Presentation on

A Giant Importer – India and g y Its Vegetable Oil Industry
By

Dr. B.V. Mehta
Executive Director

The Solvent Extractors Association of India Extractors’
At

FOI 2010 – Fats & Oil Istanbul
2–3 Dec, 2010 2 3rd D
Istanbul, Turkey 1

Presentation Sequence

• Incredible India • Indian General Economy • Agricultural Economy • O Oilseed Sector S • Demand Supply & Import of Vegetable Oils Demand-Supply • Price Outlook • Conclusion
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What People Talk About India
Second most populous nation
1.17 1 17 Bn people

Largest democracy Multi ethnic country Country with maximum young people
Median age 24.4 years

Amongst the fastest growing economics Fourth largest economy, poised to be No. 2 or 3 in next g y, p 10 years
4

What Many Don’t Talk About Country of Beauty 4 Miss World and 2 Miss Universe in last one decade 5 .

… and Brains 38% of doctors in USA are Indians 12% of scientists in USA are Indians 36% of NASA scientists are Indians 34% of MICROSOFT employees are Indians 28% of IBM employees are Indians 17% of INTEL scientists are Indians 13% of XEROX employees are Indians 6 .

Indian General Economy 7 .

3 Purchasing Power Parity (PPP): US$ 5 Tn Forex Reserve: US$ 298 Bn….Indian Macro-economic Overview • India – a fast growing significant economy in spite of global slowdown Strong Macro-economic fundamentals GDP Val e O er US$1 3 Trillion (Tn) Value: Over US$1.5% 32 5% • • • • • • Average GDP Growth Rate (last 5 years): 8 4% 8.4% 8 . and growing Household Savings (world’s highest) Rate (2009 10): (2009-10): 32.

8 9.1 4.5 G GDP Growth Rate (%) 8 7.2% Source : CMIE 9 .8 5.7 6.4 3.2 7.7% and 7.5 9.8 6.4 6.8 4 2 0 E) 0( -1 10 -1 -9 -0 -0 -0 -0 -0 -0 -9 -9 -0 -0 -0 -0 00 02 04 05 06 07 01 96 97 98 99 03 08 1( F) 1 8 0 2 3 5 7 8 7 9 4 6 9 09 In spite of lower growth in 08-09 and 09-10 at 6.4% For FY10-11.2 10 8.4% due to recession.7 9.5 7.India's Overall GDP Growth 12 9.5 6 4. growth is forecasted at 9. recession the overall growth in last five years is registered at 8 4% 8.

7 9. y g g However.7 12 Indust GDP Gro try owth Rate (% %) 10.3 4 2 0 -9 7 -9 8 -9 9 -0 0 -0 1 -0 2 -0 3 -0 4 -0 5 -0 6 -0 7 -0 8 -0 9 (E ) -1 0 -1 1 03 04 05 07 96 97 98 99 00 01 02 06 08 (F ) 9.1 3.2% In FY 10-11Current year growth forecasted at 9.8 4.9 In 08-09 the industry growth reduced to 3.3 10 3 10 8 6 4.4% Source : CMIE 09 10 10 .4 7.2 9.9% due to global recession.4 6.4 64 5.Industry Sector GDP Growth 14 12.3 7.8 3. in 09-10 revived and reached at 9.7 2.5 9.

2 5.2 10.8 10.1 9 1 8.5 8.5 9.8 8.2 7.1 10.4 10.0 % Source : CMIE 11 .0 Servic GDP Grow Rate (%) ce wth 10 6 4 2 0 E) -1 0( 10 -1 -9 -9 -9 -0 -0 -0 -0 -0 -0 -0 -0 -0 -0 97 96 99 00 98 01 02 04 06 08 03 05 07 1( F) 7 8 9 0 1 3 2 6 5 7 8 4 9 09 Service sector has grown by about 9 to 10 % in last 7 years.6 11.Service Sector GDP Growth 12 9. thanks to g y y the IT sector Current year growth is forecasted at 10.0 9.4 8 7.7 5 7 7.

6 3.2 10 09 -1 -2 0. Indian Govt.1 0. the growth is projected at 5.0 Agricult ture GDP Gr rowth Rate (%) ( 8 6.Agriculture Sector GDP Growth 12 10 9.5 6 4 2 0.8 5.0 5.5% For FY10-11.3 63 5.6 10.0 0 1 0 9 4 7 2 8 3 -0 -0 -9 -0 -0 -9 -0 -9 -0 98 03 00 99 97 02 04 96 01 -0 -0 -0 -0 F) -1 0( 06 07 08 05 -4 -6 -8 -2. agriculture sector had a negative growth of 0.3 1.4 Agriculture Sector Growth depends heavily on monsoon performance.5% -7. is aiming at 4% Agriculture GDP growth to achieve 10% overall GDP growth Last year due to bad monsoon.2 1( -0.2 62 6.5 F) 5 6 7 8 9 Source : CMIE 12 .

India’s Agriculture Production 13 .

2 No. 1 14 . 2 No. 2 No. 2 No. 7 No.3 Mn Km2) • Arable Land (161. 1 No.7 Mn Ha) • Irrigated land (56. 2 No.0 Mn Ha) • Rice Production • Wheat Production • Rapeseed Production • Fruit Production • Tea Production • Coffee Production • Sugar Production • Milk Production • Cotton Production No.Indian Rank in World • Area ( (3. 1 No. 3 No. 2 No. 6 No.

0 Mn T Source : Economic Survey 2010 15 .Rice Production & Area The production of Rice in 2009 10 estimated at 89 1 Mn T 2009-10 89.1 Current year forecasted at 90.

Wheat Production & Area Wheat production for the year 2009 10 estimated at 80 7 Mn T 2009-10 80.7 Current year production forecasted at 81.7 Mn T Source : Economic Survey 2010 16 .

Pulses Production & Area Production of Pulses in 2009 10 estimated at 14 6 Mn T 2009-10 14.6 Current year the production is forecasted at 16.0 Mn T Source : Economic Survey 2010 17 .

Sugarcane Production & Area Production of Sugarcane in 2009 10 estimated at 277 7 Mn T 2009-10 277.7 Current year the production is forecasted at 321.0 Mn T Source : Economic Survey 2010 18 .

5 Mn bales Current year the Cotton Bales production is expected to be at 33.0 Mn bales Source : Economic Survey 2010 19 .Cotton Production & Area Cotton Advisory Committee estimated at 29.

8 MnT in 2007-08 CMIE has forecasted current year production at 28. CMIE 20 .9 27.2 MnT Source : Economic Survey 2010.Oilseeds Production & Area Production of Oilseeds during 2009-10 is estimated at 24 9 MnT compared to 27 7 24.7 MnT in 2008-09 and 29.

Milk Production & Per Capita Availability India ranks first in the world in milk production World average per capita availability is 265 gms/day India’s average per capita availability is 258 gms/day 80 per cent of milk produced is handled by unorganised sector Source : Economic Survey 2010 21 .

aquaculture and allied activities provide employment to over 14 Mn persons apart from being a major foreign exchange earner 22 .6 MnT in 2008-09 Fishing.1 MnT in 2007-08 to 7.Fish Production & Exports Fish production increased from 7.

India’s Oilseeds Sector 23 .

of India 5. in Mn T Groundnut Rape-Mustard R M t d Soybean Sunflower Castor Sesame Linseed Safflower Niger Seed Total Source : Govt.04 0.41 6 41 10.14 0.17 0.66 0.51 6.10 0 10 24.India’s Oilseed Map Indian Oilseed Production 2009-10 Qty.93 24 .90 0.99 0.

06-07 d 09-10 This year production is estimated at 28.84 14 84 20.India’s Oilseed Production (Nine Conventional Oilseeds) 35 30 25 24.76 27.93 24 93 28.32 20 15 10 5 0 07 -0 8 08 -0 9 09 -1 0( E) 10 -1 1( F) 96 -9 7 97 -9 8 98 -9 9 99 -0 0 00 -0 1 01 -0 2 02 -0 3 03 -0 4 04 -0 5 05 -0 6 06 -0 7 29.2 Mn T Source : Govt.2 Quantity (in Mn T) n Year (Nov-Oct) Oil seed crop is stagnant at 26-27 Mn T.44 14.35 24.72 18.72 24.75 24 75 20. of India 25 . due to bad performance of monsoon production h f th reduced as h d ti has further d d happened i 02 03 06 07 and 09 10 d in 02-03.38 21.29 27. However.66 25.98 24.18 25 18 24.

5 0.2 5.0 24.8 06-07 4.8 3.8 3.9 0.0 0.3 3.7 07-08 9.0 26 .6 40. COOIT 10-11(F) ( ) 8.9 3.1 8.4 28.2 09-10 5. of India.0 7.6 37.7 8.3 9.6 33.in Mn T) Crop p Major Oilseeds Groundnut Rape/Mustard Soybean Other Six O S Sub-Total Others Cottonseed Copra p Grand Total Source : Govt.0 3.9 7.2 7.2 9.6 39.8 29.2 0.9 08-09 7.2 24.0 3.6 37.0 8.2 9.5 6.3 05-06 8.4 27.0 9.4 10.0 9.9 8.9 10.5 27.8 11.Oilseed Production (2005-06 To 2010-11) (Qty.9 0.4 8.6 34.2 0.

.4 Mn T 9.9 15–16 Mn M T Mn T Mn T Mn T Mn T Per capita consumption is rising by 3 to 4% per annum 27 .7 7.8 34.8 Mn T Non-Edible • • Per Capita Consumption 0. 950–1000kg 24.Oilseed Sector 2009-10 • • • • Area Under Oilseed Cultivation Average Yield ( Per Hectare) Output f C lti t d Oilseeds O t t of 9 Cultivated Oil d Output of Cottonseed & Copra Total • • • Production of Vegetable Oils Demand of Vegetable Oils Import of Vegetable Oil 2009-10 (Est.5 Mn T Kg 26-27 Mn.2 13.9 24 9 9. Ha. Nov-Oct) Edible 8.

0 16 0 20-30% 35% 50% 40% 45% Excess capacity coupled with raw material shortage.Indian Vegetable Oil Industry .Present Status Segment Oil Mills ( Primary Crushing ) y g Solvent Extraction Plants Vegetable Oil Refiners Vanaspati ( Hydrogenated) Units Feed Mill F d Mills Annual No.0 31. leading to lesser capacity utilisation of the industry it tili ti f th i d t 28 .0 20.0 16.0 20 0 3. of Utilization Capacity % Units Mn T 15000 600 650 250 200 36.

66 23 66 27.29 29.98 24.84 25.51 26.11 Production P d ti Mn T 18.77 22.56 26.69 27.64 21.52 27. half of the world average or 1/3 of the best.76 27. Production & Yield of Oilseeds Year Y 2000-01 2001-02 2002-03 2003-04 2003 04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Area A Mn/ha 22.44 20.49 23.66 14. of India 29 .86 26. This shows there is tremendous opportunity for raising yields and thereby production Source : Govt.93 Yield Yi ld Kg/ha 810 913 691 1064 885 1004 916 1115 1006 955 Area is normally 26-27 million hectare while productivity is hardly 1000 kgs kgs.72 24.19 25 19 24.35 27.Area.

Share of India • • Vegetable Oil Sector Turnover Import & Export from Oilseed Sector Rs.00 % 4.80 % 5.5 2009-10 • • • • • • In World's Oilseed Production In World's Oilmeal Production In World's Oilmeal Export p In World's Production of Veg.65 % 10.000 Crore (US$ 8 5 Bn) 8. 100.000 Crore (US$ 22 Bn) Rs. Oils In World’s Vegetable Oil Import In World's Edible Oil Consumption 7.20 % 6.28% Source : Oil World 2010 30 .Oilseed Sector . 40.16 % 13.

Brazil China India Pakistan Turkey World 09-10 (F) 61.0 19.4 19.78 05-06 53.3 20.0 23.4 21.9 22.7 20.5 52.0 26.S.9 35.8 19.3 24.0 50.2 14.3 19.89 07-08 57.9 33.2 22.2 20.3 30.0 23.54 08-09 60.2 12.1 24.9 25.Per Capita (kg) Disappearance of Oils and Fats in Selected Countries and World Country EU-27 U.4 33.6 21.11 04-05 49.A.4 14.6 20.3 50.6 53.3 27.9 27.6 12.8 31.2 25.7 11.42 06-07 56.1 24.7 52.6 11.09 Number shown includes consumption of oils and fats for Bioenergy Source : Oil World 2010 31 .1 30.5 23.9 49.2 22.

92 14.54 16 54 17.74 15.53 18.8% Growth In Bn Consumption @ 4% Growth Per Capita Kgs Mn T Consumption @ 5% Growth Per Capita Kgs Mn T Consumption @ 6% Growth Per Capita Kgs Mn T Year 2009 2010 2011 2012 2013 2014 2015 1.84 24.61 16.73 13.30 1.62 20.87 13.25 17.18 19.India’s Population & Consumption of Edible Oils Population @1.34 18.66 14.04 14.10 13.48 14 48 15.38 13.48 15 48 16.26 1.61 16.60 16.72 15.37 14.85 18.18 22.81 19 81 21.53 19.53 17.28 1 28 1.63 13.53 18 53 19.22 17.05 15.62 21.06 15.37 12.18 16.75 15.89 14.21 1.19 1.33 12.77 12.65 Source : SEA 32 .17 21 17 22.58 15.24 1.50 18.

5 8.0 11.6 6.8 51% 2015-16 * 1.0 53% 33 .21 15.33 20.8 10.Edible Oil Demand and Import Projection (Excluding Non-edible Oils) Parameter Population (in Bn) Total Demand of Edible Oils (Mn T) pp y ( ) Domestic Supply of Edible Oils (Mn T) Import of Edible Oils (Mn T) Import as Share of Demand * Based on 4% Growth 2009-10 1.

5% 34 .5% 7.5% Item Description p Soybean Oil Palmolein Palm Oil Groundnut Oil G d t Sunflower Oil Safflower Oil Coconut Oil Rape/Mustard Oil RBD Pamolien Tariff Value is US $484 and therefore the current effective Duty is 3.5% 7 5% 7.5% 7.5% only against 7.5% 7.5% 7.5% 7.5% 7.Import Duty Structure on Edible Oils WTO Bound Rate 45% 300% 300% 300% 300% 300% 300% 75% Current rates of duty on Crude Edibl C d Edible Oils Nil Nil Nil Nil Nil Nil Nil Nil Current rates of duty on Refined Edibl R fi d Edible Oils 7.

p p (Qty in Mn T) Vegetable Oils Edible Oils Vanaspati (E) Non-edible Total 2009-10 8.61 0. Source : SEA 35 .82 -0.39 The import of Vegetable Oil ( Edible oil.65 6.25 0.46 8.41 0.Import of Vegetable Oils Edible.24 2008-09 8.68 5.42 9.02 0.66 2007-08 2006-07 5.59 2005-06 4. Vanaspati & Industrial Oil ) increased by 70 % in last 5 years.71 0. Vanaspati & Non-edible for period 2005-06 To 09-10 .30 0.31 4.63 5.18 0.05 0.

37 0.71 0.99 0.63 0.18 0.11 2.59 0.17 0.11 1.03 0.02 5.67 0.76 0.21 5.24 5.04 0.82 1.32 0.99 0.01 1.03 0.08 4.61 0.Import of Edible Oils (Qty in Mn T) Edible Oils RBD Palmolien Crude Palm Oil Crude Palm Kernel Oil Soybean Oil Sunseed Oil Others Total 2009-10 2008-09 2007-08 2006-07 2005-06 1.70 0.11 0.73 4.03 8.20 0.03 1.19 0.11 2.06 8.10 0.41 Edible oil import doubled in last five years Source : SEA 36 .10 4.

13 0 13 % 14% 15% 13% 3% 3% Crude Oils 7.88 4 88 4.82 8 82 8.59 4.73 0 73 0.41 4 41 Refined oil import has increased in last 3 years due to reduction in duty difference Source : SEA 37 .) Oils 2009 10 2009-10 2008-09 2007-08 2007 08 2006-07 2005-06 2005 06 1.24 0.61 7 61 6.21 1 21 1.Import of Refined & Crude Edible Oils Ratios for the period 2005-06 To 2009-10 p (Qty in Mn T) Year Refined (Nov.18 5.94 4.28 4 28 % 86% 85% 87% 97% 97% Total 8.12 0.Oct..61 5 61 4.71 4.

10 Soft Oil Total % Others Total % 74% 80% 86% 67% 58% 0.59 0 59 0.82 8.54 33% 1.07 0 07 0.32 1.Oct) +CPO + Crude Olein + CPKO) 6.57 Soy bean Oil 1.02 0.65 1 65 20% 0.03 0.17 2.71 4.81 3.03 0.84 42% 8.76 1.66 0.80 14% 1.70 Sun seed Oil 0.61 4.50 2009-10 2008-09 2008 09 2007-08 2006 07 2006-07 2005-06 6.01 0.Import of Palm & Soft Oils Ratios for the period 2005-06 To 2009-10 p (Qty in Mn T) Palm Oil (RBD Year Palmolien (Nov.18 8 18 5.63 0.04 2.99 0 99 0.20 0.53 6 53 4.41 Soft oil import jumped in last two year as premium over palm reduced Source : SEA 38 .32 26% 1.

...2009 July. 2009 Apr. 2010 Apr.2009 April 2010 onward premium reduced below US$ 100 lead to higher import during 2009-10 39 . 2010 July.2009 Jan..2010 Apr 2010 Jan.Landed Price of Soybean Oil & Crude Palm Oil in India (US$ / T ) Month Soybean Oil Degummed Indian Ports CIF 1099 873 866 907 867 807 839 763 Import Duty 0 0 0 0 0 0 0 116 Total 1099 873 866 907 867 807 839 879 Crude Palm Oil Indian Ports CIF 967 796 809 774 666 624 724 563 Import Duty 0 0 0 0 0 0 0 0 Total 967 796 809 774 666 624 724 563 SBO Premium over CPO +132 + 77 + 57 +133 +201 +183 +115 +316 Oct.2010 Oct...

0 418.6 294.6 255.4 708.1 135.F.1 59.2 647.D.1 97.6 2007 08 2007-08 13.6 2006 07 2006-07 15.F.1 96.7 66.O.S.7 269.0 255. C. P.8 629.K.P.6 India import non-edible vegetable oils t meet th d I di i t dibl t bl il to t the demand f d from th soap the and oleo chemical industries Source : SEA 40 . Others Total 2009 10 2009-10 10.D.K.1 116.4 109.8 459.4 91.9 27.A.3 200.P. C.5 8.4 2005 06 2005-06 6.A.5 200.2 72.Import of Non-Edible Oils (Qty in ‘000) Non-edible Oils Oil P.1 2008 09 2008-09 18.9 65.8 368.1 9.

subsidized oil and NRGEA also b l boosted th d t d the demand f edible oils d for dibl il 41 .lower price has boosted the g p y p demand and consumption Zero import duty on crude edible oil and very nominal duty on refined palmolein have favoured the import over domestic oils at the expenses of Indian oilseeds farmers and crushers Govt.Why import has increased in 2009-10 ? Increase in per capita consumption of edible oils with rise in income and notable increase in institutional consumption and middle class of the society High price elasticity . schemes like mid-day meals.

Why import has increased in 2009-10 ? Depreciation of Dollar v/s Rupee has made import more attractive Disparity in domestic seed crushing leading to poor capacity utilization and accumulation of stock in the p y beginning of the season The profit margin of oilseeds processors deteriorated severely in new season and many plants were operating at much lower capacity to minimize the losses 42 .

Import Forecast for 2010-11 (Qty in Mn T) Oils RBD P l l i Palmolein Crude Palm Oil C.P.4 0.630 0. C PK O Soybean Oil Sunflower Oil Others Non-edible Total 2010-11 (F) 1.K.5 0.4 9.O.1 01 1.2 2009-10.1 0.3 0.418 9.112 0 112 1.213 1 213 5.667 0. 1.031 0.4 14 5.170 0.241 Import is likely to be of the same level during current year as additional production will take care of incremental demand 43 .

Price Outlook I am not expert on price outlook however. f th f the ld Cont…… 44 . would lik t share my views with you. the fight for acres in USA between corn . soybeans and wheat. based on my knowledge. Finally we have to watch the rate of growth of th world economy. particularly to the impact of La Nina From March onwards we must keep an eye on Nina. k l d ld like to h i ith We have to keep an eye on the developing Soybean crops in South America . cotton .

the world will have to draw down the vegetable oil stock for the third successive year . 45 . we are not likely to see any significant decline in prices . If that were to happen. One thing is certain . It is quite possible that during the oil year Oct 2010 to Sept.Cont …. prices will be higher in the first half of the year and then may decline in the second half depending on the recovery in palm oil production and recovery in rapeseed and sun seed production. 2011..

Conclusion India will continue to be large Importer of Vegetable Oils thanks to : Strong GDP Growth Rising Population Per Capita Consumption Growth Oilseeds Production Lagging 46 .

47 47 .

225. FIO 2010 Conference. Mumbai 400 021 Tel: (+91-22) 2202 1475.seaofindia. Fax.2010. Mehta Executive Director The S Solvent Extractors’ Association of India f A Premier Association of Vegetable Oil Industry & Trade in India ISO 9001:2008 Organisation 142. II. B.: (+91-22) 2202 1692 Email: solvent@mtnl.. Istanbul.Dr. Website:www. Oil Industry. V.in . 2282 2979. Jolly Maker Chambers No. Turkey 48 .com File : Presentation on A Giant Importer – India and Its Veg. 2–3rd Dec.net. 14th Floor. Nariman Point.

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