Agri Business

Solvent extractors rue hike in oilmeal freight rate

Our Bureau Chennai | Updated on January 05, 2011 Published on January 05, 2011

Processing plants may be forced to slash production





A move by the Railways to hike freight rates for oilmeals has left the solvent extraction industry worried.

In a circular dated December 20, 2010, the Railways had changed the classification for de-oiled cakes (oilmeals) from Class 110 to Class 120.This, according to the Solvent Extractors Association, will lead to a rise in freight charges between 11 and 13.5 per cent.

In a memorandum to the Union Railway Minister, Ms Mamata Banerjee, the association's President, Mr Sushil Goenka, said that oilmeals are produced locally and exports were made on wafer-thin margins.

“This increase in freight will make production of oilmeals unviable, thereby forcing many a processing plant to cut down production,” he said.

uses

Oilmeals are used in the manufacture of compound feeds for cattle, poultry and aquaculture. Meals derived from castor are used as fertilisers.

constraints

“A substantial increase in freight charge will also put constraint on the viability of dairy and food industry,” Mr Goenka said.

The hike in freight rate will result in increase in feed costs, in turn leading to hike in prices of milk, eggs, meat and fish.

High prices

“Prices of milk, eggs, fish and meat are already ruling high and are a cause for serious concern to the Government as inflation is now over 14 per cent,” he said.

Stating that oilmeals faced stiff competition in the global market from the US and South America, Mr Goenka said the hike will affect exports.

Incentive

“In fact, to compete in the international market, the Government has granted two per cent incentive under Focus Product Scheme for exports of some oilmeals and 5 per cent under VKGUY for castormeals. The hike in freight charges will nullify the benefits derived by exporters from the schemes, he said in his plea to review the decision.

Exports

Oilmeal exports from the country increased to 23.81 lakh tonnes during April-November of the current fiscal from 18.90 lakh tonnes in the same period a year ago.

Soyameal exports made up 17.1 lakh tonnes of this against 11.61 lakh tonnes during the year-ago period.

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Published on January 05, 2011
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