Financial Daily from THE HINDU group of publications
Friday, Sep 03, 2004
Agri-Biz & Commodities
Oilseeds & Edible Oil
Marketing - Standards & Benchmarks
Row over palm oil carotenoid norms intensifies
New Delhi , Sept. 2
THERE seems to be no end to the dispute surrounding the Government's decision on August 1 last year to impose a minimum carotenoid specification of 500 mg/kg on imported crude palm oil (CPO) for it to attract 65 per cent customs duty, against the higher 75 per cent charged on refined oil.
The domestic vegetable oil refining industry claims that the 500 mg/kg minimum carotenoid standard is rather stringent, so much so that hardly 20 per cent of the imported CPO currently conforms to this requirement.
As a result, the consignments are being mostly assessed at 75 per cent duty (as applicable on refined, bleached and de-odourised palmolein or palm oil) and not the 65 per cent notified rate on CPO or crude palmolein.
The country annually imports about two million tonnes of CPO. At the existing landed price of around $430 per tonne, the difference between paying 65 per cent duty and 75 per cent duty works out to roughly Rs 320 crore (assuming 80 per cent of the consignments fail the minimum carotenoid test).
The stipulation of "an acid value of two per cent, or more and total carotenoid (as beta carotene) in the range of 500-2,500 mg per kg" on imported crude oil was clamped last year, following reports that bulk of the CPO entering the country was actually refined palmolein, degraded by admixture of 3-5 per cent palm fatty acid distillates.
Since the imported oil had to undergo minimal processing, the refiners were basically making a killing by simply exploiting the duty difference between refined and crude oil, while engaging in little value-addition.
The Government's minimum carotenoids specification was also consistent with the international Codex Alimentarius standards of 500-2,000 mg/kg for `unbleached palm oil' and 550-2,500 mg/kg for `unbleached palmolein'.
But according to Mr D.N. Pathak, Executive Director of the Indian Vegetable Oil Processors Association (IVOPA), the 500 mg/kg minimum carotenoid condition was impractical because carotenoids are inherently `labile' or prone to continuous chemical and physical breakdown.
In the case of imported CPO, there is normally a 60-day period from the time the oil is extracted from plantations in Malaysia or Indonesia to its landing in Indian ports. During this period, the oil is subjected to heating at various stages of handling, which brings down the carotenoids content well below the minimum 500 mg/kg standard.
IVOPA has, in fact, referred to a test conducted last December by Ganesh Scientific Research Foundation (GSRF), a laboratory under the Directorate of Vanaspati, Vegetable Oils & Fats (DVVO&F).
As per this, the carotenoids content in a CPO sample had come down from 451.8 mg/kg to 372.3 mg/kg after being subjected to heat treatment at 55 degrees Celsius for 10 hours.
The concentration fell further to 203.9 mg/kg after the sample was subsequently kept for 14 days in an incubator at 40 degrees.
But, for reasons not fully known, the DVVO&F, on March 9, referred the issue afresh, this time to the Regional Research Laboratory, Thiruvananthapuram (RRL).
The latter's tests, based on CPO sourced from Godrej Agrovet Ltd's mill at Pothepalli, Andhra Pradesh, revealed that carotenoid losses during heating and handling did not exceed 10 per cent.
IVOPA has, however, challenged RRL's finding on grounds that the CPO produced in India has a higher carotenoid content than that on imported oil due to differences in the oil palm varieties being cultivated and also the age of the trees and method of crushing.
But according to Dr C. Arumugham, Deputy Director, RRL, the total carotenoids in the domestically sourced CPO was over 700 mg/kg.
"How much lower can the carotenoids content in imported CPO be? Even if it is 600 mg/kg, a 10 per cent loss will still keep it above 500 mg/kg," he pointed out. The RRL tests are now being cited as a vindication for the Government's decision last year.
Industry observers feel that the dispute over carotenoids basically reflects the conflicting interests of two lobbies the domestic refiners and the Malaysian palm oil industry.
"The Malaysians want to export refined oil and not CPO. They would, therefore, not like refining capacities coming up in India. The domestic industry, in turn, is sourcing most of its CPO from Indonesia", they noted.
Stories in this Section
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2004, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line