The Hindu Business Line : Solvent extractors sore over Shellac Export Promotion Council

FOLLOWING the availability of kharif-harvested oilseed crops and the start of the new processing and marketing season, oilmeal exports in November showed a smart recovery to 2.15 lakh tonnes, significantly up from 47,700 tonnes in the previous month, according to latest figures compiled by Solvent Extractors Association of India (SEA).

However, even this improved performance falls considerably short, actually less than half, of 4.80 lakh tonnes shipped out during November 2003. But the silver lining is that April-November 2004 exports aggregated 15.7 lakh tonnes, up over 50 per cent from 10 lakh tonnes during the year-ago period.Soyabean extraction continues to dominate the oilmeal export basket. At 9.8 lakh tonnes during the first eight months of the current fiscal, soyameals accounted for a major share of the total oilmeals exported. Shipments were mainly to Indonesia, South Korea and Vietnam as well as to Thailand, Japan, and Malaysia. Rapeseed extraction shipments during the period were 4.3 lakh tonnes versus 3.3 lakh tonnes during the year-ago period. Groundnut meal registered one lakh tonnes versus a paltry 3,500 tonnes in the previous year.

Notwithstanding all this and the prospects for one more satisfactory season, the solvent extraction industry in the country is deeply anguished and distressed, as the Ministry of Commerce, with no apparent provocation, decided to entrust the Kolkata-based Shellac Export Promotion Council (EPC) to promote export of various oilmeals and oilcakes.

For long years, three Mumbai-based export associations and one Indore-based export association have been looking after the promotion of various oilmeals. These associations are mutual bodies run by representatives of the industry and trade. Their track record has been good and performance commendable.

Their activities are not confined to export alone. They promote domestic production, quality upgradation, logistics and infrastructure development as also technology infusion in the solvent extraction industry. There is now an apprehension that much of the good work done by these well-established trade promotion bodies would be rendered as a waste.

What has amused some and evoked angry reactions from many is that there is little in common between shellac and oilmeals. Shellac EPC has been rather inactive for many years and does not possess the requisite expertise and experience to promote oilmeal exports. It should come as no surprise, if the move was actually prompted by considerations not relating to export promotion. It is also likely that someone is pushing his private agenda.

Unfortunately, in this country, most EPCs function like Government departments. They are bureaucratic and have no clue what economic liberalisation and globalisation mean to businesses. At a time when EPCs and commodity boards have to be abolished or, in the least, their role redefined to meet current requirements, the Government has entrusted an inactive EPC to promote exports of a vibrant and growth-oriented sector.

Oilmeal exports from the country are 25-30 lakh tonnes a year and earn foreign exchange to the tune of Rs 3,000-3,500 crore with tremendous growth prospects. The industry also provides large employment.

The Government had no business to tinker with the free trade policy and undo the voluntary promotional activities of the trade associations, some of the industry leaders asserted. It is unclear as of now what prompted the Commerce Ministry to initiate such a move, that is shift oilmeal export promotion to Shellac EPC.

In any case, the move is hasty and ill-advised. If anything, the decision would be a setback not only to the trade associations, but also to oilmeal export promotion itself. As there is nothing to suggest that Shellac EPC has any knowledge at all in this area of activity, which needs focused attention of people with domain-knowledge, the industry has reason to bemoan.

The trade bodies concerned are likely to petition the Government soon and voice their objection. It is hoped that the Government will not make it a prestige issue, but examine the case on merits and take a decision in the overall interest of the country's solvent extraction industry and exports of oilmeals.