SEA asks stakeholders in veg oil sector to jointly address challenges

BL Mangaluru Bureau Updated - March 22, 2024 at 03:30 PM.

The Solvent Extractors’ Association of India (SEA) has asked all associations representing various facets of the vegetable oil industry to come together to collectively address the challenges facing the sector.

In his monthly letter to the SEA members, Ajay Jhunjhunwala, SEA President, said the turnover of vegetable oil industry stands at an impressive ₹3 lakh crore, a testament to its significant contribution to the economy. The vegetable oil industry -- encompassing refining, vanaspati, oleo-chemical, feed and biodiesel sectors -- directly employs over one million individuals and supports an equal number indirectly.

“Despite this substantial economic footprint, our industry’s influence on government policy formulation has been limited. One of the primary reasons for this is the fragmented nature of the industry, often leading to conflicting interests among different segments. It is imperative that all associations representing various facets of the vegetable oil industry come together to collectively address the challenges facing our sector,” he said.

Mustard below MSP

On the mustard crop, he said the current market prices for mustard are below the MSP (minimum support price) of ₹5,650 a quintal necessitating immediate government intervention. He urged the authorities to direct NAFED to establish procurement centres in major mandi areas to facilitate the purchase of mustard seed at MSP, thereby supporting market stability and farmer welfare.

Despite reaching a peak of 100 lakh hectares in acreage during the current season, mustard cultivation faces stagnation due to declining prices. The disparity between past remunerative prices and the current market rates has discouraged farmers from expanding mustard cultivation. Addressing this issue is critical to sustaining agricultural growth and ensuring farmer prosperity, he said.

WPI weightage for edible oil not right

Stating that the Wholesale Price Index (WPI) for edible oils, which was established in 2011-12, does not accurately reflect the evolving consumption patterns in recent years, he said the disproportionate weightage assigned to certain oils fails to align with their actual consumption trends. SEA has petitioned the Union Ministry of Consumer Affairs, Food and Public Distribution to reconsider the weightage allocation in light of changing consumption dynamics within the edible oil segment, he said.

Referring to the ban on the export of de-oiled ricebran since August 2023, he said this decision has severely impacted solvent extraction plants in West Bengal and Eastern India, underscoring the need for policy interventions to support affected industries.

Imports continue to rise

On the import of edible oils, he said import dependency for edible oils continues to escalate annually, with last year witnessing imports of 165 lakh tonnes valued at ₹1.4 lakh crore. While imports are necessary to bridge the demand-supply gap, excessive imports have led to surplus inventory, posing challenges to both the government and the industry. It is imperative to strike a balance between domestic production and imports to ensure food security and economic stability, Jhunjhunwala said.

Published on March 22, 2024 10:00

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