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Our Bureau

New Delhi, March 20 The continuing low import duty regime on edible oils may lead to prices of the rapeseed-mustard crop (currently being harvested) dipping below the Centre’s minimum support price (MSP), the Central Organisation for Oil Industry & Trade (COOIT) has warned.

“Last year, at this time, farmers were obtaining Rs 2,500-2,600 a quintal for mustardseed, with prices going as high as Rs 3,400-3,500 about four months back. But today, prices are ruling at Rs 2,000 and could go below the MSP of Rs 1,830 a quintal with more than 80 per cent of the crop still to be marketed,” said Mr Davish Jain, President, COOIT.

According to him, even the current prices may not be sustainable given the sharp fall in edible oil realisations.

A miller processing one quintal (100 kg) of mustardseed with 40 per cent oil content obtains 35 kg of expeller oil and four kg of solvent extracted oil, besides 60 kg of de-oiled cake (containing one per cent oil). Alternatively, he can sell 35 kg of expeller oil and 64 kg of expeller oil-cake (having 8 per cent oil).

Currently, expeller oil is fetching Rs 45 a kg, with these being Rs 42 on solvent extracted oil, Rs 10.50-11 on expeller cake and Rs 9 on de-oiled cake.

The gross realisation from processing one quintal of mustardseed, thus, works out to around Rs 2,280.

From this, one needs to deduct processing costs, which come to Rs 120 (on hexane, power, utilities, direct labour, etc) and Rs 150 if other financial overheads are accounted for. In other words, at prevailing product realisations, a miller cannot afford to pay more than Rs 2,150 a quintal for the mustardseed. And this, after including value-added tax, mandi tax, entry tax, commission agent’s fee, bagging costs — which add up to 10 per cent on the price received by the farmer at the mandi.

“Even at a price of Rs 2,000 a quintal to the farmer, I am today operating on a negative margin,” Mr Jain claimed. He blamed the situation on large-scale imports, which had reduced the realisations on expeller oil from Rs 65-70 a kg till four months back to Rs 45 now.

The COOIT president said the zero per cent import duty on all crude oils (barring soybean, which attracts 20 per cent) and 7.5 per cent on refined oils was understandable six months back when international prices were $1,000 to 1,500 a tonne.

But now, with landed prices of crude palm oil at $600 and de-gummed soy oil at $750, there was no case to keep duties at zero.

“India’s consumption of edible oils is 13 to 13.5 million tonnes (mt), while we produce 8.5 to 9 mt. Our import requirement is less than 5 mt, whereas in the 2007-08 oil year (November-October), we imported 5.6 mt and in the first four months of 2008-09, almost 3 mt has landed. We need to raise duties now so as to protect domestic oilseed growers,” Mr Jain added.

More Stories on : Oilseeds & Edible Oil | Agricultural Policy

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