Budget 2001: A Primer

Over the last two years, the country's oilseeds production has declinedsharply by over 26 per cent. This calls for urgent measures to improvedomestic oilseeds production, as also reduce import duty on oilseeds whichcurrently is prohibitive.

The current year oilseeds crop is lowest in the last 10 years, says theSolvent Extractors Association (SEA). It has reduced by 6.6 million tonnefrom the peak level of 25.2 million tonne during 1998-1999.

The decline in production of oilseeds is directly related to excessiveimport of edible oils during last four to five years and reached at 45 lakhtonne valued at Rs 8,500 crore during 1999-2000, said SEA in its`Observation on the Economic Survey - Oilseeds Sector.'

The excessive import of edible oils led to depression in the domesticmarkets where farmers were deprived of remunerative price for oilseeds. Thisdiscouraged them from growing oilseeds and the acreage under oilseedscultivation has reduced considerably during the last three years.

This confirms the systematic destruction of domestic supply and vegetableoil industry.

The consumer may not be affected by the current edible oils prices, more sobecause the international price of edible oil are running at lowest level ofthe decade. However, the domestic industry may have to face the difficultperiod due to the lesser availability of oilseed for crushing/processing.The current import duty of 44.04 per cent coupled with stringent quarantinechecks makes the import of oilseed unviable. Therefore, it is high time thatgovernment must take the lesson from this decline in the production of theoilseed and must concentrate to raise the productivity and encourage thefarmers for diversification from other crops to oilseeds as a long termmeasures. As short-term measures, the government must reduce import duty onoilseeds to around 15 per cent to make the import commercially viable toaugment the overall supply to support the domestic industry and to meet thegrowing demand from livestock sector.