market was still undergoing changes. In the US, soyabean prices have been higher relative to corn in recent weeks. Now the attractiveness to plant soyabean has considerably improved. It is reasonable to assume that farmers would be tempted or incentivised to allocate a higher acreage for the bean now than it was say 3-4 weeks ago. It is for this reason, many experts have argued that in the planting report expected in June there is very good chance of higher soyabean area than what the prospective report suggested. As for the stock report, it indicated that soyabean stocks totaled 1,370 million bushels, up 10 per cent from stocks a year ago. This implies fairly neutral outlook for old crop soyabean futures; but the planting numbers point to bullish outlook for the new crop soya futures. It would be advisable to exercise caution in reading and interpreting the numbers. CBOT Trading Currently, on the bourses, especially Chicago Board of Trade, the speculative interest in soyabean is considerably high. For several weeks now, investor interest in this commodity has been escalating. It is driven primarily by dry conditions in South America which has affected bean production. To be sure, investors are holding long positions and the managed money inflows are bullishly biased in soyabean. While the recent USDA prospective planting report has added 22

SAARC OILS & FATS Today, May 2012

further impetus to strong prices, as said earlier, it would be risky to place too much reliance on it. If actual planting progress suggests an improvement in acreage, one can well expect a bout of long-liquidation and sharp correction in prices. Oilseeds While other major oilseed origins in the northern hemisphere are readying to plant oilseeds, it would not be out of context here to state that peak production season for palm oil begins in April; and stocks, especially in Malaysia, could be trending higher in next few months. So, the oilseeds and vegetable oil markets are likely to be torn between constructive fundamentals in the short-term and prospects of crop rebound and better availability in the second half of the year. Many analysts are betting on rising crude prices that they believe will propel vegetable oil prices. Indeed, with global economic recovery still fragile, escalating energy prices can prove to be counter-productive. So, the last word on oil prices has not been said yet. n

May 2012, SAARC OILS & FATS TODAY

Health & Nutrition

Indian diet is too oily: Study

il is seeping into Indian diets like never before. The per capita consumption of edible or vegetable oils in the country shot up from around 3 kg annually in 1950 to 14.2 kg during 2010–11. The trend has begun to ring alarm bells owing to its severe health implications in the form of a rising tide of cardiovascular complications. Experts also fear shortages in the future if the consumption continues to grow at the current pace. The dramatic rise in demand began in the mid-1990s when the doors were thrown open for liberal imports. ‘The per capita oil consumption has surpassed all earlier predictions and may continue to increase at a blistering pace in the years to come, if the present conditions of declining vegetable oil prices and increasing incomes continue,’ a new study published in leading Indian scientific journal Current Science noted. The pattern could spawn shortages and India would then have to depend 24

SAARC OILS & FATS Today, May 2012

heavily on imports, the study, conducted by the Hyderabad-based Directorate of Oilseeds Research, warned. However, alternative strategies to boost oilseed production could help forestall a crisis. The increasing oil consumption was mainly attributed to three factors: economic boom resulting in better standards of living, decline in edible oil prices and growth in embedded oil consumption owing to proliferation of fried processed food products. ‘Both higher incomes and lower prices have contributed to the rising consumption,’ Dr D.M. Hegde, who authored the analysis, explained. Consuming fats is an essential nutritional need, most of which is met through visible fat sources - vegetable oil, ghee, butter, etc. In view of this, a certain increase was necessary to meet the challenges of malnutrition. But the rise in consumption has surpassed the country’s nutritional needs by a wide margin. An average fat intake of 29 grams

per person per day is enough to meet the nutritional requirements of Indians, which translates into an annual vegetable oil requirement of 10.585 kg per person. The per capita consumption has already reached 14.2 kg, which means the average consumption has risen to 38.9 gm, much beyond the nutritional need of visible fats. Edible oil consumption is closely linked to economic development. The trend has been witnessed in the developed world in the past and is playing out in emerging economies currently. China’s per capita consumption of vegetable oils was just 3.09 kg during 1976–80, which increased to over 23 kg by 2008–09. Rising oil consumption has both health and economic implications. For an adult, not more than 30 per cent of the total calorie intake should be from fats. Excessive intake of fats, especially saturated fats, is known to increase the risk of cardiovascular diseases. Health experts attribute the sharp rise in heart diseases in India to unhealthy diets, among other factors. Excessive oil intake in various forms is to blame for this. The increasing oil demand is an economic challenge, too. During 2010–11, the country imported about 9.2 million tonnes of vegetable oils costing around Rs 38,000 crore. The import bill is bound to go up with rising consumption. The total vegetable oil needs of the projected Indian population of 1,685 million by 2050 works out to 17.84 MT to meet the nutrition requirement. ‘The needs of vegetable oils to meet the nutritional fat requirement even by 2050 can easily be met if we increase the production of supplementary sources of vegetable oils, besides increasing productivity. But it may be difficult to match the unbridled increase in vegetable oil consumption with supply if the current trend of consumption persists,’ Hegde said. n

May 2012, SAARC OILS & FATS TODAY

Dairy

Pak’s dairy industry touches $26 billion Engro Foods cashes in on the boom

akistan is the fifth largest producer of milk with industry volume comprising different dairy products. The total trade reached at US$26 billion this year due to increasing population causing high domestic consumption, a research report said. A dense, growing and young population and rising income levels in Pakistan have opened a door for companies selling milk products. Engro Foods Limited (EFOODS) is the fastest growing company listed at the Karachi Stock Exchange and is strong enough to cash in on all opportunities of big markets with big investment. Engro Food’s business encompasses 26

SAARC OILS & FATS Today, May 2012

milk and nutrition products, beverages and ice cream. It operates in three business segments namely Dairy and Juices, Ice cream and Dairy farms. The company is the leader in UHT milk with over 44 percent market share while it is the second largest player in ice cream segment with market share of 24 percent. The company’s main brands include Olper’s, Owsum, Olwell, Olper’s cream, Trang, Olfrute, Dairy Omung and Omore ice cream. But Engro Foods has only 2.8 percent of the market share in the country. 93 percent is dominated by the unbranded and open (non Tetra Pack) milk sector. Hence, the opportunity for Engro Foods

is enormous. Other segments where the company expects growth are Ice-cream (US$133mn) and the North American Halal meat market (US$256bn). Dairy and juices making rapid progress In the UHT milk market, Engro Foods has grown exponentially in the past seven years and is now the market leader. Growth for the company is now coming from conversion of consumers to UHT milk from the open (non Tetra Pack) milk. The company has already positioned itself to benefit from this shift by launching “Tarang” and “Dairy Omung” for such consumers. As per the company’s management, initial market response for

Dairy

A dense, growing and young population and rising income levels in Pakistan have opened a door for companies selling milk products. Engro Foods Limited (EFOODS) is the fastest growing company listed at the Karachi Stock Exchange and is strong enough to cash in on all opportunities of big markets with big investment “Dairy Omung”, which is priced 7-10 percent lower than open milk, has been overwhelming with sales for “Dairy Omung” outshining the post launch sales of company’s most profitable product “Tarang” by 55 percent. The company expects this shift to result in 10 percent annual volume growth for the coming few years. Engro Foods plans to invest Rs 8.7 billion in 2012 to enhance its milk collection capability, increase powder plant capacity by 200 percent (from 5,000 tonnes to 15,000 tonnes) and increase its footprint in the ice cream business. The company currently has 916 milk collection centers which collect 89 percent of company’s total milk. With the expansion, which is being financed by Rs 5 billion of debt (57 percent) and Rs 3.7 billion of internal funds (43 percent), the company expects to significantly increase its milk collection infrastructure which will help sustain future growth. The market potential for the producers of different brands of ice cream has been estimated at US$133 million. The company plans to increase its presence in ice cream industry and expects volume growth of 11 percent, according to the research report of Elixir Securities. The company expects to achieve breakeven in the ice cream segment in 2013 which will boost company’s net margin to 5 percent from the current 3 percent. Ice Cream Sector The company breakeven in ice 2013, though its segment has been

does not expect to cream segment until growth within this extraordinary. Engro

Foods ice cream competes against that of ‘Unilever’ but the company, with its effective marketing strategy, has been able to capture a sizeable market share of 24 percent in a short span of time. The feat becomes remarkable when one considers that Engro Foods is only present in 40 percent of “Walls” geographies. Halal Foods Sector Engro Food Limited has entered into international market with the acquisition of AL-SAFA halal foods in early 2011 and has become the first Pakistan based food multinational company. The company currently has a market share of 15 percent and 3 percent in the Canadian and North American Halal meat market. To capture a higher share of this US$250 billion industry, the company is in talks with major retail chains to increase its product availability. The company also plans to launch Rice and Paratha (wheat bread) in near future from this platform. Engro Foods competitors within this industry are the unbranded halal meat shops (in Canada) and small local brands (in North America). Engro Foods has witnessed a steep growth in its revenues with last five years growth averaging at 82 percent. Growth largely came from its dairy and juices (DJ) segment which represents over 90 percent of its sales. Venturing into ice cream business back in 2009 has resulted in DJ contribution to sales to come down from 100 percent in the period 2006-2008 to 91 percent in 2011. The company had initially adopted market penetration along with differentiation strategy where focus

was on capturing the market share and establishing a strong brand. This strategy entailed high marketing expenses and squeezed margins. Now, with a sizable market share, management’s focus is shifting towards making sustainable business profits by curtailing marketing expenses as the brand has been adequately positioned. Moreover, increasing volumetric sales along with vertical integration shall also help in achieving the desired margins. Furthermore, clearly defined consumer segment is helping market share enhancement. EFOODS’ DJ segment’s market share has grown from 7 percent to 44 percent in a matter of 4 years. Ice cream business has become “Number 2” player in a span of only three years. This was possible only because of its clear segmentation and effective marketing strategy to target each consumer segment. More than nine sub brands within DJ segment, ice creams for various age groups along with different sales mix adopted for each segment are obvious examples. Moreover, EFOODS has explored and successfully targeted many underserved segments of Pakistan. As such, launch of affordable products like Tarang and Dairy Omang particularly in rural areas targeting the lower income group clearly highlight this fact. Engro Foods Limited’s management has highlighted near-term goals including capitalizing conversion from unprocessed to processed milk through strong branding – the company expects the recently released Dairy Omung, which is priced at par with open milk to drive conversion to Tetra pack milk at a higher rate. Secondly the geographical expansion in ice cream sector is also an opportunity. The company currently serves only 40 percent of potential market size, and may achieve breakeven in ice cream by 2013. Given rising profitability, management believes that company is appropriately poised to explore any new opportunity within the local and international food and agriculture sector. n

May 2012, SAARC OILS & FATS TODAY

Dairy

Yoghurt:

A healthful indulgence — Shailaja Sharma

s gut-conscious city folk switch from creamy dahi (curd) to probiotic flavoured yoghurt, dairy majors are keen to increase consumption first. Fight for market-share can wait. The last two years have seen a sea change in the way Indians consume dahi (curd). The dairy product, in its relatively novel avatar of processed yoghurt, is increasingly becoming a healthful indulgence. Sweet it might be, but yoghurt has less fat than both home-made and branded (Amul and Mother Dairy) dahi. It’s considered good for the gut, given 28

SAARC OILS & FATS Today, May 2012

its digestive, coolant properties. What’s more, it has none of the guilt associated with ice-cream consumption. Small wonder, as yoghurt sales continue to zoom, and with summer round the corner, both multinationals (like Nestle and Danone) and Indian food companies (like Mother Dairy and Amul) think flavoured yoghurt is now the most exciting category among dairy products. So exciting that they have introduced a plethora of choices: probiotic, vitaminfortified, stirred, creamy, pulp-laced. Flavours abound too: vanilla, mango, pineapple, strawberry, raspberry, plum. And prices are competitive: Rs18-20 for a

100 ml cup of yoghurt. The effect of this slick marketing is that Mother Dairy, which recently entered the yoghurt category, saw repeat demand from retail stores within two days of launching its product. Consumers scooped up multiple cups at a go. According to Subhashis Basu, head of dairy products at the company, “Yoghurt as a format is beginning to be developed only now. Indians are more tuned to curd, but with global exposure, yoghurt is slowly gaining in momentum.” Danone India’s MD Jochen Ebert said, “Younger Indians are very aware of this product. It is an interesting category for

Dairy the Indian food market in general. It is a healthy product too.” Danone started selling flavoured yoghurts in India nearly two years ago priced Rs 10 for a 100-ml cup. Six months ago, it launched Cremix, a premium yoghurt brand, which commands Rs 20 for the same quantity. Amul, too, had test-launched yoghurt as early as 2006 with its brand Yogi but discontinued it, only to re-enter the market with another brand Flaavyo in 2011. But it was Mumbai-based Parag Milk Foods that launched fruit dahi Go two years ago. Innovation in yoghurt is credited to G S Bhalla, an entrepreneur who started the frozen yoghurt dessert chain Cocoberry in 2009. With a single product offering flavoured yoghurt served with toppings like pomegranate, kiwi, raspberry, strawberry, chocochips, gummi bears Cocoberry has opened nearly 40 outlets across nine cities selling ‘guilt-free’ dessert-cum-snack, at over Rs 80 for the smallest serving. By the end of this year, Bhalla said Cocoberry should have 80 outlets in all. The yoghurt business has been so exciting that Cocoberry is mulling a possible foray into fast moving consumer goods (FMCG) space to sell health and wellness foods. In the last one year, international chains like US-based Red Mango, Smoothie Factory, South Korea’s Yogurberry and Canadian yogurt chain Kiwi Kiss have entered India, all aiming to expand their global footprint. Danone’s Ebert said companies are investing in yoghurt with the intention to grow consumption. Competition, he said, will eventually help all companies. “The per capita consumption of this category is very low if one compares 0.01 kilo per capita consumption in India to 25 kilos in France, Germany or Holland. It makes for a very interesting business for very many people in the market. Danone will be happy if Amul invests in the category; Amul will be happy if Nestle invests in the category; and Nestle will be happy if Mother Dairy invests in this area,” Ebert said. Mother Dairy’s Basu said, “Mother Dairy does not intend to gain market-share at the expense of consumption growth in the category. FMCG yoghurt sales in a city like Mumbai put together are less

than a tonne a day. We are striving for 1.5 tonnes a day. In such a nascent category, our objective can’t be market-share”. But the high growth in excess of 20 per cent is luring these companies to look

at yoghurt seriously. As rising disposable incomes and attendant enhanced lifestyles drive consumers to demand healthful foods, the trick is to make such foods tastier, said Basu. n

Gujarat Govt & Amul to promote camel’s milk

f the camel is called the ship of the desert, it would surely provide you some cooling in this summer as well. Yes, it may sound unconventional but the taste of ice-cream made from camel’s milk would not only give you a cool tasteful snack but also nutrition values to fight illnesses like tuberculosis, diabetes, hypertension etc. The Gujarat state government is also mulling over the development of a network for the marketing and distribution of camel’s milk and its products. The large network of Amul might also be utilized for the state government’s plan. A group of camel rearers from the Kutch visited the state assembly on Monday and served ice-cream made from camel’s milk to the MLAs. How did these MLAs find this ice-cream is a different thing but Bhikhabhai Rabari, president of Kutch Unt Uchherak Maldhari Sangathan (KUUMS) is optimistic of popularising camel’s milk. Rabari said, “MLAs have liked the ice-cream. Our product is already popular but now we want to market camel’s milk as it has very good qualities.” He said, “Camel’s milk has only 2.5 per cent fat and it is full of vitamin C which is not found in the milk of cow or buffaloes. Camel’s milk has more sodium, calcium, phosphorus, zinc and magnesium as compared to cow’s milk. This milk also controls insulin in type-1 diabetes. Further, this milk is very good in curing tuberculosis. Its shelf life is 9-10 hours when kept at room temperature.” Utilising these qualities for making it popular, State Animal Husbandry Minister Dileep Sanghani said, “The state government has planned to develop distribution system of camel milk in the next financial year. This will provide livelihood support to the camel rearers of the state and milk will be available to the needy citizens. We are mulling over utilising Amul’s distribution network for the supply of camel’s milk on large scale.” Camel milk dairy Gujarat will soon get its first commercial dairy for processing of camel milk into various products in Kutch district. A proposal in this regard has been received by the Government from the Kutch District Cooperative Milk Union or the Sarhad Dairy. A local union of camel breeders Kutch Unt Uchherak Maldhari Sangathan (KUUMS) has been formed to develop milk collection networks, while a Kutchbased NGO Sahjeevan has been roped in to mobilise the camel breeders and spread awareness with regard to economic and nutritional importance of camel milk. Also, the Gujarat Milk Marketing Federation (GCMMF) or Amul has agreed in principle for marketing of the camel milk which is high in nutrition and low in fat, a state government official said. “The Government is planning to set up a dairy for commercial processing of camel milk, for which provision has been made in the 2012-13 budget,” the Director of Animal Husbandry, Dr A.J. Kachhiapatel said. He said that a proposal for setting up a milk processing unit of capacity of 2,0002,500 litres has also been received from Sarhad dairy. This project has been taken up with two objectives — one to provide an alternative for income generation for the local community of cattle breeders or ‘maldharis’ and other to increase the use of camel milk which is high in nutritional properties, low in fat and easy to digest, Dr Kachhiapatel said.

May 2012, SAARC OILS & FATS TODAY

Research

Using Enzymes as Catalysts …in interesterification

– Wolf Hamm

he use of chemical catalysts for interesterification has already been described from a historical as well as a technical point of view. The technology which was developed in the 1920s served the oils and fats industry well for much of the 20th century - and still does - but progress in other fields, particularly degumming of oils rich in phosphatides, eventually meant that an alternative to chemical interesterification became a practical reality. The patent literature is in fact replete with claims for the use of enzymes to degum oils such as soybean oil. Such patents began to appear in the last quarter of the 20th century, and their success encouraged the search for other uses for enzymes. Initially the enzymes used were derived from animal material but before long plant sources were found to match the performance of the earlier products. This produced a number of benefits, including versatility, acceptability and cost. Although enzymes have a long history of use in food they have only recently been developed for the large-scale modification of oils and fats. Of principal interest in this field are the lipases, which are ubiquitous in nature, being present in the animal, microbial and plant kingdoms. They are able to detach the fatty acid chains from the triglyceride molecule, either selectively or comprehensively, but can also promote the reverse reaction – i.e. they can also be used to promote the synthesis of esters such as fats. The most extensively studied lipases are those from microbial sources, as these are more readily available and are considered to be more stable than plant or animal lipases. They are particularly interesting because different types display a wide range of activities. However, they have to be handled with great care, as they are very temperature-sensitive and lose their activity rapidly when used above 700C. A fuller explanation of the functionality of the various lipases can be found in a paper in the journal INFORM, which is listed at the end of this article. Of course lipases are not the only enzymes to find applications when processing oils and fats. Phospholipases had for some time already found an application in degumming of vegetable oils. Fundamentally, lipases catalyse the hydrolysis of fats, but in the presence of low levels of moisture the lipase introduced will catalyse interesterification reactions. This produces results similar to those found when using chemical catalysts for interesterification. Certain lipases have the additional facility of being regio-selective, i.e. of being able to replace fatty acids in specific positions on the triglyceride molecule, a feature which

SAARC OILS & FATS Today, May 2012

turns out to be very useful in the production of fats having properties that rely on molecular arrangement. As lipases (and other enzymes) are generally not very stable it is usual to deposit them on a carrier prior to use, and various carriers have been tested for suitability, comprising mainly the ability to bind the lipase to the carrier, to ensure lipase stability during the process of immobilisation and to ensure particle porosity sufficient to allow full use to be made of the enzyme for the reaction. The stereo-specific lipases, which act on specific positions on the triglyceride chain, are particularly important due to their ability to act on specific positions in the triglyceride molecule. Of these the best-known are the 1,3-specific lipases, i.e. lipases which specifically act on the fatty acids at the ‘outer’ positions on the glycerol molecule that forms the ‘backbone’ of the triglyceride molecule. These can be used to produce symmetrical triglycerides, which are important confectionery fat constituents. Reactions in this category are preferably carried out in a fixed bed, as this facilitates repeated use of the enzyme, thus reducing their unit cost. A further feature of the enzyme-based process is that, compared with that used in the corresponding operation using a chemical catalyst, lower temperatures are needed to achieve interesterification. A temperature of approximately 700C appears to be ‘most generally advocated for this process, and it has been stated that the enzyme would begin to lose activity if a temperature of 800 C is used. As in the case of the process using one of the chemical catalysts, the enzymatic process for interesterification requires great attention to safety aspects, in particular focusing on containment of the enzyme. In this respect the enzyme immobilised on an inert carrier is obviously less hazardous than an enzyme freely suspended in the material being processed. Immobilised enzymes offer the user several advantages. The subject of reactor loading with enzyme and end-of-reaction discharge also warrants careful consideration from the point of view of personal safety. Chemicals versus enzymes The enzyme-based process has been used for the production of specialty fats, requiring regio-selective enzymes, - and has also been shown to be applicable to the production of fats requiring random interesterification. Although, as pointed out earlier, a wide range of enzymes is available for fat modification, in practice the alkali catalysts, and in particular sodium methoxide, have dominated the field of interesterification applications.

Research

Whereas chemical catalysts are single-use initiators of the reaction, enzymes can be re-used, although their activity declines with multiple re-use or with continuous use over an extended period. To operate in this mode in a production environment would result in fluctuating output from the reactor, which is not desirable, and the logical solution is to have several reactors in series. By operating several columns in series, it is not necessary to have full conversion in the first column, as the load can be spread over several reactors. This results in a more even flow and output from the reactor series. Two groups of compounds that have specific relevance for enzyme working life have been identified and are residual inorganic acids from degumming or bleaching earth together with citric acid from deodorisation and oxidation compounds, specifically those contributing to the measured Peroxide Value. The formation of diglycerides as by-products is an important consiueration when interesterifying chemically but is relatively insignificant in the case of the enzyme-based process. The fact that the regio-selective properties of specific enzymes provide a functionality not easily obtained with the existing chemical catalysts is another factor to be borne in mind when comparing the chemical and the enzymic catalysts as the agents of the change required. These may be particularly valuable in the case of structured lipids. The production of diglycerides, which are considered to be useful in managing obesity, provides another application of enzymatic modification of fats. Symmetrical diglycerides produced using enzymes are now being marketed in Japan with the aim of promoting obesity reduction. The range

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of conversions using enzymes is constantly growing, though in most cases these are niche products having high added value and not large in volume. At the presentâ&#x20AC;&#x2122; time, it is likely that the most important application of the process of interesterification is to be found in its combination with full hydrogenation in order to avoid the formation of trans-fatty acids when producing a plastic fat. It remains to be seen whether this is a long-term solution to the trans-fats problem. Enzyme interesterification has proved to be of greatest interest because of the wide and growing range of modifications shown to be possible. The cost of enzyme use remains a handicap to the wider use of the technology resulting, at least at present, in the technology being primarily applicable to high value-added products. Studies on enzyme reuse are narrowing the cost gap relative to the use of chemical catalysts, bearing in mind that post-refining costs as well as other processing costs should also be lower in this case. The methodology of Life Cycle Analysis (LCA), which has been employed in recent years to assess the global impact of various technologies, is also now being used to compare the longerâ&#x20AC;? term effects of the two routes for interesterification discussed above. LCA is coming to be of growing interest in food production across the whole spectrum of its potential relevance. It will be of considerable interest to study the outcome of this comparison, although it needs to be remembered that to a considerable extent the two routes at present target different product areas. The comparison of chemical and enzymic interesterification processes is shown in diagrammatic form (Figure 1). This illustrates very clearly how much simpler the enzymatic process is than that using a chemical catalyst On the other hand, the enzymes used are significantly more expensive than the alkaline catalysts generally used when using the chemical process, although multiple re-use of the enzyme - not possible when using a chemical catalyst - reduces this cost difference significantly. The diagram also shows the temperature ranges prevailing in the various stages. Spent enzyme is generally combined with spent bleaching earth for disposal, thus creating additional solid effluent but no liquid effluent from this source. Whereas chemical interesterification gives rise to a small amount of aqueous effluent (plus oil and fatty acid losses when deodorising the product), enzymic interesterification largely avoids these losses. Overall, the environmental impact of the enzyme-based process is less than that of the process using a chemical catalyst. The enzyme process is also more effective at conserving the tocopherol content of the oil, an important consideration where palm oil is one of the constituents of the blend being processed. (The Author is Edible Oil Processing Consultant - Retired)

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World Bank approves $ 352 million High milk production tones down credit for National Dairy Support product prices Project ith an estimated seven

he World Bank has approved a $ 352-million credit for the National Dairy Support Project. The project will cover over 40,000 villages across 14 major dairying states in the country, benefiting an estimated 1.7 million rural households. The States included in the project, such as Bihar, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh, account for more than 90 per cent of the national milk production, according to a World Bank report. The project will support the implementation of the first phase of the National Dairy Plan (NDP) of the National Dairy Development Board (NDDB), which aims at increasing the animal productivity, expanding infrastructure for milk procurement at the village level and enhancing milk processing capacity and marketing, among other things. It is pointed out that while the dairy sector in India had seen significant growth over the decades, the growth rate of milk production has slowed down in recent years. From an average 4.3 per cent per annum in 1990s, the growth rate came down to 3.8 per cent in 2000s. On the other hand, the 32

demand for milk is expected to increase as the economy grows and the income levels rise. According to the Union Government’s estimates, the demand for milk is projected to grow to around 180 million tonnes by 2021-22. This will require milk production to grow by 5.5 per cent per annum over the next decade to meet the anticipated demand. At the same time, a major concern in the country’s dairy sector is low animal productivity. The average milk yield of Indian cows is only about 3.4 kilograms per day as against a world average of 6.3 kg. The productivity is low mainly for reasons such as poor nutrition, health and low genetic potential for milk production. In the circumstances, the primary focus of the dairy project is on increasing milk production by genetic improvement of the cows and buffalos and optimal use of feed and fodder. The project will support long-term investments in animal breeding, extensive training to dairy farmers and doorstep delivery of artificial insemination and advisory services on balancing animal feed and nutrition.

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per cent increase in domestic milk production this year, availability of milk and dairy products has improved. The improved supply, driven by higher production, has led to a fall in domestic prices of dairy products like skimmed milk powder (SMP) and butter oil (ghee). Prices of liquid milk that saw a series of increases in the past year have not come down. However, consumers can expect a more stable price, this year and the government can breathe easy, as milk has a high weightage of 4.37 per cent in the wholesale price indexbased inflation. R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, which sells milk and milk products under the Amul brand, said, “Farmers have got good prices for the past two-three years and they have worked towards expanding production. Compared to a milk production of 123 million tonnes (mt) last year, we expect production to be 130-132 mt.” He said price increases in liquid milk this year should not be as frequent as last year. An improved supply on an extended winter season has exerted pressure on prices of SMP and butter oil. “There has been a 2025 per cent drop in prices of both, SMP and butter oil, since Diwali. Export of milk products is banned and domestic availability has improved. Therefore, the higher production is exerting

pressure on product prices and milk procurement prices,” said Sandeep Aggrawal, director, SMC Foods, which sells SMP under the Madhusudan brand. The SMP is currently priced at Rs 160 a kg, while butter oil is around Rs 220 a kg. The industry has reduced the price of milk it procures from farmers to Rs 24 a litre from Rs 29 a litre. R G Chandramogan, chairman and managing director of Chennai-based Hatsun Agro, said the export ban had left the industry with 100,000 tonnes of milk solidnot-fats and dairy cooperatives had imported 50,000 tonnes of SMP, adding to the improved domestic availability. Prices of milk products have been falling internationally as well, due to high production in countries like New Zealand and the US, said Aggrawal. “If we compare current SMP prices to last year’s rate in New Zealand, the biggest dairy product exporting nation, it points to a 20-per cent drop. A bumper produce in the US, where the price is prevailing lower than in countries like New Zealand, is exerting pressure on global prices,” he said.

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NID to design milk packs for Parag

FM snubs edible oil industry

ackaged milk and other dairy products of Parag Uttar Pradesh’s flagship milk brand - would soon be available in stylish packs designed by the Ahmedabad-based National Institute of Design (NID). The state government asked the milk development and dairy department to “reorient” its marketing and development strategies and get all milk products of Parag, the brand of the Pradeshik Cooperative Dairy Federation (PCDF), packaged in style by NID. The directions were given by Chief Minister Akhilesh Yadav at a high-level meeting. He also asked the officials concerned to work out the financial details for setting up a modern dairy plant in Lucknow which

would handle 5 lakh litres of milk every day. He said the Samajwadi Party (SP) government would make all efforts to make the dairy sector a small scale industry. The chief minister also asked Agriculture Production Commissioner (APC) Alok Ranjan to tailor make a marketing strategy for the PCDF and to devise mechanisms to make it more effective, and ensure wider publicity of Parag products that include butter milk, butter, cottage cheese, milk, curd, kheer and ghee. He also directed officials to set up Parag outlets at the Indian Institute of Management (IIM) Lucknow and other educational institutions.

Butter & chocolate can lower cholesterol and manage weight

cientists and doctors from a Cambridge UK based company, Lycotec Ltd, have developed a technology which converts all edible fats and oils into lipid-lowering and weight management products. Moreover, it prevents the accumulation of excessive fat in our body when we overeat. This technology explores completely new mechanisms of lipid metabolism in humans. Based on this, the company has developed new chocolate and butter products which have been tested in double blind, placebo controlled trials. The results were remarkable in drastic reduction of elevated cholesterol and triglycerides in patient blood – major lipids in our body. The taste and the texture of the new products are identical

to the original, and the cost is 2 pence per day for 1 person. The ingredients used are safe and accepted by food industry, and technology implementation does not require specialised expensive equipment. According to the founder of Lycotec, Dr. Ivan Petyaev, we now have the means to completely change the negative impact of food fats in our society. Let industry make it happen.

he edible oil industry is crestfallen as the Union Finance Minister, Pranab Mukherjee, chose to ignore its pleas. The industry has appealed to the Government to save the domestic palm oil industry from crumbling by increasing duties on the refined oil imports from Indonesia. The industry’s fears were not without a reason. There was a huge surge of finished oil (RBD palmolein) in February compared with the average figure. The figure went up to 3 lakh tonnes in that month against 1.10 lakh tonnes. “It is wrong to ignore our

pleas. Many palm oil units are being forced to close down after Indonesia changed policies that made export of raw oil uneconomical,” O.P. Goenka, an edible oil industry expert, said. Sushil Goenka, President of Solvent Extractors’ Association of India, said there was an unprecedented surge in the imports of finishes product, which will sound a death knell for the Indian Vegetable oil industries based at the ports. He called for increase in the tariff value on the refined edible oils to $1,200 a tonne in line with the current market price.

Edible oil prices up, milk prices may follow

dible oil prices soared almost 10 per cent — by Rs 6 to 8 per kg — in the last one month, adding further pressure on food prices. Palm oil, which accounts for nearly half of India’s refined oil consumption, went up Rs 10 per kg following a sharp rally in international markets. India imported about eight million tonnes, or half of its domestic vegetable oil requirement, last year. A weakening rupee has been another trigger for the rising edible oil prices. “There has been the worst expected soya crop in Argentina following drought conditions, and demand from China remains good. On the domestic front there is speculation about private cartels rigging prices in the futures market by taking advantage of the global scenario,” said Angshu Mallick, CEO, Adani Wilmar, which is the market leader in the domestic packaged refined

oil market. Palm oil price has soared to Rs 645 per 10 kg, rising almost Rs 100, while soyabean oil has gone up Rs 70 per 10 kg in the last one month. “Supplies of edible oil are reducing and, therefore, global prices are going up. Rupee has also weakened in the past few weeks. These are factors affecting domestic prices,” said Siraj Chowdhry, chairman of Cargill India. Milk prices set to boil over again Milk prices are set to soar again. Rising inflation and excise duty on packaging material for milk pouches are likely to make milk dearer by Rs 2 per litre, R S Sodhi, managing director of Gujarat Co-operative Milk Marketing Federation (GCMMF), which markets Amul milk, said on Monday. While he did not say when the hike would come into effect, sources said it could happen over the next couple of months.

May 2012, SAARC OILS & FATS TODAY

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High palm oil prices may affect demand

ith the palm oil price rising to a 13-month high, there is a fear in the Indian market that consumption level may fall in the current oil year that runs from November to October. Palm oil constitutes 42 per cent of the total edible oil consumed in the country and is largely used by rural India and eateries. The edible oil industry feels that this year the consumption level will not grow by 5 per cent as was anticipated. Malaysian palm oil futures climbed to an almost 13-month high on Wednesday as traders continued to bet on a brighter demand outlook for palm oil following expectations of a smaller soyabean crop in coming months. The US Department of Agriculture said in a muchanticipated report on Friday that farmers would plant less soyabean than expected, sending signals that global oilseed supply will tighten further and helping palm oil cross the psychological 3,500 ringgit mark. While palm oil price is rising in the international market, prices of Indian soyameal are also increasing globally. According to market reports, an Indonesian feed miller bought soyameal from India at a record-high price of $505 a tonne. Indian soyameal, which typically sells at a discount to 34

South American cargoes, was being offered at a premium of $20-$ 25 a tonne over Argentine soyameal, traders said. Strong demand in the domestic market in India combined with additional purchases by Iran and a delay in the arrival of South American cargoes has resulted in Indian prices climbing to an all-time high, traders said. Angshu Mallick, COO of Adani Wilmer said: “It is a very difficult situation now. We cannot hike prices due to this daily fluctuation in prices. The crop shortage in soyabean is affecting the entire edible oil complex. There will be a cut in demand in the bottom of the pyramid that consumes palm oil. Hotels, restaurants and roadside eateries are the other major consumers of palm oil. We do not see a 5 per cent growth in consumption in the current oil year.” India consumes 165 lakh tonnes of edible oil. Of this, palm oil constitutes nearly 70 lakh tonnes. Palm oil is largely sold in loose form. In rural India, they buy oil according to their daily needs. “For instance, if earlier they were getting 10 ml for Rs 10, now they will get 8 ml for Rs 10. And they will manage their requirement also in this 8 ml. This means that there will be a cut in demand,” said a palm oil trader.

SAARC OILS & FATS Today, May 2012

Tanfed to launch copra price support operations in TN The Tamil Nadu Co-operative Marketing Federation Limited (Tanfed) has been notified as the State-level designated marketing agency in Tamil Nadu to undertake copra procurement under the price support scheme for the 2012 season, according to the orders issued by the Tamil Nadu Government through the Food and Consumer Protection Department. Accordingly, Tanfed will procure milling copra at the rate of Rs 5,100 a quintal (Rs 51/ kg) and ball copra at the rate of Rs 5,350 a quintal (Rs 53.50/kg) under the price support scheme for 2012. Earlier, the Union Government had announced the minimum support price for procurement of copra under Price Support Scheme (PSS) on February 3. Based on the order, the Registrar of Co-operative

societies had requested Tanfed to start procurement operations in Tamil Nadu immediately. Nafed, the national level nodal agency will also enter into an agreement with Tanfed for the procurement as was done earlier, a press release issued here said. Meanwhile, Rajeev Gupta, Managing Director of Nafed, visited the Coconut Development Board and held discussions on procurement operations during 2012 season with T.K. Jose, Chairman, CDB and senior officers of the Board. The visit assumes significance in view of the continuous fall in the prices of milling copra and coconut in Kerala and Tamil Nadu. Gupta assured all support of Nafed for expediting the procurement operations agencies under minimum support price.

Russia bans import of protein feed of animal origin

ussia has implemented a complete embargo on imports of protein feeds of animal origin from all EU countries. This decision was made “in connection with the need to harmonise Russian legislation with international “as well as taking into account multiple detections of ruminant DNA in imported feed. This poses a risk of skidding spongiform encephalopathy agents (socalled “mad cow disease”) on the territory of Russia, according to Rosselkhoznadzor, the Federal Service for Veterinary and Phytosanitary Surveillance. Rosselkhoznadzor notes that the restriction applies

to processed animal protein intended for productive animal feeding. At the same time, it does not apply to food protein obtained from fish processing. All previously issued by Rosselkhoznadzor permissions to import these products to Russia for use in feeding of productive animals are canceled. Rosselkhoznadzor also banned the purchase of live pigs, cattle, sheep and goats from the EU. This measure Rosselkhoznadzor made due to the numerous outbreaks of Schmallenberg virus in the EU countries, and a wide spread of other viral diseases bluetongue.

May 2012, SAARC OILS & FATS TODAY

Oils & Fats News

FDA told to act on antibiotic use on poultry farms

New date palm tissue culture lab opens in Jodhpur

judge has ordered the US Food and Drug Administration (FDA) to take action on its own rule that would stop poultry, pig and other livestock producers from mixing antibiotics into animal feed. The ruling, made last week by US magistrate judge Theodore Katz, compels the agency to withdraw approvals for most non-therapeutic uses of penicillin and tetracyclines in livestock, unless antibiotic manufacturers can show that they are safe. Public health experts don’t expect such evidence to emerge. The suit was originally brought by the Natural Resources Defense Council. Overuse In 1977, the FDA concluded that the overuse of antibiotics in livestock and poultry weakened the treatment’s effectiveness when used in human medicine. The agency issued an order that would have banned non-medical use of penicillin and tetracycline in farm animals, unless drugmakers could show the drugs were safe. The rule was never enforced, following vigorous pushback from Congress members and lobbyists for agricultural organisations and

drug-makers. Farming groups have always stated that the drugs are needed to keep animals healthy. The court said that now those findings obligate the agency to act. Misuse and overuse Misuse and overuse of antibiotics can speed up the development of resistance: Bacteria that can withstand the drugs will survive and reproduce, while their antibiotic-susceptible counterparts will evolve out of the picture. The result is decreased effectiveness of antibiotics in human medicine and an increasing threat of deadly Methicillin-resistant Staphylococcus aureus (MRSA) and other difficult-to-treat infections. The FDA has 60 days to appeal the ruling. In a statement, the FDA said, “We are studying the opinion and considering appropriate next steps.” The FDA approved antibiotic use in animals in 1951.

Parag’s milk production goes down With the production capacity of one lakh litres of milk every day, the Parag dairy-- which is perhaps one of the oldest dairies of eastern Uttar Pradesh-- is presently producing only 17,000 litre of milk per day. However, if the officials of the dairy are to be believed, there is no crisis of milk supplied to the dairy but the unavailability of unit to convert the stored as well as surplus milk into dry

milk powder is responsible for low production. “The plant that converts milk into powder form has been non-functional since 2004. The surplus milk used to be stored in powder form and was used whenever there was a shortage of milk in the region. This is the main reason why the plant is not able to treat about 50,000 litre of milk on an average,” said a company source.

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new date palm tissue culture laboratory established in Jodhpur at a cost of Rs.20 crore is expected to promote research for improving the date varieties and augment the production of date palm trees for being supplied to farmers in western Rajasthan. Chief Minister Ashok Gehlot inaugurated the lab at Chaupasni in Jodhpur in the presence of a large number of farmers and agricultural scientists. He noted that environmental conditions in and around Jodhpur were ideal for date production and hoped the research would help improve the output. Gehlot said the lab would be able to supply about 2.5 lakh date palm trees at very low prices within the next three to four years. “The lab is going to bring about a revolution in the horticulture sector in Rajasthan. This will permanently change

the lot of farmers in the region,” he said. The Chief Minister said technical know-how for the lab had been obtained from the United Arab Emirates. When fully functional, the lab will obviate the need for importing date palm trees from West Asian countries at high prices. Addressing the gathering, State Agriculture Minister Harjiram Burdak said date farming has the capacity to generate annual income up to Rs.2 lakh per acre for farmers. Date production is not affected by factors such as high temperature, soil salinity and low rainfall, he added. Pali MP Badri Ram Jakhar, State Energy Minister Jitendra Singh, Principal Horticulture Secretary Dinesh Goyal, Zila Pramukh Durga Devi Balai, Jodhpur Mayor Rameshwar Dadhich and Jodhpur Development Authority Chairman Rajendra Solanki were among those present.

TN Varsity intelligence cell advises farmers to sell coconut after harvest

t could be bad news for coconut farmers, as the price of the nut is tending to drop by half compared to the rates that prevailed in 2011. From an all-time high of Rs 13 a nut last year, the price in Tamil Nadu markets slipped to Rs 9 in January, and is seen easing further to Rs 5-7 . Market sources do not anticipate any spurt in the price of coconut at least till May. Trade sources attribute the price fall to low demand and high production. The Domestic and Export Market Intelligence Cell at the Centre for Agricultural and Rural Development Studies, Tamil Nadu Agricultural University, has, after analysing

the trend in the Pollachi market, advised farmers to sell the nut on harvest. According to trade estimates, copra production might touch 10.5 lakh tonnes this year. Of this, the share of Tamil Nadu is expected to be 40 per cent, Kerala 30 per cent and Karnataka and Andhra Pradesh put together 25 per cent. Surplus copra coupled with inadequate industrial demand is expected to ease the price of the coconut oil as well, say sources. The low price of palm kernel oil is seen as another reason for the fall in coconut oil prices apart from the frequent power shutdowns in the State.

Oils & Fats News

Acid in meat and dairy products offers therapy for bowel disease: A research study

onjugated linoleic acid (CLA), a naturally occurring acid found in meat and dairy products, could help treat Crohn’s disease, a form of inflammatory bowel disease (IBD), researchers at the Nutritional Immunology and Molecular Medicine Laboratory (NIMML), Virginia Tech said. They have found that Crohn’s patients who took supplementary CLA showed noticeable improvement. CLA is known for its anticancer and immune modulatory properties. The researchers collaborated with the Division of Gastroenterology and Hepathology at University of North Carolina School of Medicine and the Wake Forest Medical Center. “In our recent open label study of CLA as a supplement in study subjects with mild to moderate CD there was a marked improvement in disease activity and quality of life in 50 percent of the subjects. CLA was well tolerated by all of the study subjects. These findings are very encouraging and will need to be verified in a randomized controlled trial,” said Professor Kim L. Isaacs, a Professor of Gastroenterology at the University of North Carolina at Chapel Hill. The two main manifestations of IBD-Crohn’s and ulcerative colitis-afflict over 1.4 million people in the United States. Symptoms include abdominal cramping, fever, fatigue, loss of appetite, skin and mouth ulcers, and diarrhea or constipation. CLA affords those afflicted with mild to moderate IBD an effective treatment without the unwanted side effects of many synthetic drugs. “Furthermore, we have demonstrated that probiotic bacteria can produce CLA locally and suppress colitis.

Therefore, CLA can be administered directly in capsules or indirectly through CLA-producing probiotic bacteria,” said Dr. Raquel Hontecillas, an Assistant Professor of Immunology at NIMML. NIMML strives to develop safer and more effective therapies for human chronic inflammatory diseases from Nature’s own medicine cabinet. To achieve this, NIMML uses advanced computational modelling in addition to mechanistic and clinical experimentation. “The validation of the antiinflammatory actions of CLA in the gut is in line with our goal because CLA is a natural fatty acid found in milk and ruminant products,” said Dr. Josep Bassaganya-Riera, a Professor of Immunology, principal investigator of this human clinical trial, and the Director of the NIMML and the Center for Modeling Immunity to Enteric Pathogens. “The fully integrated bioinformatics, nutrition and immunology experimentation capabilities of NIMML enable the acceleration of translational biomedical research from computational and mathematical modeling into the clinic. CLA is an example of an antiinflammatory compound in a pipeline of naturally occurring and synthetic compounds (e.g., abscisic acid, eleostearic acid, terephthalanilides) with tremendous therapeutic and prophylactic potential as antiinflammatories,” added Dr. Bassaganya-Riera, These findings, reported in the most recent edition of Clinical Nutrition1, were awarded the American College of Gastroenterology Presidential Poster of distinction for human clinical trials.

Kashmir Varsity scientists clone Pashmina goat

n a first, scientists at Shere-Kashmir University of Agricultural Sciences and Technology (SKUAST) have successfully cloned the first Pashmina goat. The healthy female kid was born using a foster mother and it took two years for standardisation of the technique, Director, Research of SKUAST, Shafiq A Wani said. The Faculty of Veterinary Sciences and Animal Husbandry made the breakthrough under the leadership of Associate Professor, Centre of Animal Biotechnology Riaz Ahmad Shah, assisted by a team of scientists including Nazir A Ganai, Hilal Musadiq, Mujeeb Fazili, F D Sheikh, T A S Ganai along with Syed Hilal, Maajid Hassan and Firdous Khan as Research Associates. Shah was the key researcher in the team of scientists who earlier in 2009 gave the first cloned buffalo calf “Garima” to the world using the same handmade cloning technique while doing research at the National Dairy Research Institute, Karnal in Haryana. “The programme called National Agricultural Innovation Project of ICAR was funded by the World Bank,” Wani said while speaking at the inaugural session of a weeklong training programme on “Reproductive technologies in

sheep and goat“. “The success of this technology would open up new vista in strategic and applied research which includes multiplication of elite animals of desired sex, stem cell technology for regenerative medicine, cloned animals as disease models and conservation of threatened wild and domestic animal species, “ professor in-charge, Centre of Animal Biotechnology Nazir Ahmad Ganai said. The Vice Chancellor of SKUAST (Kashmir) Tej Partap expressed hope that the technology would help to improve the lot of Pashmina goats, particularly in the frontier Ladakh region to harness better income opportunities for the people. Pashmina goats, which grow a thick, warm fleece, survive on grass in Ladakh where temperatures plunge to as low as minus 20 degree Celsius.

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25-26-27, August 2012 Gayathri Vihar, Palace Ground, Bangalore

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