You are on page 1of 15

Economy of Edible Oilseeds and Edible Oils* Edible oils are one of the most sensitive, essential and

irreplaceable commodities in Indian food basket. They constitute an important component of Indian households’ expenditure on food. According to NSS 61th Round (January-June 2004), average monthly per capita consumption expenditure (MPCE) of edible oil in food was 4.6 per cent in rural India, and 3.5 per cent in urban India. The share of edible oil has increased in successive NSSO surveys. Edible oil products comprise of four broad categories, namely, vegetable refined oil, hydrogenated oil (vanaspati), bakery fats/margarine, and de-oiled cakes. The production of edible oils in India is dependent on the production and availability of oilseeds. Economy of Oilseeds The country, blessed with different agro climatic conditions, produces a wide range of oilseeds, which act as a primary source for edible oils produced in the country. A total of nine oilseeds, traditionally cultivated in the country, include groundnut, mustard/rapeseed, sesame, safflower, linseed, nigerseed, castor, soyabean and sunflower. Groundnut, soyabean and mustard have been the major contributors to the oilseeds production with their combined share standing at more than 85 per cent of the country's oilseeds production. Apart from these, secondary sources, namely, coconut that forms a part of plantation crops, rice bran and cottonseed, which are nonconventional sources, oilseeds of tree and forest origin that grow mostly in tribal inhabited areas and oil palms grown in Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and Andaman and Nicobar Islands, also, have assumed importance as secondary sources of oil-production in recent years. Oilseeds are grown mainly on marginal and sub-marginal lands under low input usage. Area covered under oilseeds occupied 24.5 per cent of the total irrigated area and 13.8 per cent in 2003-04. Oilseeds’ cultivation and output is concentrated in central and southern parts of the country, mainly in Madhya Pradesh, Gujarat, Rajasthan, Andhra Pradesh and Karnataka. Area covered under the entire group of 9 oilseeds has increased from 10.73 million hectares in 1950-51 to 25.99 million
Table 1: CAGR reported for Total Nine Oilseeds (per cent) Period Area Production Yield 1950-60 2.5 4.1 1.6 1960-70 0.4 0.3 -0.1 1970-80 0.4 0.7 0.3 1980-90 2.4 5.5 3.0 1990-00 0.2 2.2 2.1 2000-07 3.9 6.6 2.7 1950-2007 1.6 3.0 1.4

hectares in 2006-07, registering an average compound annual growth rate (CAGR) of 1.58 per

soyabean and sunflower have been genetically modified with emphasis on agronomic traits1.cent during the period of 57 years. ‘All-India Coordinated Project on Oilseeds’ had been launched in 1967 that helped development of different types of high yielding varieties of oilseeds along with production practices suited to various agro-climatic conditions. in 1989. National Dairy Development Board (NDDB) was assigned a Area (million hectares) and Production (million tonnes) Yield (kg per hectare) .00 0 0. processing. Notwithstanding this. While their production has risen from 5. provision of assured procurement and distribution channels. production and yield of these oilseeds (Graph A) indicates that the group of oilseeds as a whole did not experience any major development with respect to any of these aspects during first three decades after independence.00 considerably during this period (Table 1).00 400 10. restrained the growth of other crops. etc.26 million tonnes marking an average CAGR of 3. etc. and allocation of financial resources for research and development. Only a few major edible oilseeds like mustard. marketing infrastructure and technological assistance in the form of improving the quality of different input materials.16 million tonnes to 23. indirectly. marketing.03 per cent. Besides. In fact. Production and Yield of Nine Oilseeds 1200 Yield Production Area 30. of oilseeds. oilseeds production witnessed a major break-through in 1986. Graph A: Trend in Area.. have been some of the important factors that encouraged ricewheat cropping pattern and thus.00 A closer look at the trends of area cultivated. Concentrated efforts made towards boosting the production and productivity of major foodgrains like rice and wheat through various incentives like significant hikes in minimum support price (MSP).43 per cent to 895 kg per hectare from 481 kg per hectare during the same period (Table 1). the yield has improved at an average CAGR of 1. with the central government launching a more comprehensive programme. called ‘Technology Mission on Oilseeds (TMO)’. oilseeds being one of them. the growth rates in terms of area covered. aiming to provide a thrust to production. production and productivity decelerated 800 20. However.

Nonetheless. with oilseeds regaining their momentum in 2003-04. a surge of 70 per cent in output and that of 54 per cent in yield over the previous year (Annexure I). production and yield for the decade 1980-90 standing at 2. the growth rates in terms of area cultivated.5 per cent and 3. soyabean production is expected to touch a new high of 9. This can be observed from CAGR for area.84 million tonnes and 691 kg per hectare. small scale expellers (which use metal screws to press or expel oil from seeds) are larger than the ghanis. registering a growth of 10 per cent in area cultivated.0 per cent. 5. Acceleration in the growth rates continued till late 1990s with the year 1998-99 marking the highest ever levels of production (24. which is likely to rise by an impressive 15. on account of favourable weather conditions.75 million tonnes) as well as that of yield (944 kg per hectare). . the situation reversed completely. which stood at 14. While ghanis belong to the small scale industries (SSI) segment and usually serve the rural markets. respectively.04 million tonnes for kharif season of 2007-08. Processing of Oilseeds Edible oilseeds processing consists of three operations: crushing and expelling (separating oil from the solids). reasonable costs to consumers and attaining of self-sufficiency by government of India (refer to End note 1) Consequently.7 per cent to around 16 million tonnes. the cyclical pattern that has been observed vis-à-vis area. Though the rising trends did not continue for each of the successive years. respectively. production and yield recorded sharp increases towards the end of 1980s. The ghanis and small scale expellers. in 2002-03. adverse weather conditions (drought witnessed by major oilseeds producing states like Chattisgarh. on account of remarkable increase in output of groundnut and soyabean. At present. oil expelling capacity being in the range of 5-10 tonnes per day. However. solvent extraction (to chemically remove residual oil from the oilcake solids).4 per cent. carry out the first operation. production and yield helped CAGRs for the period 2000-07 to sustain at levels higher than those attained during earlier decades (Table 1). In fact. generally.role of market intervention for edible oilseeds and oils for ensuring remunerative prices to farmers. improved sowings of oilseeds during kharif season 2007 has indicated better output prospects during this season. Madhya Pradesh and Rajasthan) in the successive years hampered the production and productivity of oilseeds. and oil refining.

of Units (lakh tonnes) Approximately 425 (In terms of Seeds) 1.50. Though the primary sources.7 lakh tonnes in 1995-96 to around 87 lakh tonnes in 2005-06 (Table 3). in the domestic edible oil industry. cottonseed) into edible oil and de-oiled cake. .e.in Production of Edible Oils in India As stated earlier. Solvent extractors. Bakery Shortening & Margarine) Average Capacity Utilisation (per cent) 10-30 31 45 27 36 35 18 Source: www. Type of Vegetable Oil Industry Oilseed Crushing Units Solvent Extraction Units Refineries attached with Vanaspati Units Refineries attached with Solvent Units Independent Refineries Total Refineries Vanaspati Units Table 2: Status of Vegetable Oil Industry Annual Capacity No.compared to around 50-60 kilos a day for ghanis. the uninterrupted and ever increasing demand for edible oils in the domestic market in addition to inconsistent supply of domestically produced oilseeds have made the secondary sources play a critical role in domestic production of edible oils (Table 3). They use modern technology to process low oil and high meal seeds (for example soyabean..nic. Oil refining also belongs to the organised sector and they generally refine both expeller oils and solvent extracted oils. Total edible oil production in the country has risen at a CAGR of 0. engaged at the second stage of processing. i. belong to the organised segment and are also the second largest after the SSI segment. Vanaspati is made by hydrogenation of refined oil to vegetable shortening or spread and is similar to the milk product ghee and absorbs around 10 per cent of the total edible oil supply in India (Table 2). domestically produced oilseeds.000 313 711 (In terms of Oil-bearing Material) 51 127 (in terms of oil) 297 585 1009 264 36 (in terms of oil) 35 (in terms of oil) 122 (in terms of oil) 53 (in terms of Vanaspati. have contributed almost three fourth of the total edible oil production in the country.fcamin.4 per cent from 74. production of edible oils is directly proportionate to production and availability of oilseeds.

20 4.8) {5.48 18.5) (7.6} {5.6} {0.8) (7.1) (32.60 19.7) (5.9) (0.30 4.67 65.1} {1.50 23.9} {7.20 19.16 36.12 3.13 2.98 1.73 0.3) (4.58 79.93 0.54 22.80 5.33 8.9} {6.4} {0.6} {3.80 0.0} {0.50 5.5} {1.0} {1.6} {15.6} {0.7) (23.7) (3.0} {1.49 1.0} {6.7) (0.1) (21.3) (33.95 20.8} {7.16 4.2) (25.2) (26.8} {72.14 8.1) (38.5) (6.4} {24.3) (3.71 3.2} {4.5} {3.7} {0.6} {0.8) (4.87 0.0} {3.5} {0.6) (6.1} {2.30 22.5) (0.66 12.8} {33.1} {4.1} {26. Primary Sources 55.6} {0.1) (24.1} {75.6} {2.4} {2.8} {4.45 9.0} {73.8) (32.8} {3.3) (1.6} {22.9) (3.8) {6.4) (3.4) (33.2} {3.2) (1.2} {66.2) (30.6) {6.90 4.1) (20.0} {1.42 (1.9} {7.0) (0.5} Soyabean 8.6) (27.1} {25.38 (5.8} {2.54 7.0} {6.10 {25.4) (35.97 87.6) (1.4) (7.9) (5.1} {1.50 4.33 0.5) (7.50 2.8) (6.24 2.6) (5.3) {0.80 2.6) (27.6) {10.3) (1.50 6.2) (0.7} {6.9} {1.74 16.4) (29.5} {0.3} {20.26 0.0) (31.2} {27.8) (19.0) (20.0) (25.4} {28.5) (5.42 0.8} {6.6} Groundnut 17.6} Nigerseed 0.8) (34.4) (1.00 5.9} Linseed 0.16 9.45 0.3) (1.42 2.00 0.7) (0.00 4.50 5.3} {7.3} {74.3} {6.84 80.0} {2.09 2.4} {4.9) (24.8) (25.1) (14.2) (32.90 20.3} {17.4) (24.72 0.34 11.69 15.4} {20.4} Sesamum 1.8) (21.42 0.10 (25.3} {6.57 0.1) (19.0) (20.70 2.0} {1.68 81.6) (18.4} {3.00 3.00 4.7) (5.9) (18.90 18.7} {21.3} {4.50 4.0} {0.7} Tree & Forest Origin 1.0} {1.7} {7.4) {23.5} B.00 1.7} Castor 3.1) (27.6} {22.5} Total (A+B) 74.6} {75.2} {1.52 0.1) (28.7) (0. Ministry of Agriculture .51 11.78 0.30 3.68 61.7) (28.22 (33.0} {3.80 5.52 2.6} {14.8) (4.9} {3.8) (23.6} {0.5) (29.46 54.3) (30.9} {10.6) (7.4) (1.20 (22.44 19.9) (11.3} {3.4) (21.1) (22.6} {3.60 20.3} {6.57 51.5) (0.16 1.8} {0.9) {1.24 60.8} {4.4} {72.7} {0.35 0.5} {6.9) (5.03 19.4) (2.7} {23.5} {0.06 3.5) (1.6) (21.2) (18.2} {19.58 17.9) (31.00 6.40 1.44 0.6) (4.11 Figures in brackets are percentages to total edible oil production Figures in curly brackets are percentages to the respective sub-group viz primary sources and secondary sources Source: Agricultural Statistics At a Glance2006-07.59 0.2} {4.4} {23.37 2.9} {3.4} {13.66 0.0) (2.7} {4.20 4.60 4.4) (25.0) (3.6} {71.7} {3.70 60.6) (0.3) (32.80 0.6} {0.63 1.60 68.2) (30.29 2.4} {5.3} {5.8} {6.2} {4.50 1.64 1.1) (19.80 1.0} {4.17 3.5} {0.6} {27.36 3.50 1.3} {7.2} {20.3) (1.4} {24.60 4.6} {3.00 19.37 (14.8) (0.7) (1.Table 3: Contribution of Primary and Secondary Sources to Total Edible Oil Production: A Decadal Perspective (lakh tonnes) 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06* A.76 12.30 4.2) (3.77 1.4} {7.88 3.30 4.0} {5.6} {5.3} {7.50 4.8} {5.00 19.40 0.0) (34.6} {15.7} {25.99 69.36 0.90 4.1) (27.4) (23.6) {1.87 16.8} Cottonseed 4.70 50.01 {74.5) (30.3} {23.00 6.7) (0.00 2.4} Coconut 4.7) (5.6) (5.0} {2.2) (4.9} {25.5} {0.4} {0.6) (25.6} {13.60 0.00 4.50 4.80 0.2) (4.9} {1.0} {26.99 50.0) (3.5) (5.5} Ricebran 4.9) {1.70 (21.27 70.0} {17.50 4.6) (13.9} {1.12 2.45 12.14 1.4} {6.1} {1.80 (23.39 0.80 5.80 0.5} Rapeseed & Mustard 18.00 13.1} {25.2} {6.15 44.3) {5.9} {10.33 0.0) (0.30 18.6) (24.8) (5.3} Sunflower 4.7} {13.1} {4.54 0.1) (22.7) (0.0} {0.6} {1. Secondary Sources 19.8) (26.56 17.92 4.4} {3.61 10.7} {14.9} {74.21 (1.15 2.53 0.8) (0.6} {7.6) (4.2} {25.2) (5.38 59.1) (4.09 14.6} {8.9} {10.1} {4.30 (7.6) (24.30 5.60 0.99 15.0) {5.7) (27.80 4.8} {5.0) (3.2} {29.70 4.19 3.94 12.07 3.8} Solvent Extracted Oils 4.8) (28.5} {1.0} {1.3) (5.60 5.2} {1.94 3.57 17.8) (0.4} {24.9) (0.15 62.60 3.8) (16.1} {1.8) (25.6) (1.2} {5.5} {1.57 (2.0} {7.8} {75.5) (10.5} {2.2} {2.34 0.51 0.60 80.61 1.2} {2.43 11.1) (6.4} {16.6) (17.50 1.20 3.50 5.50 5.3) (1.2) {4.4) (33.8) (21.5) (1.72 0.00 18.9} {24.70 19.32 3.6) (18.84 (31.9} {1.0} {26.6} {5.6) (20.5) (28.63 0.6) (4.9} {24.1) (7.20 6.5} {5.65 14.5) (32.27 (2.6) (14.5} {13.6} {4.61 2.2) {24.5) {2.2} Safflower 1.73 (7.

coconut and solvant extracted oils. etc. soyabean oil. the share of soyabean oil has increased from 14. On the contrary. rice bran has emerged as the largest contributor to the edible oil production with a share of 30. cottonseed oil. vanaspati and . per capita consumption of oils like sunflower oil. odourless and tasteless).6 per cent. In urban India the decline in per capita consumption of groundnut oil is about 80 gm per month. other vegetable oil and rice bran oil. unconventional oils like palm oil or its liquid fraction (palmolein). mustard oil. Per capita consumption of edible oil has definitely been rising over the eleven years from 1993-94 to 2004-05. have started gaining preference.8 per cent in 2005-06 followed by cottonseed. mainly due to health concerns.Among the primary sources rapeseed and mustard oil has the largest share of 34.0 per cent to 25.1 per cent in 1995-96 to 19. over a span of a decade. Similarly. followed by mustard oil. On the other hand. Among the secondary sources.0 per cent in 2005-06. that of groundnut oil has declined over a decade from 31. Palm oil (mainly imported) and soybean oil has accounted for almost half of India's total edible oil consumption in recent years.5 per cent in 2005-06. However. In rural areas. In both rural and urban India. there has been a fall of about 50 gm per person per month in the consumption of groundnut oil. The slow pace of growth in the production of edible oils in the domestic economy has not been able to meet the domestic demand. in fact. taken together has surpassed the consumption of groundnut oil. While the share of rapeseed and mustard oil has risen slightly from 33.8 per cent) among secondary sources in 1995-96. its contribution has declined to 18.6 per cent to 20. which has been escalating continuously due to increased population. soyabean oil. followed by groundnut oil and soyabean oil. coconut oil also has experienced a fall in its share in the total edible oil production from 22.2 per cent in total edible oil produced in the country in 2005-06. which is more than the rise in mustard oil consumption. Edible oil consumption pattern in the country indicates that varieties of oils used as well as quantity consumed have a regional distribution corresponding to varied culinary tastes and preferences across different states. rice bran oil and sunflowerseed oil.3 per cent in 1995-96 to 27.4 per cent recorded in 1995-96. had the major share (25. Table 4 shows the extent of increase to be as much as 30 per cent in rural India and about 18 per cent in urban India. offset by a corresponding rise for mustard oil. growing incomes. contribution of cottonseed has improved from 21.8 per cent during the same period (Table 3). Solvent extracted oils. groundnut oil.6 per cent during the same decade. Though in recent years with the advancements of technology (rendering oils colourless.

23 24.25 31. import of edible oils has been resorted to for more than two decades to make this item of mass consumption easily available to consumers at reasonable prices.15 50.37 0. In pursuance of the policy of liberalisation.06 11. except that of coconut oil. Subsequently.12 0.9 41.22 0.17 0.7 Edible oil (other)** 2004-05 0.coconut oil has more than doubled.05 13. due to increasing demand in the domestic economy.72 98 94.5 0.16 13. increasing steadily both before and after 1999-2000. This facilitated easy access to imports of edible oils.5 28. one-half of what it was in 1993-94 (40 per cent).6 Edible oil: All 2004-05 0.07 0.1 35.6 93-94 0.03 0. there have been progressive changes in the import policy in respect of edible oils during the past few years. However. Table 4: Consumption of edible oil between 1993-94 and 2004-05 Per Capita Quantity (kg) Percentage of Households consumed in 30 days consuming in a 30-day period Edible oil Year Rural Urban Rural Urban 93-94 0.5 *Includes margarine in 1999-2000.24 0.56 97.06 13.7 35 99-00 0. imports of other edible oils were also placed under OGL. subject to 65 per cent of basic custom duty.5 99-00 0. Edible oil. NA: Not Available Source: NSS 61th Round.8 92. The prevalence of use of groundnut oil among urban households dropped in 2004-05 to 21 per cent.11 NA NA 99-00 0.14 0.8 31.24 30. Among rural households the percentage in 2004-05 has reduced to 14 per cent from a 1993-94 level of 30 per cent.5 93-94 0.2 51.9 93-94 0.8 20.3 99-00 0.7 Mustard oil* 2004-05 0.1 37.04 0.03 0.4 40 99-00 0.66 98 94.05 0. was first decanalised partially in April 1994.8 Groundnut oil 2004-05 0. Declining .48 0. this wasn’t the only reason for this resilience in the imports. Ministry of Statistics and Programme Implementation Since there has been a continuous excess of demand over domestic supply of edible oils. **excluding coconut oil.12 0.25 50.7 16 93-94 0.6 21. This was followed by enlargement of the basket of oils under Open General License (OGL) import in March 1995.1 Vanaspati 2004-05 0. which was in the negative list of imports.5 19. Buoyancy in the edible oil imports has been observed in late 1990s in spite of good harvests of oilseeds in the country. resulting in increasing domestic availability of edible oils.09 0.17 21.

0 71.0 60.2 1996-97 81.6 76.1 (-14.9) (9.6) 2000-01 63. However.2) 2005-06* 87.7 11. Imports as a percentage of net domestic availability surged from 27.4 52.5) (-24.6 12.0 60.3 16.2) (0.6 9.0 8.6 10.1) (1.8) (0.5) (-5.2 71.0 69.1 85. This resulted in increasing burden on foreign exchequer of the country as imports of edible oil increased from Rs 7.3 15.7) 2003-04 80.1 per cent in 1999-2000 and further to 48.0) (6.2) 2001-02 69.6 10.0 55.2 (-7.2) 2002-03 54.8) (3.2) (53.5 (8.6 43.8 27.3 (-13.7 90. resulted in increasing dependence on their imports.0) (-15.7 41.1 8.edible oil production for the three years. packed and distributed doing away with the need of having manufacturing facility in the domestic market.1) (30.3 10.9 38. Figure in the brackets are growth rates over the previous year.0 8.5 72.0 64.0 41.0) (12.2 8.6) (0. Source: Agricultural Statistics At A Glance 2006-07.1) (21.5) * 3rd Advance Estimates (released on 05-05-2006). during 1999-2000 to 2002-03.4 per cent in 1998-99 to 41.2) (-8. on account of huge fall in the domestic edible oilseeds production.9) (107.5 8. the sharp improvement in domestic production of oilseeds and therefore of the edible oil output in the following years have helped to moderate the extent of dependence of the country on the imported oils during 2002-03 to 2004-05.0) (11.6 26.0) (2.9 124.6 (47. in order to avoid large imports of edible oils to the extent possible and to harmonise the interests of domestic oilseeds growers.2 17.5 43.2) 1998-99 79.0) (-8.6) (-0.2 46.683 crore in 2003-04.8 96.2 42.0) (-14. However.1) (2.3 48.7) 2004-05 81.6) (1.3) (0.1) (11.4) (-20.5 45.8) (0.4 (12.5) (-14. Table 5: Snapshot of Edible Oils Status and India's Dependence on Imports of Edible Oils (lakh tonnes) Net Domestic Actual Import Exports and Production Imports Consumption Dependence Industrial Use Availability (4)+(5) (5)/(6) (2)-(3) (1) (2) (3) (4) (5) (6) (7) 1995-96 74.7 73.2) (21.0) (-13.0) (14.0) (-10.589 crore in 1998-99 to Rs 11.4 117.0) (-13.5) (8.1 41.9 34.8 120.5) (-7.3 42.0 61.5 (7.2 104.3 14.6) (-5.8 8.2) (37.2 95.3 per cent in 2002-03 (Table 5). Ministry of Agriculture Free imports (since 1994) have further lowered the entry barrier to the industry as crude or refined oil can be imported.0 102.6) (60.7 10.1) (-5.8) 1999-2000 68.8) 1997-98 70.0) (10.3 (10.8 43.5 (0.1 41.0 79. .3 (-21.

213. share of soft oils has risen from 33.747 2006-07 2 Source: Solvent Extractors' Association of India Crude palm oil (CPO) import has jumped to 2.225.943 9 2. On the other hand.041.60 7 4.41 106.499 28.360.531 1.650 64.807 2005-066 8 Nov-Sept 2.114.425.018 100.480. total imports of edible oil during November–September.840 24.504 7.015 8 2. duty structures on imports have been reviewed from time to time (Annexure II).57 2004-05 422.822 5.050 Canola / Rape Oil 10.050 1.982.6 lakh tonnes from around 2 lakh tonnes during the same period. Composition of Imports A glance at the composition of imports (Table 6) reveals that palm oil and its products have accounted for over 65 per cent of total edible oil imports in 2001-02.895 Palm Oil Crude Olein Crude Palm Ker.804 1 Nov-Sept 1.701 2. has augmented by 11 per cent to 4.68 2005-06 113.059.167.53 920. Similarly import of sunflower oil is more than doubled due to reduction of duty from 75 per cent to 40 per cent.600 75.491 55.8 lakh tonnes in the same period last year on account of lower domestic oilseeds production witnessed in 2006-07 (Table 6).994 15.907 1.735 186.83 3 3.consumers and processors.372.18 2 5.360 90.2 lakh tonnes compared to 3.261. crude palmolein and crude . which has reduced to 58 per cent in 2005-06 to.11 2 4.349 32.379 4 8 2. Palm oil products’ (CPO.996 3. RBD palmolein.723 890.475.922 94.44 9 4.120 1.001.502 39.396.795 2.891. due to reduction of import-duty on CPO from 80 per cent to 45 per cent at present.57 2003-04 796.457 20.400 5.324 25.684 3 2.010 Sunflower Oil Soft Oil Coconut Oil Refined Soybean Oil 1. According to statistics provided by the Solvent Extractions Association of India (SEA).291 22.457 9.8 per cent to around 42 per cent during the same period.Oil Soyabean Oil (degummed ) 2.843 1.992 51.72 4 Total 1.780. 2006-07 (11 months).416.63 102.540 Refined Sunflower Oil 4.307 21.558 26. Table 6: Import Trend of Edible Oils (Tonnes) Palm Oil Oil Year (November -October) Crude RBD Palmolein 2001-02 118.745 1.29 1.703.800 77.846 491.843 192.003 20.151.029 7.624.58 7 5.331 8.56 2002-03 319.695 2.307 10.

6) 35.3) 108.2 lakh tonnes from 1. As per the ‘Oilseeds: world Markets and Trade (October 2007)’.4) 100. the rising cost of oil seeds and the expanding demand-supply gap. Source: USDA. International Market World production of edible oils has grown at a Total Production Total Imports Total Exports Total Domestic Consumption Total Ending Stocks Table7: International Vegetable Oil Scenario (million tonnes) 2001-02 2002-03 2003-04 2004-05 2005-06 92. around 40 per cent of the demand for edible oils .8) 118 (5.19 (7.9 per cent.66 33.78 (9.32 (5.83 (7.843 tonnes.1) 35.6) 43.1 per cent between 2001-02 and 2006-07.0) (21. Consumption of edible oil.5) 40.6) 37.3) compound annual growth rate (CAGR) of 6.02 (10.4) Figures in the bracket denote the percentage change over the previous year. a publication of United States Department of Agriculture (USDA).22 9. while sunflower oil import has increased to 192.8 lakh tonnes (66 per cent) from 2. accounting for 10.palm kernel oil) import share has further increased to 2.07 95. The country has also been the 3rd largest consumer as well as importer of vegetable oils.795 tonnes from 90.31 Imports have increased even faster at a CAGR of 7.08 (5.03 (6.17 8.7) 121.1) (0.61 (3.0) 46.55 (9. during the same period.11 (6. 92.5 lakh tonnes due to disparity compared to CPO.97 10. The Indian edible oil industry has to be contended with increasing competition from imports. India is one of the largest edible oil producing countries in the world.3 per cent of world edible oil consumption and 12.0) 111.2 lakh tonnes (57 per cent).71 (9.7) 48.4 lakh tonnes (34 per cent) from 1. while soft oil import has reduced to 1.6 (9.7) 42.6 lakh tonnes (43 per cent) during November 2006 to September 2007 compared to the same period of last year.0) 38.9 per cent and are likely to continue their upward trend to reach in the future as well (Table 7).4 (5.76 (3.3) (2.6) 95.87 31. crude soybean oil import reduced to 1. Within soft oil.1 per cent of world edible oil imports in 2006-07.0) (-15.7) 46.5 (3. Since the production of oil seeds is heavily dependent on monsoon.01 8.5) 115. July) 8. 'Oilseeds: World Market and Trade' (2006.31 (3.58 (7.92 (9.6 (-1.9) 102.06 (6. has risen at a CAGR of 5.4 per cent in the international market in 2006-07. India has been 7th largest edible oil producer having a share of around 5.3) 2006-07 121.22 8.

National Statistical Survey 61th Round. (*This note has been prepared by Pallavi Oak) References  United States Department of Agriculture (USDA) (2007). ‘Agricultural Statistics At a Glance 2005 and 2006’ Ministry of Agriculture (2007). ‘Efficiency in Indian Edible Oilseed Sector: Analysis and Implications’. Food and Public Distribution. September Ministry of Agriculture. encouraging research and development to upgrade the oilseeds having higher productivity and provision of various fiscal benefits to farmers to undertake increasing cultivation oilseeds. ‘Reports of the Commission for Agricultural Costs and Prices for the crops sown during 2006-07 season’    Ministry of Consumer Affairs.  Ministry of Statistics and Programme Implementation. ‘Annual Report 2006-07’ Solvent Extractors Association of India Mruthyunjaya. et al (2005). is what the minimum need at the current moment. ‘The Indian Edible Oil Industry’ (2005). ‘Oilseeds: world Markets and Trade’. Economics Research Review. Jul –Sept. September    ICRA Sector Analysis. A policy framework aiming towards improving the capacity utilisation of all the oilseeds processing units. .within the country has to be met by imports that may have to continue.

3 6.8 10.0 16.4 -0.3 -13.67 14.5 -18.73 474 -3.4 6.5 8.99 12.37 488 -1.0 -1.83 570 0.2 7.15 529 2.27 605 -2.43 512 -2.5 2.81 16. 6.1 -6.0 18.90 17.6 0.2 6.00 563 -6.2 -11.5 22.3 11.8 6.6 4.25 15.2 2.9 20.2 -0.7 .40 419 -0.9 1.73 522 2.64 17.7 -17.34 14.1 12.98 507 -1.9 7.7 10.43 428 -1.18 10.4 12.39 555 7. per Annual Variation in Tonnes Hectare Per cent 5.82 15.03 430 8.9 10.5 -16.2 -25.08 639 7.1 16.31 16.4 -2.13 21.4 -16.1 -16.91 17.0 0.39 482 3.10 570 3.13 481 -3.7 13.0 3.30 530 4.89 Annexure I: Oilseeds Scenario Production Yield Area Production Yield Million Kg.8 42.5 -10.3 16.66 13.Year 1950-51 1951-52 1952-53 1953-54 1954-55 1955-56 1956-57 1957-58 1958-59 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1965-66 1966-67 1967-68 1968-69 1969-70 1970-71 1971-72 1972-73 1973-74 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 Area Million Hectares 10.69 679 5.74 516 -4.4 5.6 10.94 17.60 18.4 -10.47 17.6 12.80 24.27 15.9 12.37 532 3.9 4 9.3 -10.5 29.6 10.28 493 7.1 23.1 4.69 11.3 -2.47 14.3 6.63 20.2 6.1 12.7 15.63 579 24.71 16.3 9.79 16.8 7.9 20.7 10.4 -3.1 -25.7 -9.69 18.56 561 3.60 719 7.3 12.0 10.3 4.02 18.35 502 1.5 -9.7 -20.61 627 -2.30 561 2.95 13.7 9 5.08 526 3.5 -2.1 -6.73 424 -4.0 18.1 9.17 17.6 -21.0 11.4 -6.00 13.2 -1.92 742 4.4 7.1 8.6 -4.1 10.5 -10.6 6.7 11.5 9.9 -2.49 12.66 563 4.92 19.1 6.8 -5.4 28.3 14.5 -0.2 4.1 -17.1 12.76 18.2 -10.16 481 5.61 771 5.26 15.1 4. 9.9 18.2 8.73 11.5 15.0 20.8 9.9 7.77 15.5 -7.0 7.77 14.1 13.0 18.8 7.8 6.90 22.09 12.2 8.92 16.03 824 8.36 509 3.95 684 1.2 3.14 452 -8.85 473 -7.6 1.4 7.65 629 8.4 -14.2 26.15 25.5 31.00 15.52 12.0 31.40 511 19.56 470 7.2 7.2 4.

5 0.7 -24.1 -16.5 per cent.38 21. 1998 Import duty further reduced to 15 per cent. rapeseed & mustard and linseed.5 per cent.6 10.5 6.9 -0. 2000 raised to 45 per cent (basic)+4 per cent (SAD)=50.2 -0. Import duty on CPO for manufacture of vanaspati raised to 25 per cent and on crude vegetable oils raised to 35 per cent.2007 Note: 1.49 23.28 22. Source: Agricultural Statistics At A Glance 2006-07.0 12.52 20.3 5. groundnut.98 1004 14. 1 16.50 21.9 8. castorseed.3 54.3 -11.23 24.7 -3.9 13.5 -0. Import duty on refined vegetable oils November.96 26. 3 1. palm kernel oil.8 0.7 8.2 -6. RBD palm oil.8 -11.2 69.4 -7. Further reduction in import duty to 20 per cent +2 per cent (special duty of 1996-97 customs) bringing total import duty to 22 per cent. The yield rates given above have been worked out on the basis of production & area figures taken in '000 units.7 3.11 21.04 per cent. Ministry of Agriculture -2.4 -6.32 24. In addition. RBD March.04.19 24.1 6.77 22.66 27.90 25. Import duty on Crude Palm Oil (CPO) for manufacture of vanaspati retained at 15 per cent (basic) + 10 per cent (surcharge)=16.9 2.84 25.6 -5.4 2006-07* 25.9 * Advance Estimates as on 04.0 12. July. 2000 cent (surcharge)+4 per cent (SAD)=44. sesamum.11 24.6 per cent.12 26.75 20.3 10.8 per cent.66 14.5 per cent.44 20.9 15.6 -5. Import duty on crude oils raised to 25 per cent (basic) + 10 per cent surcharge)=27.7 -9. 1994 Import of RBD Palmolein placed on OGL with 65 per cent import duty.6 -5.5 per cent and on refined oils raised to 35 per cent (basic)+10 per June.34 26.64 21. Data for 1950-51 to 1969-70 relate to total of five major oilseeds viz.1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 25.3 -12.24 26. 4 per cent SAD levied on refined oils.8 Annexure II: Import Duty Structure on Edible Oils April. (In regular Budget) Another special duty of custom @ 3 per cent was later imposed bringing the total import duty to 25 per cent.6 16.26 895 -16. 2.30 25.34 22.72 18.86 27. Import duty on refined palm oil and RBD palmolein raised to 65 per cent (basic)+4 per cent (SAD)=71.6 1. Import duty on CPO for other than vanaspati manufacture raised to 55 per cent. Import of all edible oils (except coconut oil.0 -16. .35 797 799 843 851 926 816 944 853 810 913 691 1064 885 2005-06 27.9 -10. 1999-2000 (Budget) Import duty raised to 15 per cent (basic) + 10 per cent (surcharge)=16. 1999 27.99 23.1 10.8 0.0 -28. 1995 palm stearin) placed on OGL with 30 per cent import duty. Import duty on refined oils raised to 25 per cent (basic) + 10 per cent (surcharge) = December.

With effect from 8. 24. 75 per cent and 75 per cent respectively. Import duty on Refined Palm Oil and RBD Palmolein reduced from 85 per cent to 70 per cent and SAD not applicable on edible oils.2007.3.5 per cent Source: Directorate of Edible Oil.3. Statuesque on import duty structure of vegetable oils/edible oils maintained. import duty on refined Palm Oil/RBD Palmolein reduced from 80 per cent to 67. 11.2006. Import duty on Crude Palm Oil and its fractions.5 per cent to 57. 2004 February. edible oils attract a special additional duty of Customs @ 4 per cent and Import Duty on Vanaspati and similar products raised from 30 per cent to 80 per cent.3.2007. import duty on Crude Palm oil/Crude Palmolein reduced from 80 per cent to 70 per cent and import duty on refined Palm Oil/RBD Palmolein reduced from 90 per cent to 80 per cent.2006. special additional duty of customs not applicable on vanaspati imported from Nepal w.000 tonnes (Tariff Rate Quota) of total imports of such goods in a financial year subject to certain condition.5 per cent. Further edible oils (except Soybean oil. The duty on refined oils including RBD Palmolein raised to 85 per cent (basic) except in the cases of Soyabean Oil and Mustard oil where the duty is placed at 45 per cent(basic) and 75 per cent(basic) respectively due to WTO binding. 2002 March. in loose or bulk form reduced from 75 per cent to 65 per cent.4. import duty on Crude Sunflower Oil has been reduced from 65 per cent to 50 per cent and import duty on refined Sunflower Oil and other Oils has been reduced from 75 per cent to 60 per cent. 2001 March. Ministry of Public Distribution April. 4 per cent SAD levied on refined oils. all edible oils will not attract Special Additional Duty of customs @ 4 per cent/ 2007-08 (Budget) With effect from 13-04-2007 import duty on Crude Palm Oil /Crude Palmolein has been reduced from 60 per cent to 50 per cent and import duty on refined Palm Oil /RBD Palmolein has been reduced from 67. 2007 . 2001 November.f.March. Import duty on Refined Palm Oil and RBD Palmolein raised from 70 per cent to 75 per cent Import duty on Crude Palm Oil / Crude Palmolein raised from 65 per cent to 80 per cent and Import duty on Refined Palm Oil / RBD Palmolein raised from 75 per cent to 90 per cent With effect from 1. SAD is not applicable on vanaspati imported from Nepal under TRQ. 2006 January. rapeseed oil and mustard oil) will attract education cess of 3 per cent of the aggregate of customs duty.2007.2007 Import duty on crude oils for manufacture of vanaspati/refined oils by the importers registered with Directorate of VVO&F raised to 75 per cent (for others import duty levied at 85 per cent) except soyabean oil.e. Import duty on crude sunflower oil or safflower oil reduced to 50 per cent up to an aggregate of 1. colza or mustard oil reduced to 45 per cent unto an aggregate of 1. Import duty on refined rape. Status quo on import duty structure of vegetable oils/edible oils maintained. import duty on Crude Sunflower oil reduced from 75 per cent to 65 per cent and import duty on refined Sunflower oil reduced from 85 per centto75 per cent. With effect from 1. 2003 April. 2003 July.000 tonnes (Tariff Rate Quota) of total imports of such goods in a financial year subject to certain condition. import duty on Crude Palm Oil /Crude Palmolein reduced from 70 per cent to 60 per cent. Import of vanaspati from Nepal be levied SAD @ 4 per cent. W.e.50. With effect form 1.8. In addition. 2005 2006-2007 (Budget) August. 2002 August.2006.1. 2001 (As amended on 26.2001) October. of edible grade. rapeseed oil and CPO at 45 per cent.50.8.f.

1 Mruthyunjaya. et al (2005). ‘Efficiency in Indian Edible Oilseed Sector: Analysis and Implications’. Economics Research Review. Jul –Sept. .