Commodities

Encourage castorseed exports via FPOs

G Chandrashekhar | Updated on November 19, 2020 Published on November 19, 2020

A section of the country’s oilseeds and oil trade has demanded a ban on export of castorseed. China is showing a lot of interest in buying castorseed from India. To be sure, we are the world’s largest producer of this non-edible oilseed. In other words, India holds a dominant position in the global castor market.

Castor oil is a versatile vegetable oil with varied industrial application, and enjoys excellent demand in Europe, USA and Japan. However, over the last 25-30 years, as a nation, we have failed to capitalise on our dominant position in the world market. Indian traders indiscriminately export castor oil at throwaway prices, completely unrelated to our dominant position and inelastic demand in the global market.

Unaware of top position

Worse, Indian castor oil exporters have failed to cultivate actual end-users of the product and continue to play into the hands of international trade intermediaries. Also, there is little value-addition. In the process, domestic castorseed growers are short-changed. Growers seldom receive prices that reflect the country’s dominant position in the world market.

Now, the same set of people who throw away precious castor oil at rock-bottom prices in the overseas market are demanding that castorseed export be banned. This demand lacks justification, especially given the poor track-record of castor oil exporters in obtaining a premium price in the export market.

Therefore, we are forced into an anomalous situation wherein exporters will not extract good prices in overseas market but will demand a ban on seed export. To be sure, any restriction on export castorseed would be anti-farmer. The government should not succumb to lobby pressure.

Involving FPOs

At the same time, castorseed exports can be routed through or confined to farmer producer organisations (FPOs/FPCs) and other farmer welfare bodies such as Nafed and SFAC. By doing this, castorseed growers will be able to reap the benefit of export and over time, these FPOs will learn the nuances of the export market.

It is an experiment worth attempting. FPOs will need some handholding for one or two seasons. They are smart enough to learn fast. The Union Ministry of Agriculture and the Ministry of Commerce should encourage FPOs/FPCs to explore the export market for castorseed. According to Agriculture Ministry, India produces 16-18 lakh tonnes of castorseed. We export 5-6 lakh tonnes of castor oil. By allowing FPOs to export castorseed, the benefit of export will flow directly to growers.

The writer is a policy commentator and global agribusiness specialist. Views are personal

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Published on November 19, 2020
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