1. India’s oil security at risk, says SEA, here’s why

India’s oil security at risk, says SEA, here’s why

The sustained low prices of oilseeds may make farmers disinterested towards oilseeds cultivation, thereby putting India’s edible oil security at risk, the Solvent Extractors Association of India (SEA) has warned.

By: | Pune | Published: June 15, 2017 3:38 AM
The south-west monsoon has already marked its entry from Kerala and is expected to cover the whole country in the next 10-15 days.

The sustained low prices of oilseeds may make farmers disinterested towards oilseeds cultivation, thereby putting India’s edible oil security at risk, the Solvent Extractors Association of India (SEA) has warned. Key edible oil prices, including soyabean, rapeseed and groundnut prices have declined in the range of 20-28 % since June last year. Against the Minimum Support Price (MSP) of Rs 2,775 per quintal, soybean prices were quoted at Rs 2,550, while rapeseed prices hovered around Rs 3,250 a quintal against the MSP of Rs 3,700 and groundnut prices were quoted at Rs 3,500 a quintal against the MSP of Rs 4,220 a quintal. The south-west monsoon has already marked its entry from Kerala and is expected to cover the whole country in the next 10-15 days.

However, the current price level is the lowest in the last five years and farmers are totally discouraged to sow oilseeds in the current kharif season. Moreover, there is hardly any market intervention operation to support the price level,” said Atul Chaturvedi, president, Solvent Extractors Association of India (SEA). In a letter to Prime Minister Narendra Modi, union finance minister Arun Jaitley and agriculture minister Radha Mohan Singh, the SEA raised key concerns over oilseeds’ sustained low prices below the MSP.

“After two years of drought, the current year witnessed oilseed production rebounding. However, the increase in production has not brought any cheer to our farmers as prices have collapsed below the MSP levels. This has happened probably for the first time in decades and needs immediate action,” SEA wrote in its letter dated June 5. It also suggested remedial measures to ensure farmers do not loose total interest in oilseed cultivation.

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“Import duties on crude oils should be raised to 20% from a level of 7.5% on crude palm oil and 12.5% on soft oils with immediate effect. Import duty on refined oils should be raised to a minimum of 35% from the current level of 15% on palmolein and 20% on other refined oils,” it said. Edible oil availability in the world is very good on back of very good crops worldwide. “We feel the international prices would actually come down with this action of government. Further, raising import duties on refined oils to 35% would also help in improving capacity utilisation of domestic refining industry,” he said.

Lower realisations may lead to lesser area for oilseed production: SEA

Import of vegetable oils rose 35% to 13,84,439 tonne in May 2012 as compared to 10,24,878 tonne in May 2016, consisting of 13,23,792 tonne of edible oils and 60,647 tonne of non-edible oils, Solvent Extractors Association of India (SEA) has said.

Import of edible oil sharply increased in last two months as farmers are reluctant to sell oilseeds below MSP, thereby resulting in lower production of domestic vegetable oils.

SEA has warned that lower realisation to farmers may lead to lesser area in oilseeds in ensuing kharif season. To ensure farmers do not lose interest in oilseeds cultivation, the association has strongly appealed to the government to immediately raise import duty on crude vegetable oil to 20% and refined vegetable oil to 35% so that market forces are able to pay higher price to farmers.

The overall import of vegetable oils during first seven months of current oil year 2016-17 is reported at 85,18,704 tonne compared to 85,93,587 tonne, more or less equal to last year. The country’s total vegetable oil imports remained flat at 13.84 million tonne in May this year from 10.24 million tonne in the year-ago period.

The stock of edible oils as on June 1, 2017 at various ports is estimated at 770,000 tonne (CPO 230,000 tonne, RBD Palmolein 160,000 tonne, degummed soybean oil 190,000 tonne, crude sunflower oil 170,000 tonne and 20,000 tonne of rapeseed (canola) oil) and about 13,90,000 tonne in pipelines. Total stock at ports and in pipelines slightly increased to 21,60,000 tonne from 21,20,000 tonne in May, SEA said.

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