Vegetable Oil Imports See a Drop For First Time Strap.

India has, for the first time, seen drop in vegetable oils imports during the first six months of oil year 2010-11 owing to better domestic availability.

The imports dropped 16% from November to April. The country is world's top importer of vegetable oil and saw its imports dropping to 36.03 lakh tonne between November 2010 and April 2011 compared.

Last year, India imported 42.9 lakh tonne vegetable oil during the same period.

The import of vegetable oils in April 2011 is reported at 4.75 lakh tonne compared to 5.43 tonne in April 2010, suggesting a drop of 12.5%.

April imports consist of 458,119 tonnes of edible oils and 17,004 tonnes of non-edible oils, according to data provided by the Solvent Extractors' Association of India (SEA).

"Due to higher oilseed production we have seen better domestic supply and hence lower imports," said Sushil Goenka, president of SEA. He expects imports to remain subdued during the remaining part of the year.

The country has seen continuous rise in its oil imports in last decade. The imports rose from 50.9 lakh tonne during 2000-01 to a high of 92.4 lakh tonne during 2009-10.

Revived oilmeals demand has helped crushers to get good price parity and led to an increase in crushing activity compared to last year. "This year, we processed 70% of local crops up from 50% last year," said Mr Goenka.

India has been importing 50% of edible oil requirements as oilseed production has been stagnant since a decade. The imports have been on the rise as domestic consumption has been increasing. The per capita consumption currently pegged at 13.5 kg has risen from 9 kg five years back.

"Consumption increased by 1-1.5 kg per person two years ago when edible oil prices where ruling at its low levels," said BV Mehta, executive director at SEA. As per his view, price levels plays significant role in deciding the consumption pattern.

"Lesser prices mean more demand from the poor and so we will see high imports," said Mr Mehta. In absolute terms, the country saw 6-8 lakh tonne of increase in edible oil demand per year which can not be fulfilled without imports.

As per Mr Mehta, the country will see 85 lakh tonne of edible oil imports during current oil year, a fall of 5-7 lakh tonne compare to 92.4 lakh tonne last year.

"We have almost crushed 70% of domestic seeds and now with local supply remaining stagnant, we will see more imports in the remaining half," added Mr Mehta. He does not see country's dependence on imports will see any fall in coming years until big boosts to the domestic oilseed production.

As a thumb rule, one-third portion constitutes of oil while the remaining two-third is of oil cakes. So if we consider the 2.7 lakh tonne of oilseed production, country's oil production would be in the range of 90 lakh tonne which is 60-70 lakh tonne short of the total 155-160 lakh tonne (120 billion into 13 kg) of oil requirements.

Strengthening rupee in last few months is supporting the import of vegetable oils and if this trend continues for coming months, the country can see rise in imports, believe sources.

There is big gap prevailing between production data declared by the SEA, a leading body of oil processing industry, and the government.

According to SEA, country has grown 2.7-2.75 crore tonne of oilseeds, while agriculture department estimate suggests 3 crore tonne of oilseed production during 2010-11. The country saw a 2.3-2.4 crore
tonne of oilseed crop during year 2009-10.

While kharif oilseeds crop remained flat, rapeseed crop saw a more than 20% rise during current ravi marketing season. "We have seen record rapeseed crop which helped to maintain good local oil supply," said Mr Goenka.

Due to good monsoon in oil producing belt last season, rapeseed yield has remained at all-time high. Rapeseed registered a higher sowing of 95 lakh hectares during 2010-11 compared to 93 lakh hectares in 2009-10.

As per the SEA claim, the country has seen a 74 lakh tonne of rapeseed production which was at 60 lakh tonne during last year. The government also fixed a 72 lakh tonne of rapeseed production.

Source : economictimes.indiatimes.com