Oilmeal exports hit a five-year low last financial year after a variety of factors made crushing of oilseeds unviable for most mills, especially during the second half of the year. The industry blames “excessive speculation” in the futures market and unfriendly government policies.
Total oilmeal shipments registered a 41 per cent decline to 3.22 million tonnes in 2009-10 (April-March), as against 5.42 mt in the previous year. In value terms, exports plunged by 38 per cent to Rs 5,176 crore versus Rs 8,341 crore, says The Solvent Extractors’ Association (SEA).
“We failed to grab the opportunity in the overseas market due to lower crushing in India when supply from Argentina, Canada, etc fell due to the lean season there. Now, since supply has resumed from these countries, we have to face competition,” said B V Mehta, executive director of SEA.
The peak oilseed crushing season is the second half of the financial year, in which mills contract most of their meal supply contracts with overseas agencies. Last year, margins were severely squeezed, with cheap imports of edible oil from Malaysia and Indonesia due to the earlier removal of a tariff on imports (an anti-inflation measure). In addition, the procurement price of oilseeds through commodity exchanges was far more than the mills’ cost of production (by about Rs 1,000 a tonne), leading to a steep drop in crushing; aggregators had held on to their stock, anticipating a rise in prices, due to a fall in production, going in for sale through futures exchanges.
The government also delisted oilmeals from the Vishesh Krishi and Gram Udyog Yojana, a special agriculture and village industry scheme last September. Notified in 2006, the government had identified 24 export products to get a five per cent incentive for export shipments; it no longer applied to oilmeal.
Oilmeal import by Vietnam from India for April 2009 to March 2010 was 8,57,690 tonnes, compared to 1.5 mt the year before. South Korea imported 4,77,171 tonnes during the year, as compared to 8,08,199 tonnes in the earlier one. Japan imported 4,74,547 tonnes as compared to the earlier 8,06,327 tonnes.