 "Rising veg oil imports a huge blow for domestic farmers")
Vegetable oil imports surged 10.55 per cent in February after a staggering 75.33 per cent spurt in January this year. In the first four months of the current oil year (November 2012 - October 2013), veg oil import registered an overall growth of 22 per cent.
Experts believe the massive inventory lying in the origin countries such as Malaysia and Indonesia (7 million tonnes, or mt), is pushing up India's import of veg oil, hitting the domestic seed crushing industry, while keeping seed and oil prices down in local markets. Data compiled by the apex trade body, Solvent Extractors' Association of India (SEAI), showed veg oil imports at 970,000 tonnes in February this year, compared to 880,000 tonnes in the last corresponding month. During November 2012 and February 2013, veg oil imports were reported at 3.74 mt against 3.06 mt a year ago.
"It's an irony for domestic seed crushing and refining units that instead of protecting local units, the government is serving the interest of Malaysian and Indonesian farmers," said B V Mehta, executive director of SEAI. "In fact, traders in Malaysia and Indonesia have been pushing up exports of crude palm oil of which India is the largest consumer, in order to get rid of high inventory."
Since the price of imported veg oil is substantially lower than that of the domestic origin, blenders and packers prefer imports. Consequently, local refineries and seed-crushing units have reduced their operating capacity to curb losses. Currently, these units are operating with less than average 35 per cent of their capacity.
Traders feel the domestic veg oil industry is overburdened. Normally, the industry is operating with less than 30-day inventory. But the inventory at both ports and the pipelines works out to 1.96 mt, equivalent to 40 days of India's consumption, the highest every stocks the industry has ever recorded. Meanwhile, higher availability has kept the prices of both seed and oil lower in Indian markets. Despite India's import reliance of over 55 per cent of the country's overall consumption, the government has failed to protect the interest of local players.
Experts believe the massive inventory lying in the origin countries such as Malaysia and Indonesia (7 million tonnes, or mt), is pushing up India's import of veg oil, hitting the domestic seed crushing industry, while keeping seed and oil prices down in local markets. Data compiled by the apex trade body, Solvent Extractors' Association of India (SEAI), showed veg oil imports at 970,000 tonnes in February this year, compared to 880,000 tonnes in the last corresponding month. During November 2012 and February 2013, veg oil imports were reported at 3.74 mt against 3.06 mt a year ago.
"It's an irony for domestic seed crushing and refining units that instead of protecting local units, the government is serving the interest of Malaysian and Indonesian farmers," said B V Mehta, executive director of SEAI. "In fact, traders in Malaysia and Indonesia have been pushing up exports of crude palm oil of which India is the largest consumer, in order to get rid of high inventory."
Since the price of imported veg oil is substantially lower than that of the domestic origin, blenders and packers prefer imports. Consequently, local refineries and seed-crushing units have reduced their operating capacity to curb losses. Currently, these units are operating with less than average 35 per cent of their capacity.
Traders feel the domestic veg oil industry is overburdened. Normally, the industry is operating with less than 30-day inventory. But the inventory at both ports and the pipelines works out to 1.96 mt, equivalent to 40 days of India's consumption, the highest every stocks the industry has ever recorded. Meanwhile, higher availability has kept the prices of both seed and oil lower in Indian markets. Despite India's import reliance of over 55 per cent of the country's overall consumption, the government has failed to protect the interest of local players.