Oilseed traders keep import option open

Oilseed producers have been saved by the arrival of the monsoon in western India over the past five days, but imports of oilseeds may still be inevitable.

Owing to the adequate production of oilseeds in 2003-04, following good monsoon rains, there was a sharp decline in the country's oil import.

"It is bound to go up this year, but it is too early to predict, "B V Mehta, executive director, Solvent Extractors' Association of India, told Business Standard.

Edible oil being a sensitive agricultural item, a sharp rise in the import might turn out to be an issue of concern.

After having the excellent monsoon in 2003, growers had not expected rainfall to be delayed as it was this year. Indian agriculture would find it virtually impossible to match the 9.1 per cent growth in agricultural production that was achieved last year after the drought of 2002.

Nearly 80 per cent of oilseed growing area was watered by rainfall in India. In 2002-03, rains failed and consequently, there was a sharp decline in production in oilseeds. The crop size fell to as low as 15.1 million tonnes.

Good rainfall in 2003-04 pushed up the crop size to a record figure around 24 million tonnes, said Mehta. Farmers sowed more oilseeds also because prices were high.

"Last year we got rain in a synchronised pattern , at the right place and right time" Mehta pointed out.

However, one effect of the delayed rains this year in major oilseeds producing states like Gujarat, Maharashtra and Madhya Pradesh would be a decline in sowing area as well as fall in yield from the high levels of 2003.

Lack of timely rainfall has resulted in around 70 per cent growth of the sown seeds till now.

Mehta said, "We would be happy if the crop size reaches around 21 million tonne this year".

Even this figure was subject to two more spells of rains - one by the second week of August and the next in the first week of September. The August rains appear to have started well.

Mehta said the delayed rains would have little effect on the quality of the oilseed crop. The bottomline though was that the domestic crop could fall quite a bit short of domestic edible oil demand.

Demand for edible oil has been rising consistently mainly owing to ever increasing population pressure and changes in dietary habits. Oil prices have also been firm.

"We need to check the likely rise in prices of edible oil. Price sensitivity is very high among underprivileged section of society" said Mehta.