Solvent extractors foresee trying times for edible oil refiners

Vijay C Roy

Tribune News Service

Chandigarh, March 5

Solvent extractors foresee serious impact on domestic vegetable oil refiners and mustard seed farmers due to large-scale issuance of licences for import of palmolein oil from Indonesia. The cheaper imports are likely to impact the farmers of Haryana, Rajasthan, Uttar Pradesh, which are major mustard producing states.

Palmolein oil is purchased by restaurants, hotels, canteens and snack manufacturers in bulk.

According to extractors, in the past one-and-a-half month, edible oil prices in the international and domestic market are showing downward trend. Currently, it is cheaper than mustard oil.

“With a massive mustard crop ready for harvesting, this will have a dampening effect on prices of domestic oilseeds and oils,” said BV Mehta, executive director, Solvent Extractors’ Association of India.

The major mustard producing states are Rajasthan followed by Uttar Pradesh, Madhya Pradesh and Haryana.

According to Mehta, the mustard crop has already started arriving in mandis and is trading below the minimum support price (MSP). Against the MSP of Rs 4,425, it is trading at around Rs 4,200 per quintal.

“The arrival is yet to pick up and is expected to increase post-Holi. The industry anticipates that prices may fall further if the palmolein oil costs cheaper than the mustard oil. Currently, palmolein oil costs around Rs 77,500 per tonne as compared to Rs 80,500 per tonne for mustard,” said Mehta.

He said this may result in mustard selling below the MSP and NAFED getting saddled with huge stocks.

“This is beyond doubt that 70% of our demand is met by imports. However, any cheaper import of oilseeds has a potential to destroy the domestic solvent extractors, be it mustard, soya or sunflower,” said Sangrur-based Ricela Group chairman AR Sharma.

Industry representatives said it will also have a serious impact on domestic refining industry and capacity utilization. Expressing concern, the solvent extractors have appealed to the Commerce Ministry to stop issuing further licences to safeguard the interest of domestic vegetable oil refining industry and mustard farmers. They have sought review of the rationale for issuing such licences which are at variance with our country’s objective of ‘Make in India’.

The extractors believe cheaper imports would be detrimental for crop diversification. The Solvent Extractors’ Association of India has undertaken a ‘Mustard Mission’ to help increase India’s rapeseed production (mustard) to 200 lakh tonnes by 2025. “This can be achieved by enhancing the productivity by providing better inputs and technology to farmers and encouraging the crop diversification from water-intensive wheat and rice to mustard,” said Haresh Vyas, chairman, SEA Oilseed Development Council.