Vanaspati firms weigh mustard oil blend impact

The vanaspati industry and organisations have welcomed the move to make 20 per cent blending of mustard oil in the manufacture of vanaspati.

The move will enable National Agricultural Cooperative Marketing Federation of India (Nafed) to clear the huge stocks of mustard.

A July 3 order, issued by the Vegetable Oil Products Commissioner, has mandated blending of 20 per cent mustard oil in the manufacture of vanaspati. This will be in addition to the existing 12 per cent blending of other indigenous oils.

IR Mehra, executive director of the Indian Vanaspati Producers' Association (IVPA), said, "The views of the industry was taken into account before making the blending mandatory. It will help Nafed liquidate the mustard stocks." This will not make any difference to the quality of vanaspati, Mehra added.

The processing of mustard oil is expensive compared with the crude palm oil (CPO) that is widely used in manufacturing vanaspati. It takes an additional Rs 1,100 to process one tonne mustard oil. So, the price of blended mustard oil should be lower by Rs 1,100 a tonne than the price of imported CPO.

"We have no objection to the mandatory blending. We only hope that the pricing is done keeping in view that processing mustard oil will add to the manufacturing cost of companies," said Jagesh Khaitan, Amrit Vanaspati managing director.

'The industry is waiting for the pricing mechanism. The department of agriculture shall ensure the supply of such quantity of mustard oil at a pre-determined price. This price should be viable for the manufacturers. The supply line of mustard oil needs to be put in place," said KML Chhabra, executive director of the Central Organisation for Oil Industry and Trade.

Nafed had procured 21 lakh tonne mustard this year. In addition, it had a carryover stock of 15 lakh tonne from last year. So far, it has been able to sell about 1.5 lakh tonne since June. This leaves a stock of about 34.5 lakh tonne mustard with Nafed.

The domestic vanaspati consumption is about 13 lakh per annum. Of this, about three lakh tonne are imported from Sri Lanka and Nepal. With the mandatory blending of mustard oil, nearly 6 lakh tonne of mustard can be used by the vanaspati domestic industry in a year. Six lakh tonne of mustard will yield about 2 lakh tonne of oil.

As local vanaspati units will have to blend vanaspati with mustard oil, their dependence on palm oil will reduce to some extent. This can result in lower palm imports and cheaper domestically produced vanaspati, said a Kotak CSL Research report.