Professional Documents
Culture Documents
• Indian vegetable oil is world's fourth largest after USA, China and Brazil.
• Oilseed cultivation is undertaken across the country in two seasons, in about 26 million hectares; mainly
on marginal lands, dependent on monsoon rains (un-irrigated) and with low levels of input usage.
• Yields are rather low at less than one ton per hectare.
The Industry…
• India – fourth largest edible oil consuming economy after USA, China and Brazil
• In 2007-08, the country could produce only about 8.2 million MT of edible oil, 35-40% of the demand
had to be met by imports, implying heavy reliance on imports
• Extreme variation in consumption. The country’s top 10% of the population consumes 20 kg per capita
and the bottom 30%, less than 5 kg per capita
• Strong regional preference for ‘first press’ oils with natural flavour – mustard, groundnut, coconut oils
15.66Kg
12.87Kg 2015
2010
11.44Kg.
2007
Per capita consumption of edible oil (year wise)
The breakup
Edible Oils
12.7 million MT
Oils Vanaspati
11.2 million MT 1.5 million MT
10% Sunflower
10%
Mustard
14% 43% Groundnu
t
23%
Kardi
Soya
Market competitors
Competitors
Players
National Dairy Development Board – Dhara Adani Wilmar Ltd – Fortune
Agrotech Foods Ltd – Sundrop Hindustan Lever Limited – Flora
Panak Foods – Gemini Ruchisoya – Soyum
Marico Indus. – Saffola Kaneria Oils – Rani
Geepee Ceval – Chambal NK Proteins Ltd – Tirupati
Aravali – Aravali Cargill – Nature Fresh
Industry Structure
• Over 600 oil extraction units, 166 Vanaspati manufacturing units - only 10 edible oil units and 8
Vanaspati units have national reach
• Over 50% of the units - sick or under utilised due to surplus capacity
Market Size
Inputs
• Edible Oils - Oilseeds (such as Groundnut, Sesame, Mustard, Sunflower), oil cakes and bran
• Vanaspati - Minor (solvent extracted) edible oils - Sunflower oil, Soybean oil, Ricebran oil
Raw Material
• Comprises 70% of the production cost
• Oilseeds - the largest cash crop
• Poor productivity - 873 Kg/ hectare (global average of 2000 kg/ hectare)
• Though oilseeds have 14.5% share in gross cropped area, only 25% of it is under assured irrigation
Technology
• Refining technology freely available indigenously
Characteristics
• Effective distribution chain - through a complex network of C&F agents, wholesalers / stockists &
retailers (kirana shops, supermarkets)
• Oil sold in bulk (tin, HDPE containers) to institutions; In retail packs (PET bottles, cans, jars, pouches)
to small customers
• Most vegetable oil is purchased by household or industrial buyers, food processors, restaurants and
hotels.
• Seasonal demand for oils & Vanaspati - September to November (peak season)
• Regulation: Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils cannot be sold
‘loose’ but can be sold only in ‘packed’ form
• Oil consumption: North is largest market, followed by South, West & East zones
Imports
• Large scale imports of oils and Vanaspati substitutes - primarily to check price rise and meet supply
shortages
• Imports during 2007-08 is 5.46 million MT
• Estimated imports by 2010-11 is 7 to 9 million MT
The Market
Demand
• Macroeconomic factors: Population; per capita income; purchasing power; oilseeds
• Other factors: Prices – domestic/international, Availability - oil, oilseeds
• Influence of branded products – ‘ health ’ message
• Growing preference for convenience foods
Future
This industry is a high volume, medium growth sector characterized by excess/idle capacities owing to
in efficient operations. Imports have been influencing prospects, leading to domestic industry crisis
Part II- Economy in Total
Overview of Edible Oil – Economy in total
• Three oilseeds - Groundnut, Soybean and Rapeseed/ Mustard - together account for over 80 per cent of
aggregate cultivated oilseeds output.
• Mustard seed alone contributes Rs.120,000 Mln. turnover out of Rs.600,000 Mln. oilseed based Sector
domestic turnover.
• Cottonseed, Copra and other oil-bearing material too contribute to domestic vegetable oil pool
Cont…
• Currently, India accounts for 7.0% of world oilseeds output; 7.0% of world oil meal production; 6.0% of
world oil meal export; 6.0% of world veg. oil production; 14% of world veg. oil import; and 10 % of the
world edible oil consumption
• With steady growth in population and personal income, Indian per capita consumption of edible oil has
been growing steadily.
• However, oilseeds output and in turn, vegetable oil production have been trailing consumption growth,
necessitating imports to meet supply shortfall.
Market Potential
• The per capita consumption of oil in India is 11.5 kg/year is way below the world average of 18 kg. Even
china is at 17 kg. By 2010 the per capita consumption of oil in India is likely to be 15.6 kg. There is huge
potential of growth.
• The demand for edible oils is expected to increase from Oil Year 2004-05 levels of 10.9 Mln. tonnes to
12.3 Mln. tonnes by 2006-07 (two years). This assumes a per capita consumption increase of 4% and a
population growth of 1.9% which translates to an overall growth in demand @ 6% p.a. Based on the
above assumptions, edible oil demand in the year 2015 is expected to be 21.3 million tonnes.
Demand Projection Edible Oil
2004 2010 2015
10.9 15.6 21.3
Total Demand (Mln. Tonnes)
Total Area under Oilseeds (Mln. Hectares)
23.4 28 32
Yield (Tonnes/hectare)
7 10.1 13.4
Total edible oil imports - (Mln. tonnes)
• India will continue dependence on imports to the extent of 40% of its consumption requirements. The
improvement in yields and the increase in area under cultivation will ensure that the domestic oilseed
production is sufficient to meet 60% of consumption requirements.
Executive Summary
Edible oil imports have been liberalized since the 1990’s and now attract lower tariffs
No import duty on crude oils in contrast to finished products (refined oils and hydrogenated fat)
Market India is the world’s largest importer of edible oils and market demand is expected to sustain
Loose or unbranded oil accounts for bulk of sales compared to branded and hydrogenated oils
Demand for imported oils to remain strong due to growing consumption and constrained supplies
Organized sector, earlier disadvantaged due to sales tax regime, is not growing its market share
Characteristics
Domestic production faces supply-side constraints and inefficiencies thereby ensuring the
dependence on large levels of edible oil imports
Rising consumption accompanied by increasing domestic production but large imports are still
necessary to bridge the gap
Trends Palm and soybean oils account for bulk of imports due to their low prices
Prices have risen at 26% p.a. with a dip observed only in 2005 - 2006
Loose or unbranded oil without proper packaging accounts for a large
portion of sales compared to branded and hydrogenated oils
Loose Oil Branded Oil
• Unrefined oils sold without any consumer-ready • Packaged pure refined oil primarily used in
packaging or brand name households
• Demand is largely driven by low income households • Available as sunflower oil (for its health benefits) but
as well as institutional customers as well as rapeseed and peanut oil
• Peanut, cottonseed, sunflower seed and rapeseed • Demand is from middle and upper class urban
oils are sold in this manner consumers
• Traders often use blends, legally or illegally, to
increase margins
12/7/21
22%
12/7/21 68%
10%
12/7/21
10 -2 0
12/7/21 12/7/21 12/7/21 12/7/21 12/7/21 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/
21 21 21 21 21 21 21 21 21
• Low but growing domestic consumption • Low and inefficient production levels of oilseeds
Low per capita consumption of a kg compared to world Virtually stagnant averaging at u mtpa
average of b kg Yields are also significantly lower than the world average
Yet overall consumption has grown at a healthy rate of 7 %
Source:
‘000 MT 12/7/21
12/7/21 X- import Total in ‘000 MT
14 Y- domestic pro
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12 A B C D E F G H I
10
80%
x% x%
x% x% x% x% x% x% x%
8
60%
6
40%
4
y% y%
y% y% y% y% y% y% y%
20%
2
0%
0 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/ 12/7/
12/7/21
12/7/21
12/7/21
12/7/21
12/7/21 12/7/21
12/7/21 12/7/21
12/7/21 21 21 21 21 21 21 21 21 21
Thank You…