Oilseed industry looks to ‘normal’ monsoon for respite from imports

The India Meteorological Department’s (IMD) prediction of a normal monsoon this year has brought cheer to the farming community, especially in the oilseeds sector, which is highly dependent on edible oil imports.

Based on the Met department’s projections, the oil industry body expects another year of robust oilseeds production in the coming kharif season.

Oilseed production increased by about 33 per cent in 2016-17 to 34 million tonnes, as growers switched to oilseed crop after the government increased the minimum support prices (MSP) of major oilseeds.

“It is heartening that the IMD has forecast normal rainfall during the South-West monsoon and sees little chances of El Nino affecting the monsoon’s progress,” said Atul Chaturvedi, president, Solvent Extractors’ Association of India (SEA).

Chaturvedi noted that the South-West monsoon brings three-fourths of the annual rainfall and is crucial for the economy, given that over half the population depends on agriculture for its livelihood. “Good monsoon rains will help keep food prices in check and boost overall growth,” he added.

There are still those who believe that excessive exuberance may be premature, since initial projections by the IMD have in the past gone wrong. However, the trade body reckons that a normal monsoon, and a boost to oilseeds production, will provide the industry some respite from its dependence on edible oil imports.

India is heavily dependent on imported edible oils, and almost 65-70 per cent of the overall edible oil demand being met through imports. Palmoil accounted for the largest share of imported edible oils in 2016-17, followed by soybean oil and sunflower oil.

“Imports of edible oils during the current oil season, which started in November 2016, will be lower.

This is mainly due to higher availability of soybean, mustard and groundnut seeds for crushing,” said an analyst at Angel Commodities Broking.

SEA has reported that India's edible oil imports fell by over 7 per cent year-on-year to 11 lakh tonnes in March 2017.

According to SEA data, in 2015-16 (November-October), import of RBD palmolein increased to 26.23 lakh tonnes from 16.6 lakh tonnes the previous year; this accounted for about 31 per cent of the total import of palm products.

“In the first five months of the current oil year, that is from November 2016 to March 2017, imports of RBD palmolein have increased to 11.4 lakh tonnes, or nearly 32 per cent of palm products,” said Chaturvedi.

“This is expected to rise further during the upcoming festival season. This is a pointer to the unhealthy trend of higher imports of finished goods, which works to the detriment of the refining industry,” he noted.

A representation in this regard has been made by the trade body, which has reiterated its demand for an increase in the duty difference between crude and refined vegetable oil to 15 per cent from the present level of 7.5 per cent. Only this, the trade body says, will help the refining industry tide over the crisis it faces.

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