Financial Daily from THE HINDU group of publications
Friday, Jul 26, 2002
Agri-Biz & Commodities
Oilseeds & Edible Oil
Ajit rules out cut in oilseeds customs duty
NEW DELHI, July 25
THE Union Agriculture Minister, Mr Ajit Singh, has ruled out any customs duty reduction or relaxation of quarantine requirements for import of oilseeds.
This comes even as a section of the domestic solvent extraction industry has sought a further liberalisation of imports to make good the likely shortage of raw material due to a sharp decline in this year's kharif oilseeds production.
``There is no question of reducing the duty or easing existing quarantine procedures to facilitate oilseed imports'', Mr Singh told Business Line. Currently, oilseed imports attract an effective duty of 35.2 per cent, inclusive of the `peak' basic customs duty rate of 30 per cent and the special additional customs duty (SACD) component of four per cent.
Besides, oilseed imports are also subjected to quarantine restrictions as applicable to seeds or any other planting material. The underlying principle here is that oilseeds even when imported for crushing rather than for planting purposes can potentially be diverted to farmers' fields, which, in turn, poses the risk of exotic pathogenic/pest infestation. Importers have to, therefore, obtain a phytosanitary certificate from the Directorate of Plant Protection, Quarantine and Storage for getting their consignments cleared.
In the case of soyabean, there are no quarantine restrictions per se, but the seeds can be imported only a `split or cracked form', so that the material is rendered non-germinative. Importers, however, say that even this requirement is impractical. The reason: once the bean is split or cracked, it has to be processed within 4-5 days, after which its protein quality deteriorates and the oil content goes down.
``This means splitting can take place only at the port of entry and not at the port of origin. None of the Indian ports have facilities for cracking and neither can the solvent extractors afford to establish these,'' they point out.
But according to Mr Ajit Singh, there is no need to further liberalise oilseed imports, especially when the country is already importing edible oils in large quantities. In fact, edible oil imports have shot up from 14.16 lakh tonnes (lt) in 1996-97 to 42.14 lt in 2001-02, even as domestic oilseeds output has shrunk from 243.8 lt to 207.3 lt during this period.
"Oilseed imports does not benefit the farmer. Neither can the consumer complain that edible oil is in short supply because imports have more than compensated for falling domestic oilseeds production. It is only the solvent extractors who want to directly import oilseeds,'' Mr Singh observed.
In fact, sources say that the proposal to liberalise oilseed imports has the active backing of the Ministry of Consumer Affairs, Food and Public Distribution, which feels that the domestic industry currently possesses crushing capacity much in excess of raw material availability. Augmenting oilseeds availability through imports would not only boost domestic production of edible oils, but even export of oilmeals. During 2001-02, the country exported 27.43 lt of oilmeals valued at Rs 2,251.03 crore.
``I don't know what others feel. But my Ministry is firmly against allowing free import of oilseeds, considering the adverse impact it would have on our growers,'' Mr Singh quipped.
The Agriculture Ministry is also concerned over the fact that the bulk of oilseeds traded in the world now consist of soyabean or rapeseed-mustard/canola that have been genetically modified (GM) to confer `tolerance' against herbicides, such as Monsanto's Round-up Ready. The global oilseeds trade of 70-71 million tonnes (mt) is mainly dominated by soyabeans (55-57 mt, mainly supplied by the US, Argentina and Brazil), followed by rapeseed (8-11 mt supplied by Canada and the European Union), sunflowerseed (2-4 mt) and cotton seed and groundnuts (1.5 mt each).
Ministry officials say that in the event of large-scale imports taking place, it would not be possible to preventing entry of consignments containing GM oilseeds. This is because the suppliers themselves often do not segregate the GM oilseeds from the non-GM varieties in their consignments. ``Segregation is economical only if, say the soyabean is being supplied for premium uses, such as tofu-making. Such small harvests can be kept separate, though at a price probably three times that of GM soyabean. But since our requirements are in bulk, segregation is not feasible,'' they added.
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