A MANAGEMENT RESEARCH PROJECT -I ON

“In Depth Study of Edible Oil Industry in India”

In the partial fulfillment of the requirement of Master of Business Administration (M.B.A.) Program (2002-2004) Hemchandracharya North Gujarat University, Patan.

Project Guide Prof. Bhavin Pandya Faculty Member, SVIM

Prepared By Samir Patel Rajendra Patel

S.V.INSTITUTE OF MANAGEMENT

Acknowledgements

Preparing a project of this nature is an arduous task and we were fortunate enough to get support from large number of persons to whom we shall always remain grateful. With immense pleasure we would like to express our sincere thanks and gratitude to Prof. Bhavin Pandya, Project Guide & Faculty Member, S.V. Institute of Management, for having given us this privilege of working under him and completing the study and for the valuable advice, guidance, precious time and support that he offered. We are desirous of placing on record profound indebtedness to Prof. Tejas Dave, Faculty Member, S.V. Institute of Management, for the valuable advice, guidance, precious time and support that he offered. We would be failing in duty if we do not acknowledge the gratitude to Prof. Hitesh Ruparel, HOD, S.V. Institute of Management, who motivated us a lot in carrying out this project and whose kind supervision, keen interest and valuable suggestions went all the in successful completion of this work.

Preface
We know that food, cloth and shelter are the three basic requirements in the life cycle of a human being. Clothing and Shelter are important, but the most important is food, without which a living being can’t survive. Particularly, in India where Edible oil in one or other form is consumed in almost every household. The peculiar Indian food habits prefer fried vegetables and several other fried snacks. India is one of the world's leading producers of oil seeds and oil, contributing to 9.3% of world oilseed production and is the fourth largest oilseed producing country in the World next to USA, China, and Brazil, harvesting about 25 million tons of oilseeds per annum. The edible oil sector occupies a distinct position in Indian economy, as it provides job to millions of people, achieves on an average a domestic turn over of about US $ 10 billion per annum and earns foreign exchange of US $ 90 million per annum. India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard/rapeseed, sesame, linseed, Niger seed/castor are the major traditionally cultivated oilseeds. India is a vast country and inhabitants of several of its regions have developed specific preference for certain oils largely depending upon the oils available in the region.

India has emerged as the world’s largest importer of vegetable oils since 1998-99. Ever since that time, the annual imports have kept hovering. The edible oil industry is now one of the leading sustainers of the positive annual economic growth rates India has enjoyed for over a decade now. India’s demand for edible oil has been growing at a rate of 8-9 per annum. The national demand for edible oil gives investment opportunities into the edible oil industry. Trained, trainable as well as unskilled labour is readily available for prospective investors in the sector to utilize.

Considerable opportunities exist in the edible oil sector of the Indian economy. The edible oil sector has shown steady growth. The index of industrial production has been positive and this trend is expected to continue over the foreseeable future.

Table of Contents
Sr.No Chapter 1: Introductions Executive Summary Introduction Research Study  Research Objectives Research Methodology Adopted Chapter 2: Industry Description 1) 2) Vegetable Oils About Edible Oil • Choice of Oil Types of Edible Oils( History & Description) • • • • • • • • • • •   Marine Oils • Fish Oil Animal Fats Cottonseed oil Linseed Oil Palm Kernel Oil Peanut (Groundnut) Oil Rapeseed Oil Soya bean Oil Sunflower Oil Sesame Oil Coconut Palm Oil Olive Oil Corn (maize) Oil 1) 2) 3) Chapters Page No.

• Lard • Tallow  Speciality Oils Chapter 3: World Market of Edible Oil    Global Scenario Global demand and supply situation Major Producers of Edible Oil Chapter 4: Comprehensive Study of Indian Market       • • • •      • • • • • • • • Overview of the Indian Edible Oil Industry Importance of Edible Oils in the Country’s Economy Types of Oils Commonly used in India Consumption Pattern of Edible Oils in India Developments in the Industry Trends in the Edible Oil Industry Raw material production National Milling Capacity Production of Edible oil & Fat Local Market Future of Indian Edible Industry PEST Analysis of the Industry Michael Porter’s Five Force Analysis Opportunities & Threats Analysis Statistical Profile of Indian Edible Oil Industry Status of the Edible Oil Industry Supply Situation in the Country Production of Oil Seeds & Net Availability Share of Major States in Area & Production Net Availability/Import/Actual Consumption Import of Edible oil under OGL Import of Edible oil on Govt. A/c (for PDS) Export of Edible oil

The research study was conducted to find out the factors which would influence the major developments taking place in this industry. harvesting about 25 million tons of oilseeds per annum. With these objectives in mind. . The important outcomes are: • The Edible Oil Market is highly fragmented. at both the global as well as domestic level. Government institutions and other secondary sources. and Brazil. This study was also conducted to understand the Import-Export scenario and government influences.  • Bibliography Annexure World Edible Oil Statistics Executive Summary The Management Research Project has been undertaken to study the international market of Edible oil industry and to analyze comprehensively the Indian Market scenario. websites. the information is collected from various publications related with this industry. • India is the fourth largest oilseed producing country in the World next to USA. China. Later on all this information was compiled in the form of presentable and highly comprehensible report.

• World Vegetable oil importers market has been divided into two parts. first. Now India has entered this cutthroat competitive market by the import contract of groundnut oil. India has emerged as the world’s largest importer of vegetable oils since 1998-99.• There has been a persistent gap between demand and domestic availability of edible oils. and secondly the markets of South-East Asian countries including Malaysia and Indonesia. . the markets of American continent including Argentina and Brazil .

castor seed. It produces the largest number of commercial varieties of oil seeds over nearly 28. safflower etc. The major edible oils produced in India are groundnut. as it provides job to millions of people. rapeseed. Soya oil contributes about 10% of total vegetable oils produced in the country. sesame seed. China.3% of world oilseed production. The edible oil sector occupies a distinct position in Indian economy. India is the world’s second largest . India is the fourth largest oilseed producing country in the World next to USA. achieves on an average a domestic turn over of about US $ 10 billion per annum and earns foreign exchange of US $ 90 million per annum. cottonseed. Soya.4 million hectares of land. sunflower.Introduction India is one of the world's leading producers of oil seeds and oil. and Brazil. Soybean is the third largest oilseed crop in India next to Groundnut & Mustard and accounts for 25% of the total oilseeds produced in the country in a year. contributing to 9. Groundnut is the most widely consumed and traded edible oil determining edible oil economics. harvesting about 25 million tons of oilseeds per annum.

to increase production of other oil seeds and oil.producer of groundnut.3 lakh tonnes compared to last year 140. next only to China. 100.9 and 33.5 . The total oilseeds crop (inclusive of nine major oilseeds and also copra and cottonseed) for this kharif season is estimated at 207. In 1996.1 lakh tonnes for the year 2002-03 estimated.4 lakh tonnes during the current year as compared to earlier record of 132. . sunflower.8 lakh tonnes and Kharif Oil availability 47.  To increase area under oilseed crop. the Government set up a Technology Mission on oil seeds. and to reduce dependence on imports. The strategy followed was:  To increase productivity with better farm inputs and practices. But groundnut being primarily a Kharif (monsoon) crop is vulnerable to vagaries of monsoon and also speculative activities.2 lakh tonnes giving marketable surplus for crushing 154. Timely and adequate rain is expected to result in an all time high oilseed production of 142.  To encourage winter (Rabi) oilseed crops.1mn ton in the mid 80's to around 22mn ton currently.1 lakh tonnes respectively. castor seed and Soya Oil seed production jumped from 6.3 lakh tonnes in 1998-99 and 88. India is today world’s third largest producer of rapeseed and cottonseed and the largest producer of castor seed. This led to a sharp increase in oilseed production driven mainly by rapeseed.

7 lakh tonne. Based on the marketable surplus and oil recovery rates. The highest oil will be recovered from groundnut and Soya bean. followed by Maharashtra at 18. Saurashtra grows nearly half of India’s winter groundnut-crop.5 lakh tonne.5 lakh tonne (marketable surplus) and copra at 6.2 lakh tonne.03 million tones. Incessant rain for a week in the groundnut-growing region of western Gujarat had threatened to damage the crop. sesame seed at 3.2 lakh tonne and copra at 4. the total oil availability of this kharif crop is estimated at 47.4 lakh tonnes.8 lakh tonne.According to trade estimates during the 2003-04 season.5 lakh tonne. torai at 1. cottonseed oil at 5. India’s winter groundnut output is expected to top 5. . as against previous kharif's 33.5 lakh tonne each.7 lakh tonne. Total production of Sunflower seed is expected to be 2. castor seed at 6.5 lakh tonne Soya bean production.5 million tones with the crop in good shape after sufficient rains.10 lakh tonne. both at 10. by the country’s worst draught in 15 years.7 lakh tonne. cottonseed at 46. Groundnut output in the 2002 winter season fell to 3.70 lakh tonne of the total expectation of 68. which is sown in May-June and harvested in October-November.5 lakh tonne. niger seed at 0. Madhya Pradesh is expected to produce 42 lakh tonnes of Soya bean . but the rains have since stopped. Rest will be recovered from balance oilseed crops. Gujarat is expected to top the kharif groundnut oilseed production at 33 lakh tonnes in shell out of the total 56 lakh tonne (in shell) estimate. followed by rice bran oil at 6.

. which grows nearly 20% of India’s winter groundnut. was being used for the cultivation of the oilseed.Besides the normal monsoon. A larger area of Southern Andhra Pradesh. attractive oilseed prices in the last season had prompted farmers to allot more land to groundnuts.

5. 2. To analyze market scenario. To study the International market of Edible Oil. To study the Role of Government in this Industry.Research Study Research Objectives The objectives of the study are explained below: The Project has been undertaken: 1. future prospects and developments taking place in Edible oil industry. To study the Indian market of Edible Oil. Research Methodology Adopted Data Collection Method Sources : Secondary Method : Publications • Oil World • The Economic Times • Business World Government Departments • The Edible Oil Wing of the Department of Food & Public Distribution . To study the Import-Export process of Edible Oil. 3. 4.

Trade Associations • Solvent Extractions Association of India (SEA) Limitations • It may be difficult to determine the accuracy of the data because the Methodology used in collecting the data may be unknown. . • Time and Cost might be the limitations.

generally organicchemical liquids.Chapter 2 Industry Description About Edible Oil "Oils" is a collective term for more or less viscous. mineral and silicone oils. a distinction may be drawn between fatty. are NUTRIENTS.the things. essential. One very basic difference between the way of looking at Edible-Oils and the Industrial Oil technician's viewpoint should be understood. From our viewpoint. those "impurities" look desirable -. When he sees dark color. Tragic because if those nutrients were present they would contribute to the health of the consumer. it represents the presence of "impurities" -. semisolid and solid products of vegetable and animal origin. . Fatty oils include liquid. odorless and bland in taste. odor and flavor.material that prevents the oil from being light colored. Depending on their chemical composition. It is both tragic and ironic that the removal of nutrients should be equated with "purity". They are also known as sweet oils. which impart color.

of course. . or for cooking or frying. Demand for all oils will inevitably grow in line with the increase in the world's population. what factors should determine the choice of particular oil? The choice of oil as a food ingredient. such as currency movements and the availability of transport and refining capacity. The factors that will need to be taken into account may include: • Price: Like all other products.Ironic because establishing the desired "purity" really results in producing poor quality food. this will be governed by the laws of supply and demand. will usually involve a compromise. the weather. Supplies of oil-bearing crops will depend on acreage planted. mean that oils are available to suit any and every need. Given such a range of options. the quality of the crop and. Prices will reflect this fundamental demand. transportation and refining. Choice of oil New methods of production. as well as being influenced by a whole host of technical factors.

monounsaturated and polyunsaturated.as in many cooking or frying processes . During subjection to high temperatures.(also known as Omega-3 and Omega-6 fatty acids). while others are extremely versatile and lend themselves to being substituted one for another. on the evidence of diets high in Olive Oil that the monounsaturated fats may be either neutral or benign. There is an increasing body of opinion. saturated fats may last twice as long as polyunsaturated types. • • • But . for example. and especially if this is prolonged . the human body is able to manufacture all the different types of fat it needs from the fat and other nutrients in the diet. Taste Appearance Nutritional and health concerns: All oils are made from three main types of fatty acids: saturated.• Intended use: The specific characteristics of some oils mean that they have a relatively limited number of uses. based. 2. a minimum of 3% of calorie intake should be in the form of EFAs. . The only fatty acids which need to be eaten are the so-called essential fatty acids or EFAs . Saturated fats are much more stable under heat than polyunsaturates. The overwhelming conclusion of current dietary research is that while the intake of saturated fats is both unhealthy and unnecessary.linoleic and linolenic .polyunsaturated fats are converted to saturates. With care.there are a number of other important considerations to be borne in mind when looking at the nutritional or health implications of using a particular oil or fat: 1. For the most part.

whereby hydrogen is bubbled through the oil at a controlled temperature. could actually have a higher level of saturated fats than non-hydrogenated oil such as Rapeseed.uk) . The effect of this might be that semi-solid cooking oil made from base oil high in polyunsaturates. such as Sunflower. and to harden it to a desired consistency at specific temperatures.co. (for example in the manufacture of margarine or extended-life oils from Soya or Sunflower oils). thereby increasing its useful life. many liquid oils are subjected to the process of hydrogenation. Hydrogenation changes the chemical structure of the oil and increases the saturated fats content. During refining. both to make the oil more stable. (Source: www.3. This is a completely harmless process and is widely used.cybgroup.

Pakistan USA. Cottonseed oil was the first vegetable oil . Brazil - Cottonseed oil's history is closely related to the history of the modern vegetable oil refinery business.Types of Edible Oils (History & Description) Cottonseed Oil Countries of origin Europe Africa Asia America Australia Sudan India.

Cottonseed oil is versatile oil prized by chefs for its unique ability to allow the flavor of foods to come through. Whether making salad dressing or deepfrying. . pharmaceutical emulsions. diapers. margarine. cottonseed oil is well regarded for its ability to avoid overpowering the flavor of foods and its composition prevents an unpleasant greasiness on food. Dissolved cellulose derived from cottonseed linter pulp is used for products such as plastics. Products such as paper. cosmetics and photography and x-ray film. David Wesson and other edible oil refining pioneers developed and employed their machinery first on cottonseed oil. Other Products of Cottonseed Along with oil. Noted as slightly nutty or buttery flavored oil. hulls and meal are also produced in the processing of cottonseed. cottonseed oil has many applications. baked goods. mattress padding and even currency are manufactured from linters. pastries. shortening and oil blends. linters.used in the United States and its development followed by several decades the 1793 invention of the cotton gin. such as snack foods. mayonnaise. rocket propellants. rayon.

linium usitassium is certainly not a new crop. Flaxfibre and linen have been discovered with remains of Stone Age man and it is known that flax was a well-established crop in the Nile Valley around 1000 BC. In the early days of the . Argentina. Hungary Egypt India USA. Genus Linum.Linseed Oil Countries of origin Europe Africa Asia America Australia Russia. Uruguay. which includes the vast majority of the herbs and shrubs found in temperate and sub-tropical regions bordering the Mediterranean Sea. a subsidy system of one sort or another has been in operation since 1976. Paraguay - Linseed comes from the family Linaceae. Canada. In terms of EU support for both linseed and fibre flax. Linseed/flax.

Palm Kernel Oil Countries of origin Europe Africa Asia America Australia East and West Africa Indonesia. This tree is generally believed to have originated in the jungle forests of East . while the oil palm. The two trees also look rather similar. France was the single biggest producer of linseed. Coconut palm is "Cocos nucifera". which gives both palm oil (PO) and PKO is "Elaeis guineensis".scheme. India - Palm kernel oil is very similar to coconut oil in fatty acid composition and properties. Malaysia. both are called "palms" but they belong to different genera. French production fell away significantly towards the end of the 1970s and it was not until linseed began to be grown in the UK during the early 1980s that linseed's EU fortunes were revived to any extent.

etc. it has lower cost of production and it is rising at a much faster rate. palm kernel oil is still smaller than coconut oil by about one third. some 5000 years ago. imitation whipping cream. In palm oil. Palm kernel oil and its hydrogenated and fractionated products are widely used either alone or in blends with other oils for biscuit doughs and filling creams. The outer fleshy mesocarp gives the palm oil. absorbing over half a million tonnes per annum for her oleo chemical industry. Malaysia. no doubt helped palm kernel oil prices. in spite of that.Africa and there is some evidence that palm oil was used in Egypt at the time of the Pharaohs. The palm fruit looks like a plum. most of the fatty acids are C16 (i. It is a co-product of palm oil. but it cannot be the main reason since. It is rather strange that the two oils from the same fruit are entirely different in fatty acid composition and properties. in the last five years world exports of palm kernel oil increased by 33%. while in palm kernel oil. they are C14 and lower. the coconut producing countries have exactly the climate and soil conditions . sharp-melting margarines. ice-cream. but the future belongs to it. have 16 carbon atoms) and higher. Furthermore. as opposed to 25% for coconut oil. cake icings. The good news for buyers is that the rate of Malaysia's oleo chemical expansion is bound to slow down and her palm kernel oil exports should start rising again. substitute chocolate and other coatings. Future Prospects In world terms.e. while the kernel (which is inside a hard shell) gives palm kernel oil.

In the working lifetime of most readers of this article. is native to the Western Hemisphere. South-East Asia Brazil - Peanuts (groundnuts) are pulses. while grown in tropical and subtropical regions throughout the world. Peanut (groundnut) Oil Countries of origin Europe Africa Asia America Australia East Africa.required for replanting with oil palms which are more profitable. palm kernel oil will become the major lauric oil. It probably originated in South . West Africa India. the seeds of the leguminous plants (Arachis hypogaea) and belong to the same botanical family as beans. peas and lentils. The peanut.

as well as processing techniques. The new twentieth century labor-saving equipment resulted in a rapid demand for peanut oil. Highly aromatic 100% peanut oil and peanut extract are high value products with a strong roasted peanut flavour and nut aroma. Peanut oil is liquid at room temperature. Peanut kernels range in oil content from about 43% to 54%. harvesting and shelling peanuts. Later. It allows food to cook very quickly with a crisp coating and little absorption. peanut butter and confections. depending on the variety of the peanut and the seasonal growing conditions. When the Spaniards returned to Europe. . Peanuts supply one-sixth of the world’s vegetable oil. contributed to the expansion of the peanut industry. Peanut oil is excellent quality cooking oil with a high smoke point (440º Fahrenheit). peanuts went with them. the development of equipment for production. confections. neutral flavour and odor. By the end of the nineteenth century. roasted and salted peanuts. sauces and baked goods. These products have applications in flavour compounds. traders were responsible for spreading peanuts to Asia and Africa before making their way to North America.America and spread throughout the New World as Spanish explorers discovered the peanut's versatility.

Japan Canada - Canola's roots are firmly planted in an oilseed crop known as "rapeseed". when it was found that rapeseed oil would cling to water and steam-washed metal surfaces better . India.Rapeseed Oil Countries of Origin Europe Africa Asia America Australia Belgium China. Although the crop was grown in Europe in the 13th Century. Later it was used in foods and as cooking oil. History suggests that ancient civilizations in Asia and Europe used rapeseed oil in lamps. its use was not extensive until the development of steam power.

The first edible rapeseed oil extract in Canada was in 1956/57. All of the rapeseed varieties grown produced oils containing large amounts of eicosenoic and erucic acids. The oil was urgently needed as a lubricant for the rapidly increasing number of steam engines in naval and merchant ships. Rapeseed oil for edible purposes was not fully exploited by Western nations until the end of World War II. The merits of the crop as a source of food were acknowledged by the agricultural industry who felt success could be achieved if proper processing techniques could be adopted.than any other lubricant. which are not considered essential for human growth. This event marked the beginning of a rapidly expanding industry. In fact. the need for Canadian rapeseed production arose from the critical shortage of rapeseed oil that followed the World War II blockage of European and Asian sources of rapeseed oil in the early 1940s. .

They are. Soya bean has proved adaptable to a wide variety of climatic conditions. Brazil.Soya bean Oil Countries of Origin Europe Africa Asia America Australia Southern Europe. particularly when looking at Soya food consumption only. Russia Japan. China USA. however. Canada - The Soya bean is one of the oldest vegetables known to man. a relative newcomer to the Western consumer. Although sub- . Soya beans have been grown and consumed for more than 5000 years in China and the Far East.

Oil products are already used as fuel (biodiesel). carbohydrates. commercial growing has been continuously increasing. paper coatings).39%.tropical in origin. and dust control and as pesticide and herbicide solvents. They contain all components necessary for optimal food and feed application. phytoestrogens. containing all the essential fatty acids). cultivation now extends much farther. Soya nuts. tofu and tempeh. Soya milk. steroids. vitamins and minerals. printing ink formulations. for example. The functional properties of soy protein based ingredients and the versatility of Soya bean oil based components add to its widespread use. are the most visible form of soy containing foods to the consumer. . Soya beans and Soya bean products have a much wider application area. it is also rich in fibre.20%. Soya is not only an excellent source of vegetable protein (34 . Soya beans only arrived in the United States in 1804 and were a relatively minor crop until the 1920s. in lubrication. Technical protein applications still remain limited (wood adhesives. with a balanced composition containing all the essential Amino acids) and of vegetable oil (18 . Other Uses A more recent derived development is the application in technical areas. Since then. Soya foods.

However. . Tanzania China USA.Sunflower Oil Countries of origin Europe Africa Asia America Australia Turkey. in the last few years. It was also a leader in the research and development of the crop. Russia South Africa. Canada - The history of world sunflower production in the last 20 years has been directly related to the political changes in the Soviet Union. Argentina has become the largest producer of sunflower seed and international based seed companies have taken the hybrid seed and new genetics to all corners of the earth. Argentina. The former Soviet Union was the largest producer of sunflower seed and also the largest consumer of sunflower oil.

From 1992/93 to 1997/98.The decline in sunflower production in the former Soviet Union regions has limited the growth of sunflower as it relates to other oilseeds. . Sunflower has the highest level of polyunsaturates and which are effectively all of the more stable. The actual level can vary from below 60% to over 70%. However. with the highest levels being found in crops grown in areas experiencing the largest variation between day and night-time temperatures. is that Argentina and the US export a majority of the sunflower oil that they produce. the former Soviet Union only exported limited volumes to several of their trading partners. such as rapeseed's 24 percent growth and Soya bean's 23 percent growth. such as Cuba. This compares poorly to the other major oilseed crops. the changing role of country production has not impacted the volume of sunflower oil exports as dramatically when compared to the other oilseeds. linoleic variety. the world's growth in sunflower production was just under 9 percent. The difference. The percentage increase of sunflower oil exports during the five year period of 1992/93 to 1997/98 was 39 percent. compared to rape oil of 42 percent and Soya bean oil of 48 percent. of course. Of those oils in common daily use.

The English word sesame traces back to the Arabic word of simsim. the Chinese were . The earliest records mentioning the use of sesame seed as a spice come from the Assyrian myth which claims that the gods drank sesame wine the night before they created the earth.Sesame Oil Countries of origin Europe Africa Asia America Australia Turkey Sudan. Sesame domestication began in Africa and. India and China and westward to Latin America along with the slaves. China and India are today the largest producers of sesame seed. China. which clearly links the sesame seed to India. as well as for the home-based production of oil. Egypt India. It is already known that some 5000 years ago. leaving a clear trail in Egypt. Guatemala - Sesame seed is believed to be one of the oldest seeds to have been used as a condiment. in what is now known as Sudan. Burma Mexico. A more common name is Sesamum Indicum L. It traveled eastwards to Japan. the Coptis semsem and the early Egyptian word semsent. more particularly.

thus the reference as a "lazy man's crop". Coconut Palm Oil The coconut palm (Cocos nucifera. the seedlings in polybags are protected from shock and other damages when transplanted in the fields. Traditionally. The sprouted seed nuts are transferred into polybags to allow proper selection of seedlings. normally from elite parents. The coconut palm reaches a height of 20 meters or higher for the tall varieties. The palm is propagated through seed nuts. L) is commonly called the "Tree of Life" because of its myriad uses. Furthermore. it requires little attention throughout its life span of over 50 years. coconut oil is used mainly as cooking oil or frying oil.burning sesame as a source of light and used it to produce soot for their ink blocks. shelter. It is also an important raw material for margarine and . from the roots to the leaves and particularly its fruit. are tended and developed for improved productivity. beverage. In the countries where it is produced. while dwarf varieties grow up to 3 meters upon maturity. however. animal feed and as an important raw material for various industries like the oleochemical industry. All parts of the palm. Commercial farms. These are stored in a shade to germinate in loose and friable soil provided with adequate moisture and drainage facilities. have special uses as a provider of food.

Portugal. Other . are cumulative evidence that the olive tree dates back to the twelfth millennium BC. fossilized remains discovered in strata from the Upper Paleolithic at the Relilai snail hatchery in North Africa and remnants of wild olive trees and stones uncovered in excavations of Aenolithic and Bronze Age sites in Spain. In the Philippines. other Mediterranean countries West Coast. De Candolle identifies Syria as the birthplace of the olive. The wild olive tree originated in Asia Minor where it is very abundant.shortening production. USA - Olive leaf fossils found in Pliocene deposits at Mongardino in Italy. a 90/10 blend of coconut oil/corn oil is used as a milk fat in filled milk formulations. Olive Oil Countries of origin Europe Africa Asia America Australia Greece. Spain. In his treatise on "The Origin of Cultivated Plants" written in 1883.

they introduced it to the Greek mainland where its cultivation spread. means that Olive Oil will . More recently. and because of the enormous growth in the market for quality foods it has become extremely popular. it has continued to spread and is now grown in South Africa. and for this reason. the Berbers knew how to graft wild olives and olive cultivation spread through all the Roman territories. olive trees were being grown in Mexico and then in Peru. The traditional product of the Mediterranean and the basic ingredient of classic French and other cuisines. the Phoenicians took the olive to the Greek Islands. Japan and China.contemporary botanists reported wild olive trees on the slopes of the Atlas mountains and the mountains of Tunisia. Olive trees are extremely slow-growing and the area of production is still limited to the Mediterranean countries. In the 16th Century BC. between the 14th and 12th Centuries BC. from Tripoli to Tunisia. The olive crossed the seas with the discovery of the American continent in 1492. from Sicily and Calabria in Southern Italy to Liguria in the North. The increasing demand for the different types of Olive Oil. Olive cultivation began 6000 years ago on the Mediterranean coast of Syria and Palestine. Chile and Argentina. From there. Later. With its high levels of monounsaturates. and the traditionally regional and specialized nature of its production. the olive was cultivated the length and breadth of the Mediterranean region. Olive Oil is perceived as particularly healthy oil. By 1560. When the Romans arrived in North Africa. it spread to Anatolia (via Cyprus) and to Egypt (via Crete). California. Australia. By the 6th Century BC.

including the UK and Europe. The seed contains approx. 40% oil. . the only source of real international importance is the USA. Corn or Maize Oil Liquid oil extracted from the germ (seed) of maize. However.continue to command a high price premium over all the commonly-used edible oils. The crop is widely grown and some local production is available in many countries.

the vast majority of Fish Oil is hydrogenated. The most common uses of Fish Oil are in the production of economy retail margarines and economy bakery magarines and fats.5% and 15%. even after traditional refining. Peru (Anchovy). as well being used as a shallowfrying medium. Norway (Capelin). Chile (Sardine) and Denmark (Capelin/Tobis). Consequently. Japan (Sardines/Mackerel).Marine Oils Fish Oil Produced from the flesh of fish with oil content between 0. The major producers are the USA (Menhaden). Iceland (Capelin). . depending on fish species and point of fish's life cycle oil is extracted. In its crude state Fish Oil is totally liquid but contains certain fatty acids that are so highly unsaturated and therefore unstable that they can give rise to flavour reversion problems "within hours".

A large percentage of the international trade in Tallow is for qualities considered unsuitable for human consumption but which have wide applications in the technical field. Tallow Tallow is produced in the same way as Lard. in the course of that much of the fat is removed. the name is more commonly reserved for the fat obtained from cattle and referred to as Beef Tallow. are subjected to full refining treatment prior to edible use. The freshest. traditional flavour is commonly referred to as "packers" lard.Animal Fats Lard Pigs which have been subjected to ante and post mortem veterinary inspection and certified free from disease are slaughtered for meat production. First quality. whilst a majority of the rendered tonnage requires full refining prior to edible use. Other qualities. which are too high in acidity or otherwise fail to meet the tighter analytical specifications. It has a firmer consistency than Lard and melts at higher temperatures. good color and a mild. freshly rendered material with low acidity. which can be simply cleaned/filtered and used directly for packing. . top quality production is known as premier jus. Predominant sources are the kidney and back fats which are passed through a rendering process to produce what we know as Lard. Whilst the word can cover material derived from various animals.

de .tis-gdv. temperature profile etc. and uses for.cybgroup.uk www. durability.Speciality Oils The sources of. or . modern refining and processing techniques allow different oils to be blended together for particular uses. different oils are many and various.co. increasingly. individual oils to be tailored to give specific desired characteristics. Other oils currently available are: • • • • • • • • • • Almond Arachis Borage Castor Cod Liver Evening Primrose Flaxseed Grapeseed Halibut Liver Hazelnut • • • • • • • • • Poppyseed Pumpkinseed Safflower Salmon Sesame Shark Liver Sild Walnut Wheatgerm Source: www. In addition. be it taste.

corn. the European Union and China. Vegetable oils Vegetable oils are extracted from the fruits. and ice cream. when converted into olein and stearine and its downstream derivatives. CPO. whereas major producers of CPO are Malaysia and Indonesia. shortening. palm. accounting for 17% and 23% of the total consumption respectively (GK Goh Research. sunflower. followed by Nigeria. flowers and seeds of plants. Argentina and Brazil. a major ingredient in margarine. or sold as ingredients for further processing into other food products. Approximately 40% of the world’s edible oil requirements are met by Soya oil and crude palm oil (CPO). brings further added value. a by-product of the fractionation process. groundnut and cottonseed. Leading vegetable oil producers are the United States. rapeseed.Chapter 3: World Market of Edible Oil Global Scenario The oils and fats industry consists of processors of vegetable. Thus CPO is mainly used to produce refined. bleached and deodorized palm oil (RBDPO). RBD olein is used mainly in the . and essentially have the same constituents but its proportions may vary. 4 August 1999). The principle vegetable oils are soybean. RBDPO is further fractionated to produce RBD olein and RBD stearine. animal and marine products that convert these products into edible oils and fats usually sold as food products in their own right.

439 12.566 4.006 11.677 7.423 8.557 24.936 20.784 865 6.858 3.930 102.161 94.For data on Malaysia.502 8. .191 117.119 4.970 1.150 20.175 1.945 20.2001 ('000 TONNES) Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL 1994 14.703 22.065 1998 16.688 25.223 13.047 4.601 101.355 2.168 24.938 2.825 2.308 13.834 2. instant noodles and other snack foods.430 20.309 7.507 1.083 20.066 1.304 1.852 4.962 3.199 1.520 1995 15.391 9.701 442 723 691 80.677 2001 23.264 5.761 7.888 483 589 701 74.675 3.006 5.861 18.350 1.467 1.900 446 616 636 68.165 11.285 5.905 4.648 7.955 1.722 2000 21.714 1999 20. RBD stearine is primarily used in the manufacturing of soaps and detergent and in the manufacture of margarine and shortenings for food.210 1.573 9.015 1.685 7.272 2.872 27.490 5.572 5.677 14. WORLD PRODUCTION OF 17 OILS & FATS: 1994 .815 22.357 114.354 6.968 3.194 6.302 Source: • • Oil World Annual 2001.588 441 736 694 81.521 9.322 4.903 2.230 21.880 3.038 4.111 6.855 3.404 3.692 20.229 1. 1999. French fries.919 2.690 515 751 621 95.677 7.464 5.545 494 715 698 92.052 4.196 1.830 1997 17.694 9.026 8.043 4.150 109.416 6.manufacture of cooking oil and margarine and is used in industrial frying or processed foods like potato chips.520 20.784 5.918 8.546 3.373 5.420 96.388 2.107 2.121 6.867 2.479 1.059 8. 2000.425 1996 16.301 2.320 6.563 9.725 1.556 10.147 88.500 1.822 4.073 8.461 442 726 730 87.042 479 668 666 76.410 5.336 5.539 2.830 1.572 1.631 2.550 1. 1998 & Oil World Weekly (22 March & 5 April 2002) MPOB .282 2.684 3.779 4.809 3.716 22.

demand for edible oil has increased in line with population growth. . Historically. The average growth in global demand for palm oil has been 7. Oil World.Global demand and supply situation Although demand for oils and fats was affected by the Asian economic crisis. May 2003.1% for 1999 and 2000 respectively. These forecasts assume an expected recovery of the Southeast Asian economies as well as a decrease in demand for animal fat due to concern over its high cholesterol content. Source: Oil World.6% per year from 1991 to 1996 (ING Barings Research Report. the leading forecaster of supply and demand in the edible oils industry still projected a growth of 3. June 1999).2% and 4.

and anticipated to account for around 20% of the global oils and fats supply. The year saw significant rebounds in palm oil supply. Production is expected to reach 26. although in recent years Hungary has also emerged as a strong presence in the development of linseed varieties.8% of world production.3 percent over the previous year's production of 16.2 million tonnes by the year 2005. which accounts for more than 52. Palm Kernel Oil The largest palm kernel oil producing country by far is Malaysia.7 percent in 1999. particularly for winter sowing. Palm oil share in the global oils and fats production jumped from 16.26 percent in 1998 to 18. Malaysia and Indonesia together.Major Producers of Edible Oil Linseed Oil Canada remains the world's largest producer of linseed and is the single biggest exporting country. It has also been the provider of many Europeangrown varieties.904 million tonnes was registered in 1999. while two countries. an increase of 19. . No other country produces more than 8% or exports more than 3%. Palm oil is expected to demonstrate an annual growth of 4. exports and consumption.681 million tonnes. account for about 80% of production and 90% of exports. A record production of 19.57% over the next five years.

Changing weather patterns. The majority of their production is consumed internally. . infrastructure improvements. Peanut Oil World peanut production totals approximately 29 million MT.2 million tonnes by the year 2005 in Malaysia. accounting for approximately 2/3 of total world production. Argentina. Demand for peanuts has been steady in North America and Europe. with an average annual export of approximately 240. Two significant factors affecting peanuts in the world market are (1) consumer concerns for nutritious foods and (2) stricter import standards for food safety and quality.5 million MT. Among the other major importing countries are Indonesia.4 million tonnes in production.all are factors which influence a market which increasingly demands innovation and quality (at a reasonable price). seed varieties . particularly crushed for oil use. Share of world exports varies based on crop conditions and internal market demand (particularly in China). while Indonesia is expected to reach 9.Malaysia and Indonesia will be at the forefront of this production growth. China and India are also major suppliers to the world market.000 MT. Canada and Japan. India and China are among the largest producers of peanuts. Total exports of peanuts top 1. although under competition within a dynamic snack market. The US is one of the world's leading edible peanut exporters. with production forecasts of some 12. with the largest market being Europe.

Eating more eggs and meat requires the production of more animal feed. rising incomes and changing diets around the world are pushing up the market for Soya beans and derived products. The United States exports almost half of its Soya bean production to the world market. Southeast Asian countries. It is also the world's largest consumer of Soya beans.000 farmers grow Soya beans on more than 29 million hectares of land. producing and marketing canola as a world oilseed. Soya bean Oil In the United States. A growing world population. meal and oil. are the other major growth markets for Soya beans. Soya beans are the second most valuable US cash crop after corn.Rapeseed Oil Canada has become a market leader by developing. This achievement would have been impossible without the canola breeding research that has been conducted by dedicated Canadian scientists who had the support of the government and on-going funding of the canola industry. . At a record of $17. Soya bean meal and Soya bean oil. Vegetable protein and vegetable oils replace or add to animal protein and fats. The European Union is the major importer whilst China is the strongest growing market for Soya beans. Turkey and the Turkish Republics. nearly 400. meal oil.7 billion.

From 1992/93 to 1997/98. Argentina has become the largest producer of sunflower seed and international based seed companies have taken the hybrid seed and new genetics to all corners of the earth. the changing role of country production has not impacted the volume of sunflower oil exports as dramatically when compared to the other oilseeds. such as Cuba Sesame seed Oil China and India are today the largest producers of sesame seed.Sunflower Oil The former Soviet Union was the largest producer of sunflower seed and also the largest consumer of sunflower oil. of course. The largest producers in Asia are China and India. such as rapeseed's 24 percent growth and Soya bean’s 23% growth. the world's growth in sunflower production was just under 9 percent. This compares poorly to the other major oilseed crops. it is Mexico and Guatemala. The percentage increase of sunflower oil exports during the five year period of 1992/93 to 1997/98 was 39 percent. It was also a leader in the research and development of the crop. in Africa it is Sudan followed by Nigeria while. in Central America. . However. However. in the last few years. compared to rape oil of 42 percent and Soya bean oil of 48 percent. the former Soviet Union only exported limited volumes to several of their trading partners. is that Argentina and the US export a majority of the sunflower oil that they produce. The difference.

Morocco and Palestine) are also located in the Mediterranean area.068 billion nuts. world olive oil production averaged around 2. Together they produced. Of the three leading producers. India and the Philippines. Coconut oil accounted for 6. Olive Oil During the 3 years (1997/98-1999/00).2% of this volume. which is equivalent to about 51.65 million metric tons.7%) and Syria (3. Most of the comparatively smaller producing countries (such as Algeria. Indonesia and India use the bulk of their production internally. Jordan. As for production.7%).3 million tonnes. more . particularly within the European Union and.Coconut Oil World production of coconut averaged 9. 92. Of this total. Cyprus. Coconut is widely traded in the world market in the form of coconut oil. other important world olive oil producers are Tunisia (7. which accounts for some 80% of her total coconut production. Along with the European Union. on average. copra terms (1992-96 average). with the European Union accounting for 78. the Philippines is the biggest supplier to world trade in the form of coconut oil. Turkey (3. Olive oil production outside the Mediterranean Basin accounts for less than 2% of world production. Israel.2%). both as food nuts and as coconut oil.39% of world vegetable oils market during the 90's.8% of the world's olive oil during the previously mentioned 3 year period. close to 70% is supplied by the major producers’ viz. Indonesia. olive oil consumption is largely concentrated in the Mediterranean Basin.

1989/90 in Australia.2%) and Turkey (3.specifically. . Portugal and France). which amounted to 2. 1993/94 in Canada and 1997/98 in Brazil. consumption in these countries has increased at an average annual rate of 10% since the International Olive Oil Council started to run promotional campaigns in these markets. Spain. the United States was by far the most important consumer country. 1991/92 in Japan.2% of average world consumption and well above the consumption levels of important producer countries like Syria (3. in its producing countries (Italy. Between 1997/98 and 1999/00. Canada and Japan. the European Union accounted for 71.100 tonnes. Tunisia (2.1%). Greece. Together with the United States.4 million tonnes. Other important consumer countries outside the Mediterranean are Australia. Brazil. The IOOC promotion started in 1983/84 in the United States. with an average consumption figure of 151. In the non-Mediterranean group.7%).3% of average world consumption. the equivalent of 6.

25 lakh MT in 2005 up from 100. The edible oil industry is now one of the leading sustainers of the positive annual economic growth rates India has enjoyed for over a decade now. India’s demand for edible oil has been growing at a rate of 8-9 per annum.92 lakh MT. Trained. With the right macro-economic policies now in place.Chapter 4 Comprehensive Study of Indian Market Overview of the Indian Edible Oil Industry India has a vibrant private sector driven edible oil industry. This gives investment opportunities into the edible oil industry. The national demand for edible oil is projected to reach over 110. the sub-sector has made a huge turn around and it is no longer an eyesore.96 lakh MT in 2001. National production as of 2001 stood at 54. trainable as well as unskilled labour is readily available for prospective investors in the sector to utilize.54 lakh MT making India a net importer of edible oil to the tune of over 46. .

Importance of Edible Oils in the Country’s Economy Oilseeds and edible oils are two of the most sensitive essential commodities. India is one of the largest producers of oilseeds in the world and this sector occupies an important position in the agricultural economy covering an area of 24.15 million tons in 19992000. Export of oil meals. The share of India in the world oil meal export market is about 7%. in terms of value.87 million tonnes of oilseeds during the year 1999-2000.3180/crores to Rs. However. .3327/. realization has gone up from Rs. oilseeds and minor oils for the financial year 1999-2000 slightly declined from 3.crores.96 million MTs in 1998-99 to 3. India contributes about 9% of the world oilseeds production. about 7% of the global production of protein meal and is the 4th largest edible oil economy in the world.38 million hectares and accounting for the production of 20.

Coconut is most important amongst the plantation crops.Types of oils commonly used in India India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. sesame. rice bran oil and cottonseed oil are the most important. Among the non-conventional oils. Groundnut. Karnataka. Tamil Nadu in addition to Kerala and Andaman & Nicobar Islands. Niger seed/castor are the major traditionally cultivated oilseeds. oilseeds of tree and forest origin which grow mostly in tribal inhabited areas are also a significant source of oils. In addition. mustard/rapeseed. Efforts are being made to grow oil palm in Andhra Pradesh. . linseed. Soya bean and sunflower have also assumed importance in recent years.

For example. people in the South and West prefer groundnut oil while those in the East and North use mustard seed/rapeseed oil. palm oil or its liquid fraction. All of them are again essentially bland. sesame oil etc. Of late. It has around 13% share of the edible oil market. have become easily interchangeable in the kitchen. newer oils like Soya bean. a term used to denote a partially hydrogenated edible oil mixture. Likewise several pockets in the South have a preference for coconut and Sesame oil. It has the ability to absorb a heterogeneous variety of oils which do not generally find direct marketing opportunities because of consumers’ preference for traditional oil such as groundnut oil. Vanaspati has an important role in our edible oil economy. ricebran and cottonseed and oils from tree and forest sources have found their way to the edible pool largely through vanaspati route.Consumption Pattern of Edible Oils in India India is a vast country and inhabitants of several of its regions have developed specific preference for certain oils largely depending upon the oils available in the region. bleaching and De-odouraisation. things have changed through technological means such as refining. Inhabitants of northern plain are basically hard fat consumers and therefore prefer Vanaspati. palmolein. odorless and tasteless and. therefore. About 60-70% predominantly . sunflower. processed edible oils. like those of cottonseed. Soya bean and ricebran. Its production is about one million MT annually. Newer oils which were not known before have entered the kitchen. mustard oil. For example. all oils have been rendered practically colorless. sunflower.

The share of raw oil. The oil is mostly sold loose directly to the consumers from a variety of containers.groundnut and mustard seeds are used to make non-refined or filtered oils. It is often branded by large manufacturers.4%. The lower quality and generally lower cost filtered oil produced is mainly by the small scale village based processors. This decentralized production and marketing pattern may account for around 20% of all edible oils in the country. These local crushers will produce between half and two MTs per month.7% and 13. These tend to have a strong and distinctive test preferred by most traditional customers. . About 70% of these filtered oils produced are by the organized and semiorganized sector plants producing from 2000-10000 MT per month. often within 2-3 days of production.0%. 42. refined oil and vanaspati in the total edible oil market is respectively 42.

Strategically the PMA objectives include: • • • Deepening decentralization Reduction in public sector activities in favour of the private sector Adoption of productivity enhancing technologies The overall government policy framework in the agricultural sector therefore continues to emphasize private sector participation and investments. and • • Institutions that promote raw material production have been set up and are adequately financed. in the edible oil industry: • The sub-sector has been fully liberalized to create competition in production. This emphasis is highlighted in a comprehensive strategy to deal with major constraints to private sector development Specifically. The PMA is part of the Government of India’s broader strategy of poverty eradication contained in the Poverty Eradication Action Plan (PEAP).Developments in the Industry All agricultural activities in the country will be guided under the Plan for the Modernization of Agriculture (PMA). . Τ he taxation system is being harmonized so that oil millers operate on a level playing field. processing and marketing.

Today. the number of farm families involved in oilseeds growing has been expanding.  Solvent Extractions Association of India (SEA). a private sector organization. 208. . SEA has established a sustainable seed multiplication and distribution system in the country. Institutional support to raw material production A number of institutions have been created to boost production of raw materials for crushing:  The National Agricultural Research Organization (NARO) spearheads research in the production and dissemination of improved varieties for vegetable oil processing.  The Cotton Development Organization (CDO) was set up to revive the cotton industry. In 2001. This trend has reduced the reliance on imports to meet the national edible oil.Trends in the edible oil industry Raw material production Production of raw material in the edible oil industry has shown an upward trend.72 lakh MT of locally available oilseeds were crushed and this scenario is projected to grow positively. is very instrumental in coordinating the rehabilitation and development of edible oil sub-sector. Already modest progress has been recorded in the supply of crushable cottonseed.

in the country.000 oil crushing units utilizing 10-30% of their capacity. The large-scale processors have sophisticated refining. a large-scale oil processing facility is estimated to require a minimum of US $ 350. a low-pressure boiler and a crude oil neutralizing vessel. Out right purchase of existing mills or joint venture arrangement with the owners are possible investments in this area.785 Solvent Extraction Units utilizing 32% of their capacity.50. Currently. National demand for vegetable oil exceeds local production.National milling capacity There are presently 1. downstream manufacturing and packaging facilities. Medium-scale mills follow a similar design of 4 or 5 low-capacity expellers. a decorticator.000 – 450. By Indian standards. Production of edible oil and fat Large-scale commercial production of refined vegetable oil and fat is a possible investment.65 lakh MT and about 45% of this is met by imports.950 Refineries utilizing 32% of their capacity and 222 Vanaspati Units utilizing 41% of their capacity.000 on equipment and accessories. Local Market . making India a net importer of Edible oil and fat. national demand stands at about 108.

and the food service industry.  National demand for vegetable oil is growing at 8-9% p. The local market for oil in India is comprised of households. Most urban areas have a range of cooking oils in shops and markets. This is an indicator of potential investment in the sub sector. .a.25 lakh MT in 2005. baking and confectionery industry. Demand for vegetable oil is expected to reach 110.

oilseeds Influence of branded products .edible oils will grow by 8 to 9% to 14. purchasing power. Availability .through symbiotic relationship with farmer Branding essential for success (e. the market for .Dada. Oils . ensuring regular supplies .Sun drop) Better distribution network to improve reach Efficiency in operation . Raw material sourcing : focus on improving yields. per capita income.Future of Indian Edible oil Industry • Demand Drivers • • • • Macroeconomic factors : Population growth.domestic/ international.based assistance to farmers of eliminate unofficial markets In the next five years.to become price competent and withstand overseas competition Proposed Future trading in edible oils will help curtail price volatility and lend knowledge .65 million MT • Key Success Factors • • • • Future .oil.`health’ message Growing preference for convenience foods.g. getting better quality oilseeds . Vanaspati . oilseeds crop Other factors : Prices .

Political Factors include Government regulations and legal issues and define both formal and informal rules under which the firm must operate. Import Policy Being Followed For Edible Oils There has been a persistent gap between demand and domestic availability of edible oils. there have been progressive changes in the Import policy in respect of edible oils during the past few years.low realization and idle capacities in oil industries Production slippages have also forced imports Excessive (cheap) imports of oilseeds . low import duties and slump in global prices .impact of oils usage on individual’s cholesterol levels PEST Analysis of the Edible Oil Industry (Indian Context) Political and Legal Factors The political arena has a huge influence upon the regulation of businesses. locally Hence.led to unremunerative prices. with a view to avoiding scarcity of this item and consequential rise in prices. In pursuance of the policy of liberalization of the Government.lead to `dumping’ Domestic industries of edible oils affected . farmers have shifted to other cash crops Increasing health awareness . and the spending power of consumers and other businesses. has been allowing import of edible oils. The Government. Edible oil which was in the negative list of imports was first .• • Business Concerns • • • • Free imports.

1995.4. of Revenue. Special Additional Duty (SAD) is levied on import of refined oils at the rate of 4%. the duty structure on edible oils has been revised four times in a span of 14 months. when all edible oils (except coconut oil. 44/2001-Custom dated 26. palm kernel oil.decanalised partially in April. virtually. Another surcharge of 3% was later imposed bringing the total duty to 25%. whether sick or otherwise. In order to increase imports and to curb the high domestic prices.2001. there has been no import of oilseeds largely because of the following of safety . Now. However. entries relating to concessional rate of custom duty @ 55% on Crude Palm Oil (CPO) for sick vanaspati units has been omitted. The Government has allowed import of oilseeds.2001 issued by the Deptt. The latest revision was effected on 1.3. vide Notification No. 1994 with permission to import edible vegetable palmolein under OGL at 65% duty. consumers and processors and to regulate large import of edible oils to the extent possible. were brought under OGL import at 30% duty. RBD Palm Oil and RBD Palm Stearin). and then further reduction in duty to 20% plus 2% surcharge in the regular budget for the year 1996-97. This was followed by enlarging the basket of oils under OGL import in March. However. Ministry of Finance. there is a uniform rate of duty @ 75% on CPO for all the vanaspati units. The duty on refined oil has been raised to 85% (basic) except in the cases of refined Soya bean Oil and refined Mustard Oil where the duties are 45% (basic) and 75% (basic) respectively.. 1998. The custom duty on CPO meant for vanaspati manufacture has been raised from 25% to 75% except in case of sick vanaspati units where duty was kept a 55%. this duty was further reduced by 10% in July. In order to harmonize the interests of domestic oilseeds growers.

cottonseed oil. sesame seeds. mustard seeds. salad oil. Soya bean oil have been made free. (ii) Free import of Soya bean in split/cracked form has been allowed. sesame seed oil. etc. rapeseed oil. corn oil. Kardi oil. subject to quarantine requirement. (iv) Export of Groundnut . mustard oil. when exported for consumption purpose. Niger seed oil. linseed oil.measures imposed by the Government. palm oil. sunflower oil. Free import of rapeseed/sunflower has also been allowed. have been made free without any quantitative/licensing requirements. Riceb ran oil.(i) A splitting /cracking requirement of Soya bean at the port (ii) Quarantine restriction Important Import-Export Measures Some of the important measures recently taken are:- (i) Exports of all oilseeds such as HPS groundnut. palm kernel oil. (iii) Export of vegetable oils such as coconut oil. Import duty on Edible oil is 45%. sunflower seeds.

1967. sold in retail. etc. labeling. production.Orders Control (i) Edible Oils Packaging (Regulation) Order. Edible Oilseeds and Edible Oils (Storage) Control Order. De-oiled Meal and Edible Flour (Control) Order. 1955 to make packaging of edible oils. etc. 1998 a Packaging Order under the Essential Commodities Act. through regular inspection of the manufacturing processes. (i) Edible oils Packaging (Regulation) Order 1998 In order to ensure availability of safe and quality edible oils in packed form at pre-determined prices to the consumers. 1998 (iii) Solvent Extracted Oils. packaging. the Central Govt. factory records. A well-equipped laboratory is available with the Directorate for analytical testing of samples. 1977. oils used in vanaspati. and (iv) Pulses. promulgated on 17th September. compulsory unless . These Control Orders provide for "in-process" surveillance in respect of the quality. drawal of samples. 1998 (ii) Vegetable Oil Products (Regulation) Order.

(iv) Only oils which conform to the standards of quality as specified in the Prevention of Food Adulteration Act. and manufacturers. 1998. Vegetable Oils and Fats) where testing of edible oil samples could be carried out so that consumers could be assured of quality edible oils. Uniform methods for testing the quality of edible oils. so also the identity of the packer becomes clear. The salient features of the Packaging Order are: (i) Edible oils including edible mustard oil will be allowed to be sold only in packed form from 15th December. (v) Each container or pack will have to show all relevant particulars so that the consumer is not misled. (ii)Packers will have to register themselves with a registering authority (iii) The packer will have to have his own analytical facilities or adequate arrangements for testing the samples of edible oils to the satisfaction of the government.specifically exempted by the concerned State Govt. and the Prevention of . 1977. (vi) Edible oils shall be packed in conformity with the Standards of Weights and Measures (Packaged Commodities) Rules. including the Thin Layer Chromatography (TLC) method for detection of argemone oil was prescribed and circulated to all State Govts. 1954 and Rules made there under will be allowed to be packed. Laboratory facilities (560 in number) both in the public and private sector were identified and notified by the Chief Director (Vanaspati.

(viii)The power for implementation of the Order is basically delegated to the State Governments. The Central Govt. bakery shortening and margarine are covered under this Order. namely. It is in view of these situations that the State Governments have been empowered to exempt any edible oils from the provisions of this Order in specific circumstances Scope of the Packaging Order All units packing edible oils. Further. a sizeable proportion of the population is living below the poverty line. including vanaspati. They have to have properly equipped analytical laboratory or arrangement of a common laboratory so as to enable to test the quality of oil for checking its conformity to the prescribed standards of quality . It may be difficult for them to afford the additional cost of packaged oils. 1954 and Rules made there under (vii) The State Governments will have power to relax any requirement of the packaging order for meeting special circumstances. oils specified in the Prevention of Food Adulteration Act and Rules there under. is aware that the production of edible oils is a highly decentralized industry.Food Adulteration Act. A substantial quantity of oil production is in the small scale or unorganized sector. Some of the important requirements to be complied with are that the packers will have to have facilities to pack and store edible oils under hygienic conditions.

He may. if it deems fit for the purpose of giving effect to the provisions of this Order. Vegetable Oils and Fats Department of Food and Public Distribution . The registering authority means any Officer of the State Government notified by that Government to exercise the powers and functions of the registering authority within the locas areas as specified in the Notification for the purpose of this Order Role of the Edible Oils Commissioner The Edible Oils Commissioner is the representative of the Central Government. The address for correspondence with the Edible Oils Commissioner is The Chief Director cum Edible Oils Commissioner Directorate of Vanspati. in such manner as may be specified by the State Government Whom the Application for Registration has to be made The application for registration is to be made to the Registering Authority.Eligibility to carry on the Packing Activity Every person who intends to carry on the business of a packer shall make an application to the registering authority in the form specified in Schedule-II together with the fee to be paid to the State Governments. issue directions which are not inconsistent with the provisions of this Order.

NEW DELHI-110 003 (Phone/Fax Number : 91-11-436 2270) (ii) The Vegetable Oil Products (Regulation) Order. Government has carried out a thorough review and has had intensive consultations with the industry. 1947 and (ii) Vegetable Oil Products (Standards of Quality) Order. promulgated on 16th December. 1998 The vanaspati industry was controlled by this Department through two Control Orders issued under the Essential Commodities Act. (i) Vegetable Oil Products (Control) Order. It has been decided that in future. it would be sufficient if control is limited to the manufacturing stage only. 1975. namely. Block 2. This Order. reduces the area of control and . Food & Public Distribution Government of India 5th Floor. Lodhi Road. 1998.Ministry of Consumer Affairs. Therefore. These two Orders were issued at a time when the vanaspati industry was at a primitive stage and strict control over manufacture and distribution of the product was required. The controls exercised were very stringent and covered both the manufacturer and the dealer. CGO Complex. 1955. Looking to the current status of the vegetable products industry in the country. the earlier Orders have now been replaced with a single new Order called the Vegetable Oil Products (Regulation) Order. 1998.

Directorate of Vanaspati. bakery shortening. Food & Public Distribution. blending. hydrogenation or interesterification and winterization (process by which edible fats and oils are fractionated through cooling) and includes any other process which may be notified by the Central Government in the official Gazette. fat spread including blended edible oils with refined edible oils as one of the components How to Obtain Registration under this Order For obtaining registration. an application has to be made to the Vegetable Oil Products Commissioner. Overlap with other agencies like the BIS and PFA has also been removed.limits the role of this Department to the manufacturing stage of the vegetable oil product. Ministry of Consumer Affairs. This new simplified Order is also expected to result in price reduction of the vanaspati product at the consumer level. The standards of quality now prescribed under the Schedules have been tightened and all requirements which were vague and non. . Term "Vegetable Oil Products" denote The term "Vegetable Oil Products" means any product obtained for edible purposes by subjecting one or more edible oils to any or a combination of any of the processes or operations namely. In short "Vegetable Oil Products" include refined edible oils. margarine. vanaspati.measurable and thus open to arbitrary interpretation have been done away with. New Delhi in the form specified in Schedule-I. Department of Food & Public Distribution. Vegetable Oils & Fats. refining.

91-11-436 2888 iii) Solvent Extracted Oil. the Solvent Extracted Oil. for example. the period of validity of license is also proposed to be increased and procedure for getting a license is being simplified. De-oiled Meal and Edible Flour (Control) Order.91-11-436 2270 Director (Vanaspati) . food-grade hexane and having well equipped laboratory to check the quality of oil according to the prescribed standards of quality are eligible for SEO License. Under the existing Order. 1967. the Solvent Extracted Product Units have to obtain five different types of licenses. stringent controls will be exercised at the manufacturing stage only Eligibility to apply for SEO License All units who are producing vegetable oils by use of solvent. has also been reviewed and amendments are being proposed.91-11-338 1177 VOP Commissioner . known as SEO Control Order. De-Oiled Meal and Edible Flour (Control) Order. Similarly. This is now proposed to be reduced to one. 1967 In the process of rationalization. For the purpose they have to submit the application to the Edible Oils Commissioner in the form specified under Schedule-II Fee for Registration/License . Under these proposed amendments also.Whom to Contact in Case for Details Joint Secretary (Sugar & Edible Oils) .

However.A license fee of Rs. Only those who are having SEO License or Registered User Certificate (RU) issued by the Directorate of Vanaspati. of edible oils and oilseeds subject to certain conditions. they can regulate the storage.500/. etc. Vegetable Oils and Fats can buy and use solvent extracted oils. Department of Food & Public Distribution. 1977 A major step which is likely to have salutary effect on the future prospect of the industry has been the exemption of oilseeds and edible oils from the purview of the Pulses. Applicability of the three Regulatory Orders being administered by the Directorate of Vanaspati. Vegetable Oils and Fats . New Delhi. Can anybody buy Solvent Extracted Oil No. Edible Oilseeds and Edible Oils (Storage Control) Order. Registered User Certificate can be issued for solvent extracted oils meant for human consumption when it is called RU (Edible) Certificate or it can be issued for industrial purposes when it is called RU (Industrial) Certificate iv) Storage Control Order. 1997.is payable in the form of demand draft in favour of Pay & Accounts Officer. distribution. 1977 with effect from 10th November. in terms of the provisions under Section 5 of the Essential Commodities Act. the State Government/UT Administrations have been advised that if they find it appropriate.

1998. Vegetable Oils & Fats for analytical checking of the samples drawn. For the purpose of ensuring proper quality control in addition to surprise inspection from Headquarters. A well equipped laboratory exclusively devoted to the analytical work pertaining to fats and oils is available with the Directorate of Vanaspati. 1998 are statutory in nature. 1967 and the Edible Oils Packaging (Regulation) Order.All the three Orders. the Directorate has been analyzing about 4000 samples per annum. Irregularities pointed out by the Field Officers in their Inspection Reports are considered for appropriate action against the defaulting units. However. All these three Orders derive their powers under the Essential Commodities Act. concerned State Governments are required to launch prosecution against the defaulting units. a minimum of 12 inspections per unit are carried out annually. Vegetable Oil Products (Regulation) Order. The samples drawn by the Field Officers are sent to Laboratory of the Directorate for analysis for checking conformity with the requirements prescribed under the Orders mentioned earlier. On an average. SEO (Control) Order. In case of failure of samples. namely. The Directorate is staffed by qualified Chemists with experience in the analysis of fats and oils. The violation of any of the provisions of the Order attracts penal action under the provisions of the Essential Commodities Act Quality of Oils being monitored The monitoring of quality is done in terms of the provisions of the Orders mentioned earlier and as per the procedures prescribed in the Inspection Manual. at the height of the mustard oil controversy in Aug-Sept . Field officers are also located in nine different zones organized in such a way as to enable proper monitoring.

the Directorate through its Consumer Service Centre analyzed 2930 samples in a short period of three months. Some of the recent actions taken in the area of fats and oils are as under:  Vanaspati and margarine continue to be exempted from Central Excise and placed at par with the refined edible oils.  There has been further reduction in duty on fatty acids and crude palm stearin from 40% to 32%. . a surcharge as special custom duty on imported stocks @ 2% has been levied.  Special Additional Duty (SAD) has been removed for Vanaspati. However.  Upward revision of unsaponifiable matter in vanaspati to 3.  Import duty on edible oils has been reduced to 15% ad-valorom. A Notification in this regard is being issued.1998. of which 224 samples failed PFA standards. Tax policy Recent actions taken in the area of Fats and Oils. Consumer Service Centre at Super Bazaar New has been closed as number of samples at Super Bazaar received negligible and Directorate has not sufficient staff to analyze the samples.4% maximum so as to allow increased usage of rice bran oil beyond 30% has been accepted by the Government.

New Delhi.  Permission has been accorded on experimental basis for manufacture and marketing of a new product category distinct from vanaspati so as to help product diversification and meet changing consumer needs . Connaught Place. The measure has been hailed as a landmark event in the history of consumer movement by the consumer organizations.  Flavouring of margarine with wider range of permitted flavours has also been accepted by the Government. and butter/ghee. The scope of the testing facilities will be extended to other food items in due course. The CSC is run by the Directorate and has been operational since 17-03-1997. Use of all edible oils including expeller mustard oil and coconut oil has been allowed in the manufacture of vanaspati.  A Consumer Service Central (CSC) has been set up at Super Bazaar. The fee per test is Rs.10/. A Notification in this regard is being issued. It provides service to the consumer and consumer organizations in the detection of common adulterants in edible fats and oils including vanaspati. margarine. Government had to close the centre as samples of Vanaspati/Edible Oils were not received sufficient.only.

The service sector replaced it with its fast rising share in GDP. Its share in GDP increased from about 48% in 1993-94 to more than 56% in 2002-03. the performance of the sector had all along influenced the growth pattern of our Gross Domestic Product (GDP) decisively as well. fell from 31% to 22% during the same period. in contrast. Economic growth: India’s GDP to grow at 7. Agriculture was no more the key sector to accelerate GDP growth rate. growth For year the raison d etre of Indian policymaking was raising food grains production. Agricultures share in GDP. But all this changed with the beginning of the reform process in the early nineties. . And not without reason feeding rapidly rising mouths apart. courtesy higher agri. The following are examples of factors in the macro economy.4% in 2003-04.Economic factors Economic factors affect the purchasing power of potential customers and the firm’s cost of capital.

Only once in 1999-2000 GDP grew by 6.2 million tonne in 2003-04. however.1% despite a relatively low 3% growth in food grains production. In actual terms.4% and increase of 3.But that is a thing of the past now. A monsoon failure last to last year witnessed a massive 14% fall in aggregate food grains production from 212 million tonne in 2001-02 to 182. despite the shift in priority agriculture still remains a key factor in deciding the magnitude of GDP growth rate.5 million tonne in a single year. The Union government may not be concerned yet as the news of a good monsoon in the current year has already improved the prospect of higher production food grains production is projected to grow by 14% to 208. What is significant.5 million tonne in 2002-03.1 percentage points over 4. But then neither 2002-03 nor 2003-04 are exceptions. It is now projected to grow by 7.3% achieved in 2002-03. That is. . GDP growth was higher that 5% in two year following higher growth in food grains production. The magnitude of GDP growth has generally followed the same direction as that of agricultural growth. GDP Growth too had fallen. help to raise Food grains stock next year too. in turn. in 2002-03 when foodgrains production declined. GDP grew by less than 5% three times during the last seven years and each time food grains production had fallen. is that the prospect of higher agriculture production in 2003-04 has improved the prospect of higher GDP growth too. food-grains production had fallen by a hefty 29. A good harvest this year will. In fact.

3 6.7 8. 1 6.14 21.18 56.7 5 7.52 54.8 5.05 2Jan 23. increased by just about 1% once and remained unchanged in two years.1 4. its production rose by just about 0.2 3.44 51. Agriculture her still depends largely on monsoon rains and the intensity of the latter has significant influence on production.5 22.2 6 7. In addition.99 26.3 7.78 21.1 97-98 26.6 4.6 5.8 . Punjab witnessed a fall in food grains production the last 10 year.8 4.14 53.98 54.That agricultural production in India has a fluctuating trend is now a new thing.6 0001 -0.47 Annul growth of sector-wise value added at constant prices (%) Sector Agriculture Industry Service GDP * CMIE estimates 0304* 10.07 48.82 96-97 28.4 4.3 98-99 6. Production declined twice.4 9900 0. Significantly.61 009901 00 98-99 23.3 9. Haryana too witnessed a similar fluctuating trend in its food grains production during the last 10 years.6 * Revised estimates 2Jan 5.5% once and by 1% in another year.4 6.01 21. GDP By Industry of Origin Share in gross domestic product (%) Sector Agriculture Industry Service 0203* 22. even the agriculturally rich state with better irrigation network.56 21.3 6.7 3.68 50.42 22. have witnessed sharp changes in their production of late.85 24.4 3Feb 3.46 23.5 97-98 -2.8 10.3 4.

a number of activities on Green Productivity demonstration. 1996 in its First World Conference on Green Productivity. 1992. Subsequently. GREEN PRODUCTIVITY DEMONSTRATION IN EDIBLE OIL INDUSTRY IN INDIA In conjunction with the Agenda – 21 of Rio Earth Summit. These factors affect customer’s needs and the size of potential markets. Tokyo launched Green Productivity Program – a strategy for enhancing productivity and environmental performance for overall socio-economic development in South East Asian Countries. The social and cultural influences on business vary from country to country. Asian Productivity Organization (APO).Social Factors Social factors include the demographic and cultural aspects of the external macro-environment. Under the Green Productivity Demonstrated Program. Since then. dissemination and awareness have been initiated by APO. The Manila Declaration on Green Productivity was announced by APO on 6th December. APO sponsored a project in Edible Oil sector to the National Productivity .

as it provides job to millions of people. solvent extraction up to 500 ton/day and oil . In addition to the economic importance of the sector. achieves on an average a domestic turn over of about US $ 10 billion per annum and earns foreign exchange of US $ 90 million per annum. Soybean is the third largest oilseed crop in India next to Groundnut & Mustard and accounts for 25% of the total oilseeds produced in the country in a year. With a view to enhance productivity and environmental performance in edible oil sector M/s. affect the environment significantly. India is the fourth largest oilseed producing country in the World next to USA.Council. India – a Soy Oil Processing industry was selected for GPDP. edible oil processing industries have been identified as one of the most polluting sectors in India. China. harvesting about 25 million tons of oilseeds per annum. The processing of soy seed to produce oil gives rise to the generation of substantial amount of water pollutants. Indore. gaseous emissions and hazardous as well as non-hazardous solid wastes. having a employees strength of 150 with the annual turn over of US $ 20 million. India. Soy oil processing industry being the water and chemical intensive industry. Soy oil contributes about 10% of total vegetable oils produced in the country. The unit was established in the year 1993. The edible oil sector occupies a distinct position in Indian economy. Rama Phosphate Ltd. (Oil Division). The unit has capacity of soy seed processing up to 500 ton/day. and Brazil.

refining up to 100 ton/day. APO has given award to the management. fish bone diagram. the GP team focused on the steam generation. Recognizing the efforts of the unit. economical viability and environmental acceptability. 18 options have been implemented by the management till January. 25. control charts. The GP methodology was applied to identify the problems. the unit has also . 3% recovery and 42% technology (equipment modification and/or change) based options. Out of 36 number of GP options. their causes & effects by using GP tools & techniques like ecomapping. Based on the technique/technology. The unit also produces by-products like De-oiled cake and acid oil. 2002. a total of 36 number of GP options were generated. The management has invested about US $ 4. After identification and analysis of the problem areas. All the GP options were subjected to technical feasibility. Based on the brainstorming and discussions with the top management & steering committee members. 8% material substitution. In addition. etc. 11% recycle/reuse. the various GP options were about 36% house keeping. The major problem areas identified were the hexane and oil losses in the plant. supply and distribution as the top priority area. brainstorming. concentration diagrams. The seed preparation was also identified as one of the major focus area. These options were classified based on the techniques/technologies and short. The unit has achieved the reduction in hexane loss of about 13% and oil losses in De-oiled cake (DOC) of about 20%.500 while implementing GP options and the pay back period has been estimated to be about 15 months. medium and long term options as well.

as a precautionary measure. The management has informed that they have also received best quality product award consecutively second year. the Hon’ble Minister for Food & Consumer Affairs and the Secretary. As a consequence. In order to improve the situation and restore the confidence of the consumers. and the following measures were taken:(i) State Governments were advised. Health consciousness Steps Taken by Government in the wake of the Dropsy Epidemic. . not to allow the edible oils to be marketed in loose form. trade and industry as also of the farmers. In the wake of the dropsy epidemic Delhi High Court banned the sale of loose mustard oil in Delhi on 26th August. Department of Sugar & Edible Oils held a series of meetings with the Government officials as also with the trade & industry. 1998.received the ISO 14001 certificate by adopting GP approach. availability of mustard oil reduced considerably and prices went up. Several States including Delhi banned the sale of loose mustard oil.

The ban was lifted on 5. on the recommendations of the Coordinating Group.06. Vegetable Oils & Fats) intensified Quality Control measures so as to ensure quality of edible oil including vanaspati. (v) Monitoring of quality of edible oil was made stringent and surprise checks and frequency of regular inspections also increased.1998 only after adequate quality measures were ensured. (iv) Use of mustard oil in the manufacture of vanaspati was banned on 11.9. (vi) In order to expeditiously normalize the sale of safe edible oil in the market to the consumers. Again an order has been issued on 12.2000 for use of indigenous oils @25% by weight and use of 30% expeller mustard oil in the manufacture of Vanaspati Crude Palm Oil (CPO) and its fraction thereof shall not be used by the producers other than those who are equipped with fully capture hydrogen generation facilities. Among the laboratories .(ii) The Department of sugar & Edible Oils. 39 laboratories of the DMI/BIS were initially accorded recognition for the purpose of analysis of edible oil samples.1998. Department has so far recommended for according recognition to a total of 560 laboratories equipped with necessary analytical facilities. (Directorate of Vanaspati. (iii) Operation of a few manufacturing units whose products were found adulterated were suspended till they ensured adequate analytical facilities for checking the purity of the samples to the satisfaction of the Government of India.11.

Mysore. New Delhi. Department of Applied Chemistry. Harcourt Butler Technological Institute. etc. the procedure for sampling and methods of analysis for fats and oils including the Thin Layer Chromatography (TLC) method for detection of argemone oil in edible oil in all testing laboratories was prescribed. Ludhiana.recommended for according recognition are the laboratories of NDDB at Mother Dairy. Delhi. . (ix) In order to ensure uniformity of approach and uniformity of results. Mechanical Engineering Research and Development Organization (MERADO). a laboratory of Delhi Vegetable Oil Traders Association also at Delhi. Calcutta University. Ganesh Scientific Research Foundation. (x) A number of Institutes such as Central Food Technological Research Institute (CFTRI). Kanpur have availed of this facility and have made important contributions.

One was the setting up of the Technology Mission on Oilseeds in 1986.9 million tonnes in 1998-2000. This is evident by the very impressive increase in the production of oilseeds from about 11. Because of the swift measures taken by the Government to restore the confidence of the consumers. There was some setback in 1999-2000 because of the unseasonal rain followed by inclement weather. The production of oilseeds declined to 20. as per available information.3 million tonnes in 1986-87 to 24. the oilseeds scenario in 200001 was expected to be again discouraging.8 million tonnes in 19992000. trade and industry and the farmers. However.Technological Factors: Technological Mission on Oil Seeds (1986) There are two major features which have very significantly contributed to the development of this sector. This gave a thrust to Government's efforts for augmenting the production of oilseeds. the mustard oil controversy does not seem to .

and "Strengthening of Directorate of VVO&F". In fact. as per available information.Phase-I: Research and Development Phase-II: Technology propagation including demonstration of the technology developed Phase-III: Efforts for the adoption of technology by the industry. The R&D work is basically carried out in three phases:. The basic objective of the Plan Schemes is to coordinate and concentrate research efforts designed to improve the yield of oils and co-products. mustard seed production in 2000-01 could decline from 6 million tonnes. .have had a perceptible adverse effect on the farmers. The other dominant feature which has had significant impact on the present status of edible oilseeds/oil industry has been the programme of liberalization under which the Government's economic policy allows greater freedom to the open market and encourages healthy competition and self regulation rather than protection and control. This is for introducing modern equipments for testing of oils and fats. Controls and regulations have been relaxed resulting in a highly competitive market dominated by both domestic and multinational players. This is mainly to augment the availability of quality products. R&D Plan Schemes This Department is operating three Plan Schemes which are as under: R&D Programme for "Development of Vegetable Oils". both quantitatively and qualitatively. This is for providing more technical staff to widen the scope of monitoring the oils industry. "Modernization of the Laboratory of the Directorate of VVO&F.

The need for modernisation of equipments and technological up gradation of process so as to enable optimal use of available sources. Popularization of technology found suitable. Technology for upgradation of non-edible oils to edible oils/edible grade oils such as neem oil. CFTRI. non-edible rice bran oil etc. namely. RRL. Some of the Technologies got Recognised for Improvement in Quality of Products and Co-products of Vegetable Oils Industry. Development of Soya bean oil with improved stability. biointeresterification etc. Trivandrum. Upgradation of huller rice bran and refining of rice bran oil. castor oil. reliable. OTRI. has . University of Mumbai. Development of simple. Jorhat. RRL. etc. Storage suitability of unrefined and refined edible vegetable oils. 40 lakhs. IICT. Development of low cost safe packaging material for edible oils etc. improvement in the quality of products and co-products. Mysore. Detoxification of oilseeds/oil-cakes/extraction. University of Kolkata. of oilseed/oil processing. low cost analytical methods/techniques for detection/determination of adulterants in fats and oils including vanaspati. Work relating to nutritional aspects of newer oils particularly with regard to the suitability for human consumption. There are 13 on-going R&D projects which are running in the various Institutes. GSRF. Proposals for tie-up arrangement between R&D institution/organization and industry for up-scaling of technology developed. Hyderabad. improved efficiency operation. The total outlay for the year 2000-2001 is Rs. Anantapur.The thrust areas identified by STAC for R&D work are: Application of frontier areas of technology such as membrane refining technology.

intereterification. Recognition of newer process technologies such as extruder-expander technology. This led to a sharp increase in oilseed production driven mainly by rapeseed.1mn ton in the mid 80's to around 22mn ton currently. sunflower. • Encourage winter (Rabi) oilseed crops. hydrogenated.been stressed upon. Revision of technical parameters without compromising with the quality of the product has also been a continuing efforts of the Directorate. The strategy followed was to:• Increase productivity with better farm inputs and practices. is a result of the sustained efforts of the Directorare of Vanaspati. the Government set up a Technology Mission on oil seeds. refined. and to reduce dependence on imports. physical refining. India is today world’s third largest producer of rapeseed and cottonseed and the largest producer of castor seed. castor seed and Soya Oil seed production jumped from 6. In 1996. winterized and deodorized (RBHWD) soya bean with improved stability etc. bleached. Vegetable Oils and Fats (DVVO&F). . to increase production of other oil seeds and oil. • Increase area under oilseed crop.

54 lakh MT making India a net importer of edible oil to the tune of over 46.92 lakh MT. This location gives India a commanding importance as a base for regional trade and investment.96 lakh MT in 2001. Strategic location India is strategically positioned within the South of the Asian continent that includes the SAARC countries. . The national demand for edible oil is projected to reach over 110. National production as of 2001 stood at 54. an economic grouping with a market of over 1500 million people. India’s demand for edible oil has been growing at a rate of 8-9% per annum. This gives investment opportunities into the edible oil industry.25 lakh MT in 2005 up from 100.Opportunities & Threats Analysis Opportunities: Investment Opportunities The edible oil industry is now one of the leading sustainers of the positive annual economic growth rates India has enjoyed for over a decade now.

Trained. India’s labour is cheap compared to that of most developed countries. With hundreds of universities and polytechnics. Macroeconomic factors • • • • Population growth:Per capita income: Purchasing power: Oilseeds crop: . coupled with political stability. The economic reforms undertaken. which has made her the new face of emerging Asia.5% over the last decade.Predictable and stable economic environment Since 1985. trainable as well as unskilled labour is readily available for prospective investors in the sector to utilise. Cheap but quality labour The quality of labour force is one of India’s main strengths. all levels of skills and training needed to run the edible oil industry are adequately covered. have contributed to growth rates averaging 6. India is now rated the second best improving Countries in the Asian continent after China. Inflation has consistently been maintained below 6 %. India has been on the path of economic reconstruction and development.

3. Significantly. 2. Higher economies of scale:In this industry production cost per unit is high so economies of scale are very low in edible oil industry. Micheal Porter’s five force analysis 1) Threat of new entrants: A firm profitability will tend to be a higher when other firm’s are blocked from entering the industry. Higher capital requirement:In this industry high investment is required and there is a high fixed cost so new entrant can’t enter easily. have witnessed sharp changes in their production of late. even the agriculturally rich state with better irrigation network.Threats: Monsoon dependent Agriculture Raw materials supply of edible oil industry is directly related with the agricultural production of oil seeds. 1. New entrants can reduce the industry profitability because they add new production capacity and can substantially erode existing firm market position In the Edible Oil industry threat of new entrants is moderate because of these reasons. Less capacity utilization:- . Agriculture here still depends largely on monsoon rains and the intensity of the latter has significant influence on production. That agricultural production in India has a fluctuating trend is now a new thing.

2) The nature of rivalry industry: The intensity of rivalry in an industry is a sufficient determinant of industry attractiveness and profitability the intensity of rivalry can influence cost of supplies.30 % 32 % 4. Well established local players 3. High fixed cost 4. there is a very less capacity utilization of total available production capacity. 32 % 41 % Solvent Extraction Plant) Vanaspati Units 10 . Availability of different Edible oils 3) Bargaining power of suppliers: . Fragmented Market 2.In this industry particularly in India. Customer Loyalty:In this industry switching probability is low so customers hesitate to switch to other new brands. of distribution can attracting customer so directly affect profitability In edible oil industry rivalry among firms is very high because of these reasons 1. Type of Vegetable Oil Industry Capacity Utilization Oilseed Crushing Units Solvent Extraction Units Refineries(Independent &Attached with Vanaspati.

production. In edible oil industry there are no perfect substitutes as it is an essential requirement. because of these factors the bargaining power of suppliers is moderate. etc.In edible oil industry various seeds are the raw material. The supply of oilseeds also depends upon certain uncontrollable factors like monsoon. so there is a need to purchase them from other people (suppliers). because the prices of the oils are provided according to the demand-supply & production trends and government influence. 4) Bargaining power of buyers: Buyers of an industry’s product or service can sometimes exert considerable pressure on existing firm to secure lower price or better service. 5) Threat of substitute product: Substitutes are alternative product types that perform essentially the same function. Table of five force analysis 1 2 Threat of new entrants Rivalry among existing Moderate High . In this industry the bargaining power of the buyers is very low.

) Oil Seeds) 337 (In terms of Oil-bearing material) 32 % Solvent Extraction Units 785 Refineries(Independent &Attached Vanaspati.76 (In terms of 41 % . The status of the Edible Oil Industry is summarized below:- Type of Vegetable Oil No.50. Extraction Plant) Vanaspati Units with 950 60 (In terms of Solvent (Approx.) Oil) 222 32 % 48.000 425 (In terms of 10 .3 4 5 firms Bargaining power of suppliers Bargaining power of buyers Threat of substitute product Moderate Low Very low Statistical Profile of Indian Edible Oil Industry Status of the Edible Oil Industry The market liberalization and delicensing of the industry in 1990-91 has resulted in both increased capacity and intense competition at low margin. Industry Oilseed Crushing Units of Annual Capacity Capacity Units (Lakh MTs) Utilization 1.30 % (Approx.

inefficiency of operations etc. Unrestricted growth of the industry consequent upon de-licensing of the vegetable oil industry. Creation of capacity totally incommensurate with availability of raw materials. Very low margin because of stiff competition. Speculative nature of the trade.Vanaspati) (Source: Directorate of VVOF) • Oil seeds crushing units include crushing units in the small scale sector as also in the organized sector. The capacity utilization generally ranges from an average of 10% for the ghanis (small scale sector) to around 30% in case of the expellers in the organized sector. Obsolete technology. • • • • • .

38 21. which increased significantly in the 1980s.00 25.00 Production@ 22.32 24.00 28. the target fixed by the Ministry of Agriculture was during the year 1990-91 to 1993-94. which was set up in May.50 23.10 24.50 27.75 20.Supply Situation of Oilseeds and Edible Oils in the Country To enhance the production of oilseeds. In the year 1997-98 to 1999-2000 the production of oilseed has considerably reduced which is evident from the following table – Year 1995-96 1996-97 1997-98 1998-99 1999-2000 Target@ 22. The production of oilseeds. has hit a plateau in the 1990s.87 . In fact. the strategy for area expansion was adopted in the late 1980s and early 1990s by the Technology Mission on Oilseeds & Pulses (TMOP). 1986.

40 1.60 4.45 0.30 0.72 12.74 12.70 9.00 2.87 51.47 10.50 Lakh MT] 2000-2001 * Oilseeds Oils 64.83 3.50 5.67 0.00 1.00 5.14 2.00 14.80 2.61 0.18 1.11 59.40 182.SECONDARY SOURCE Coconut Cottonseed Rice-bran Solvent Extracted Oils Tree & Forest Origin 1999-2000 Oilseeds Oils 53.00 2.54 5.2000-01 28.89 208.60 4.92 8.22 18.PRIMARY SOURCE Groundnut Rapeseed & Mustard Soya bean Sunflower Sesame Nigerseed Safflower Castor Linseed Sub Total B.68 8.50 2.77 7.77 2.58 67.18 1.10 40.60 0.11 0.72 44.90 6.00 .64 1.60 5.07 4.87 2.00 18.51 3.20 Source: @ Ministry of Agriculture PRODUCTION OF OILSEEDS AND NET AVAILABILITY OF EDIBLE OILS FROM ALL SOURCES [Figures in NAME OF THE OIL A.90 50.00 5.

02 15.46 6.84 9.13 11.53 11.4 10.01 100 .61 11.Share of Major States in Area and Production of Oilseeds State Madhya Pradesh Gujarat Andhra Pradesh Rajasthan Maharashtra Karnataka Uttar Pradesh Others All India % of Total 24.

24 8.79 100 (Source: www.kisanwatch.03 9.State Madhya Pradesh Andhra Pradesh Maharashtra Rajasthan Gujarat Tamil Nadu Karnataka Others All India % of Total 22.org ) .45 16.36 11.99 11.59 7.55 12.

The net availability of Edible Oils from all domestic sources. has been allowing import of edible oils. The Government.29 23.72 87.69 91. with a view to avoiding scarcity of this item and consequential rise in prices.Net Availability of Edible Oils/Import/Actual Consumption There has been a persistent gap between demand and domestic availability of edible oils.78 41.61 61. Actual Consumption and Import during the years 1996-97 to 2000-01 are as under SUPPLY OF EDIBLE OILS FOR THE YEARS 1996-97 to 2000-01 (In Lakh MT) YEAR Net availability of Edible Oils from all domestic sources Actual Consumption/Demand* Import @ 1996-97 1997-98 1998-99 1999-00 2000-01 70.43 100.92 Source: Ministry of Agriculture * Computed as per parameter given by Planning Commission @ Actual Consumption / Demand Important Factors Responsible for Low Production of Oilseeds and Hence of Oils .96* 11.32 69.96 39.07 54.75 46.54(T) 83.89 60.99 96.

62 0. (ii) There is limitation of land availability for crops other than food grains in the country.28(EU-15) 2. 2001) A number of factors seem responsible for this situation :(i) Only about 20% of the oilseed crops are being irrigated.49 Highest 3.A major reason for the low production of oilseeds is the low productivity of our oilseeds compared to the situation in other countries as may be observed from the table below:Productivity of Oils Seeds:- ( Tonne/ Hectare) Oilseed Soya bean Cottonseed Groundnut Sunflower Rapeseed/Mustard India 0. (v) Oilseeds production is yet to receive the desired priority in the extension set-up in the country. As per the available information.73(EU-15) 2.18 1. the availability of this quality of seeds is grossly inadequate to meet the requirement.59 0.96(EU-15) (Source: Oil World (31.29 1.85 0. Thus the extent and spread of rainfall has a critical role in production. (iv) Susceptibility of oilseeds to pests and diseases.75 World Average 2.06 1.02 1.59 0. . August.07(Australia) 2. (iii) Lack of Hybrid/HYV seeds.13(China) 1.

peaked during the subsequent years due to reduction in duty and enlarged basked of oils under OGL. the details of edible oils imported under OGL has been as under . Based on the reports received from the post Customs. import of edible oil under OGL started in 1994-95.Volume of Imported Edible Oils under OGL and on Government Account (i) Import of Edible Oil under OGL With decimalization.

for PDS has been as under (Lakh MTs) . a limited quantity is now being imported for PDS mainly to meet the enhanced demand of edible oils during the festival season. sunflower oil.47 Source : DGCI&S . onwards imports through STC have been made only for distribution through PDS. which incidentally falls during the lean supply season. 1998-99. etc. soya bean oil. in addition to distribution to consumers for direct use under the network of the Public Distribution System (PDS). As production of indigenous edible oils has increased considerably. which were also supplied to the vanaspati industry for manufacturing vanaspati. From 1989-90.78 1999-2000 41. rapeseed oil. and import of edible oils is also made under OGL.IMPORT OF EDIBLE OILS DURING OIL YEARS 1996-97 1997-98.96 2000-01 22. Till 1988-89 a variety of edible oils like RBD palmolein. were being imported both in crude and refined form. palm oil.30 1998-99 23. Kolkata ii) Import of Edible Oil on Government Account (for PDS) The Government of India has been engaged in import of edible oils through the State Trading Corporation (STC) as the canalising agency for a number of years.87 1997-98 11. 1999-2000 AND 2000-01 (in Lakh MT ) Oil Year Imported Quantity 1996-97 12. Edible Oil (RBD Palmolein) imported during the last five years.

89 1.82 - Indication the Central Issue Price For Oil For Public Distribution System (PDS). running in deficit which the Central Government has to reimburse through its budgetary provisions . therefore. The Central Issue Prices of oil supplied to States/UTs for Public Distribution System have been revised w.March) 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 Import of Edible Oil for PDS 2. Supply of oil to the States/ UTs at the above CIPs also involves an element of subsidy. and the Edible Oil Account of STC is.Year (April .000 per MT States/UTs have been advised to fix the end retail prices themselves.49 0. 1st August.e.67 0.02 1.000 per MT (ii)Oil Supplied in 15 kg tin – Rs 33. as the actual cost of oil is more than the CIP.f. 1998. These prices are as under :(i) Oil Supplied in Bulk – Rs 30.

EXPORT: The total exports during 1999-2000 in terms of quantity declined from 3. In Lakh MT] .Crores mainly due to drastic fall in exports of rapeseed meal and rice bran extractions and lesser of FOB realisation. minor oils/fats and oilmeals during the last five years are as under [Value in Rs/Crores] [Qty.96 Million MT to 3.332/Crores to Rs. 189/. The exports of oilseeds.15 Million MT and FOB earnings increased from Rs.

YEAR

OILSEEDS

MINOR OILS/FATS

OILCAKE/EXTR ACTIONS Quanti Value ty 442.7 507.4 509.1 614.6 918.6 43.14 43.00 41.70 36.26 26.76 2361.46 3157.05 3236.20 2042.90 1736.90

Quant ity 1995-96 1996-97 1997-98 1998-99 1999-00 1.63 2.39 3.40 1.40 2.40

Value

Quanti ty

Value

422.45 574.76 907.06 522.96 672.10

1.78 1.95 1.89 1.96 2.37

Source : Solvent Extraction Association Of India (SEAI), Mumbai

Business Concerns

Free imports, low import duties and slump in global prices - lead to `dumping’ Domestic industries of edible oils affected - low realization and idle capacities in oil industries Production slippages have also forced imports Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally Hence, farmers have shifted to other cash crops Increasing health awareness - impact of oils usage on individual’s cholesterol levels

• •

• •

Bibliography
Websites : www.agribizz.com www.kisanwatch.org www.indiainfoline.com www.cybgroup.co.uk www.tis-gdv.de www.holdiko.com Magazines : Oil World Business Today Newspapers : The Economic Times

The Financial Express

Annexures
WORLD PRODUCTION OF 17 OILS & FATS :1994 - 2001 ('000 TONNES)

Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil

1994 14,304 1,861 18,684 3,566 4,309 7,391 9,970 1,675 3,015 1,900 446 616 636

1995 15,210 1,945 20,404 3,905 4,423 8,556 10,955 1,855 3,350 1,888 483 589 701

1996 16,282 2,083 20,322 4,119 4,563 9,006 11,479 1,834 2,867 2,042 479 668 666

1997 17,903 2,230 21,052 4,047 4,521 9,165 11,830 1,858 3,301 2,701 442 723 691

1998 16,919 2,168 24,038 4,043 4,502 8,439 12,229 1,880 3,107 2,588 441 736 694

1999 20,631 2,557 24,809 3,822 4,694 9,308 13,066 1,938 2,388 2,461 442 726 730

2000 21,825 2,688 25,546 3,852 4,573 9,677 14,467 1,968 3,272 2,545 494 715 698

2001 23,355 2,872 27,779 4,006 5,073 8,223 13,725 1,962 3,539 2,690 515 751 621

054 6.336 5.872 670 1.156 556 2000 15.658 220 254 2.392 272 261 2.430 1.026 7.838 2. 2000.260 6.042 237 246 2.507 1.601 101.834 614 1.901 242 258 3.936 20.716 22.385 323 1997 12.320 6.813 690 1.784 5.252 1.373 5.250 7.065 81.357 114.059 8.574 195 240 2.572 5.873 523 2001 17. 1999.026 8.150 20.Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL 68.500 1.610 1.703 22.194 6.175 1.2001 ('000 TONNES) Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil 1994 10614 896 4.For data on Malaysia.111 6.420 96.888 622 1.773 509 1998 11.191 117.693 232 269 2.778 484 1.285 5.648 7.121 6.930 102.161 94.019 1.692 20.464 5.550 1.196 1.635 404 1996 10.866 237 247 2.199 1.918 8.416 6.520 Source: 74.714 87.354 6.335 7.150 109.916 1.722 92.571 443 1995 10.221 540 .770 931 5.368 1.006 1.685 7.696 195 243 3. 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB .867 1.269 1.305 1.784 865 6.302 • Oil World Annual 2001.520 20.815 22.425 76.315 1.205 706 2.761 7.903 1.677 95. WORLD IMPORT OF 17 OILS & FATS :1994 .572 1.975 467 1999 13.264 5.147 88.830 80.677 7.877 776 1.677 7.430 20.209 810 1.410 5.490 5.457 801 5.

416 1.679 38.004 1.570 906 179 4.254 789 170 3.776 236 256 3.981 232 245 2.For data on Malaysia.899 1996 10.868 1.318 417 160 3. WORLD EXPORT OF 17 OILS & FATS:1994 -2001 ( '000 TONNES) Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil 1994 10.371 1.337 629 2.088 1.665 263 262 2.595 199 244 2.763 945 4.933 255 254 2.308 7.862 249 21 112 29.855 216 242 3.500 32.318 1.852 1995 10.144 689 2.996 1.405 262 22 129 24.060 781 148 3.913 1.195 796 5. 1999. 2000.064 254 22 135 29.179 Source: 296 22 191 25.773 2.Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL 196 23 132 23.268 827 202 3.473 32.786 254 253 1.144 606 2.862 2001 17.659 28.645 1.897 1.644 232 23 131 30.500 265 25 140 32.424 690 2. 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB .050 6.643 599 2.144 605 2.294 7.357 687 214 3.234 1999 13.261 29.173 1.737 2000 15.205 .917 1998 10.950 1.197 6.842 27.405 546 2.046 7.130 251 23 110 34.760 890 4.781 1997 12.103 • Oil World Annual 2001.971 743 126 3.857 34.389 633 1.986 36.178 810 125 3.883 238 252 2.

1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB .036 508 277 26 126 32.068 Source: • Oil World Annual 2001.874 34.059 1996 2.977 36.211 1995 2.743 1997 3.532 32.246 264 2.596 603 2.008 745 134 3.373 599 1.617 27.910 272 2.353 306 264 22 138 24.837 1998 3.623 2000 3.879 211 2.154 770 139 3.251 . WORLD OPENING STOCK OF 17 OILS & FATS 1994 .864 476 250 23 128 28.884 27.180 573 2.481 443 188 23 122 23.789 257 2.344 645 2.553 1999 2.806 704 1.525 32.405 674 2.111 242 2.553 895 172 4.919 509 235 23 130 29.343 716 212 3.937 588 2.470 755 2.2001('000 TONNES) Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil 1994 2.663 38.462 690 1.247 192 2.242 832 200 3.049 438 3.Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL 504 1.192 703 2.254 823 179 3.169 704 2.704 385 302 22 188 25.948 2001 4.193 29. 1999.189 554 2.106 542 256 25 112 34.876 804 1.046 565 237 23 148 30.851 263 2.115 718 156 3.347 429 161 3. 2000.436 586 1.552 628 2.For data on Malaysia.

553 635 641 278 434 1.366 1.749 578 3.108 1.277 185 461 555 84 48 92 10.553 616 735 260 443 2.247 192 2.150 624 632 162 464 1.138 66 46 103 11. 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB .162 1.231 385 494 1.384 1.909 13.290 359 372 1.583 1.127 170 568 969 86 47 83 12.879 211 2.2001 ('000 TONNES) Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter 1994 2.656 405 521 1.353 613 1998 2.109 660 1997 3.005 71 45 87 11.109 660 498 309 442 1.098 983 123 427 684 72 46 83 8.030 65 47 110 13.277 185 461 555 84 48 92 10.553 616 2001 3.837 405 521 1. 2000.183 1.246 264 2. WORLD ENDING STOCK OF 17 OILS & FATS : 1994 .138 66 46 103 11.745 693 1995 2.415 190 374 1.436 227 478 1.280 159 580 1.036 12.353 613 578 222 465 1.280 159 580 1.743 410 492 1.553 635 2000 4.949 11.583 1.620 676 1996 3.059 359 372 1.415 190 374 1.878 13.098 983 123 427 684 72 46 83 8.366 1.111 242 2.For data on Malaysia.032 378 449 1.988 14.228 1.018 436 493 1.384 1.961 620 .436 227 478 1.042 10.183 1.948 378 449 1.626 370 480 1.162 1.553 436 493 1.607 Source: • Oil World Annual 2001.851 263 2.292 150 483 1. 1999.623 385 494 1.162 65 48 112 12.162 65 48 112 12.Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL 323 350 989 719 133 417 829 68 45 75 9.054 15.228 1.882 13.030 65 47 110 13.341 819 542 261 327 1.251 378 461 1.789 257 2.745 693 555 403 391 2.198 160 399 621 90 45 96 11.620 676 613 294 453 2.150 624 1999 3.049 438 3.198 160 399 621 90 45 96 11.005 71 45 87 11.292 150 483 1.787 410 492 1.541 378 461 1.

.018 578 222 465 1.231 632 162 464 1.857 Source: • Oil World Annual 2001.541 735 260 443 2.787 613 294 453 2.909 13. 1999.656 498 309 442 1.Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL 555 403 391 2.882 13.896 14.032 641 278 434 1.For data on Malaysia.988 14. 2000.042 10.607 674 160 442 1.054 15. 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB .036 12.878 13.

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