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M.R. Subramani

Cottonseed, rapeseed help maintain supply

Chennai March 15 Edible oil imports declined to a nine-year low in February with domestic stocks of rapeseed and cottonseed helping to save outflow of foreign exchange towards purchase of the oils.

Lean period

According to figures compiled by the Solvent Extractors Association of India, imports slid to 1.50 lakh tonnes against 2.69 lakh tonnes during the year-ago period, a fall of 44 per cent. However, for the first four months of the current oil year starting November, imports increased four per cent to 10.83 lakh tonnes, with December and January witnessing heavy inflow.

"Normally, November-March period is a lean one for edible oil imports in view of kharif and rabi arrivals. Imports may gather pace after March, when the arrivals slow down," said Mr B.V. Mehta, Executive Director of Solvent Extractors Association of India.

Edible oil imports this season areexpected to top 60 lakh tonnes in view of a fall in oilseeds production. As per first trade estimate of the Central Organisation for Oil Industry and Trade (COOIT), production of nine major oilseeds this season is expected to be down by 20 lakh tonnes at 219.8 lakh tonnes compared with last year. While kharif crop has been estimated lower by nine lakh tonnes at 128.4 lakh tonnes, rabi output is expected to be down by over 11 lakh tonnes at 91.4 lakh tonnes.

Filling gap

"What has helped to fill in the gap of fall in production is the availability of rapeseed stocks and record cotton production," said Mr Mehta.

"Nearly 20-22 lakh tonnes of rapeseed has been consumed during the first four months," he said.

The National Agricultural Cooperative Marketing Federation has been holding rapeseed stocks, procured as part of the Centre's market intervention operation, for the last 20 months and this has come handy now.

Rapeseed production last season has been estimated at a record 67.7 lakh tonnes but this time, it is seen down on lower coverage with farmers shifting to other cash crops such as pulses.

Cottonseed availability, on the other hand, is seen more in view of a record cotton crop of 270 lakh bales. In view of this, cottonseed availability is seen up five lakh tonnes at 89.4 lakh tonnes. After 15 lakh tonnes are retained for re-sowing, marketable surplus has been projected at nearly 75 lakh tonnes. Given the fact that cottonseed yields 11 per cent oil, the edible oil availability is put at around 8.2 lakh tonnes.

Other feature

The other important feature of imports has been rise in the inflow of palm oil's share compared with soft oils such as soyabean and sunflower. Palm oil's share has increased to 79 per cent during the first four months compared with 58 per cent during the same period a year ago.

Asked if the reduction in customs duty had any role in increase in palm oil imports, Mr Mehta replied in the negative.

The Centre had cut the duty on edible oil by 10 percentage points in August last to tame inflation. During the current Budget, the Finance Minister, Mr P. Chidambaram, scrapped the special additional duty on edible oil imports. Crude palm oil now attracts a net customs duty of 61.8 per cent, while for degummed soyabean oil, it is 45 per cent.

Edible oil is among items for which a considerable amount of foreign exchange is spent. During 2005-08, Rs 8,710 crore was spent on edible oil imports compared with Rs 11,066 crore the previous year. For the current fiscal, a sum of Rs 7,558 crore has been spent till December.

According to the London-based Mr Dorab Mistry of Godrej International, edible oil imports, mainly palm oil, are expected to accelerate from May and total shipments could exceed that of last year. India could emerge as an important factor in global edible oil prices, according to him.

More Stories on : Oilseeds & Edible Oil | Exports & Imports | Commodity Markets

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