CHAPTER - III

PROFILE OF THE EDIBLE OIL INDUSTRY AND

STUDY AREA

3.1 INTRODUCTION
Many varieties of oilseeds along with tree origin are cultivated in India.
Among these, the major oilseeds are soybean, cottonseed, groundnut, sunflower,
rapeseed, sesame seed, copra, linseed, castor seed and palm kernels. India
occupies the place of pride as the world's largest producer of groundnuts,
sesame seeds, linseeds and castor seeds.

3.2 IMPORTANCE OF EDIBLE OILS IN THE COUNTRYS

ECONOMY
Oilseeds and edible oils are two of the most sensitive essential
commodities. India is one of the largest producers of oilseeds in the world and
this sector occupies an important position in the agricultural economy and
accounting for the estimated production of 28.21 million tonnes of nine cultivated
oilseeds during the year 2007-08. India contributes about 6-7 per cent of the
world oilseeds production. Export of oil meals, oilseeds and minor oils has
increased from 5.06 million tons in the financial year 2005-06 to 7.3 million tons
in the financial year 2006-07. In terms of value, realization has gone up from
Rs. 5514 crores to Rs.7997 crores. India accounted for about 6.4 per cent of
world oil meal export.

3.3 MAJOR FEATURES OF EDIBLE OIL ECONOMY

There are two major features, which have very significantly contributed to
the development of this sector. One was the setting up of the Technology
Mission on Oilseeds in 1986. This gave a thrust to Government's efforts for
augmenting the production of oilseeds. This is evident by the very impressive
increase in the production of oilseeds from about 11.3 million tonnes in 1986-87
to 24.8 million tonnes in 1998-99. There was some setback in 1999-2000

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because of the un-seasonal rain followed by inclement weather. The production
of oilseeds declined to 20.7 million tonnes in 1999-2000. However, the oilseeds
production went up to 27.98 million tonnes in 2005-06 and was 24.29 million
tonnes during 2006-07. As per the 3rd advance estimate by Ministry of
Agriculture, the production of nine major oilseeds is estimated to be about 28.21
million tonnes during 2007-08. The other dominant feature which has had
significant impact on the present status of edible oilseeds or oil industry has been
the programme of liberalisation under which the Government's economic policy
allowing greater freedom to the open market and encourages healthy competition
and self regulation rather than protection and control. Controls and regulations
have been relaxed resulting in a highly competitive market dominated by both
domestic and multinational players.

Sunflower oil is produced from the seeds of sunflower, a tall plant known
for its showy flowers. Sunflower seeds are rich in protein and yield a high quality
vegetable oil used in making margarine and cooking oil. Sunflower oil has a light
taste, is suitable for frying and has some health benefits.

3.4 WORLD VERSUS INDIAN OIL SEEDS

The conventional basket of major oilseeds comprises of soyabean (57 per
cent), cottonseed (12 per cent), rapeseed (12 per cent), groundnut (8 per cent),
palm kernel (3 per cent), sunflower seed (7 per cent) and copra (1 per cent).
These figures are for 2007-08. The share of soybean production in the worlds
total oilseed production has varied between 55 and 60 per cent the highest
being 59.4 per cent in 2002-03, and the lowest being 55.6 per cent in 2003-04.
The growth of soybean in terms of area, yield and production for major producers
of the world and that for India is shown in the following table.

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 Table 3.4.1
Growth of soyabean in terms of area, yield and production

World USA Brazil Argentina India

Particulars
(%) (%) (%) (%) (%)

Area 27.75 5.65 43.73 57.89 61.13

Production 35.34 14.5 49.43 66.67 80.09
Yield 5.94 8.38 3.96 5.56 11.77

Yield 2009-
2,531 2,958 2,918 2,872 1,006
10
th
Source: Indias edible oil industry in a global perspective 25 July-2011

It is interesting to note that the spectacular percentage growth in soya

area as well as production in Argentina, Brazil, and even in India. The
percentage yield increases have been the highest in USA and India, but in
absolute terms, India has a very poor yield per hectare. Indias share in world
soyabean production has been 3.8 per cent in 2009-10.The details of soyabean
production in India and world depicted in the following table.

Table 3.4.2
Soyabean production in India and world
Year and percentage World USA Brazil Argentina India
2008-2009 211.96 80.749 57.80 32.00 9.308
As percentage of world - 38.1 27.3 15.1 4.4
2009-2010 258.00 98.417 68.00 54.00 9.725
As percentage of world - 35.4 26.4 20.9 3.8
2010-2011 250.13 90.083 65.00 50.00 10.10
As percentage of world - 36.00 26.00 20.00 4.10
th
Source: Indias edible oil industry in a global perspective 25 July- 2011

All major producers of soyabean have surplus soybean, oil and meal for
export. However, India exports soyabean meal and imports soybean oil. Indias
share in the worlds soyabean meal export was 8 per cent in 2008-09, which

83
declined to 3.8 per cent in 2009-10, due to its uncompetitive pricing in relation to
suppliers, and also the aggressive marketing by the USA in the backdrop of
bumper crop harvested by them is presented in the following table.

Table 3.4.3
Backdrop of bumper crop harvested in India and the world
Year and percentage World USA Brazil Argentina India
2008-2009 52.15 7.718 12.15 21.80 4.17
As percentage of world - 14.80 23.30 41.80 8.00
2009-2010 54.97 10.16 12.04 29.00 2.11
As percentage of world - 18.50 21.90 52.80 3.80
2010-2011 56.62 7.98 11.86 29.30 4.50
As percentage of world - 14.1 20.90 51.70 7.90
th
Source: Indias edible oil industry in a global perspective 25 July - 2011

China has been the worlds biggest importer of soyabean with 55.3 per
cent share in 2009-10. China, it can be stated, has become the country which
dictates and decides the pace and fate of world trade in soyabean and its
products, because of its insatiable appetite for soybean seed, oils and other
agro-commodities. Europe imported 41.7 per cent (2009-10) of worlds soyabean
meal export. Other major soya meal importing countries are Vietnam (4.9 per
cent), Indonesia (4.7 per cent) and Thailand (4.1 per cent). Annual SBM export
ranged from a low 2.11 mt (2009-10) to a high of 4.18 mt (2008-09). Annual total
meal export ranged from a low of 3.22 mt (2009-10) to a high of 5.44 mt (2007-
08). The domestic consumption of SBM in India has also risen with the following
features:

Average consumption has doubled in the last 5 years, together with an

increase in the soya crop size, thus leaving the surplus disposable meal available
for export. The year 2009-10 has been a typical one in terms of substantial
decrease in meal export numbers because of lower crush as a result of

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continuous disparities in the crush right from the beginning of the season. USAs
bumper crop has taken away this traditional share of Indian soya meal.

India has gained importance in the world over the last few years by virtue
of becoming the worlds number one importer of edible oils and an exporter of
protein meals. The relatively cheaper logistics cost of supplying vegetable protein
to the importing countries in the Asian area has given India an edge over other
exporting countries like from South America. Also its non-GMO protein has been
able to attract a premium. Today, China and India are the two countries that the
world is scrutinizing with very keen interest. This is particularly on the agricultural
fronts as both countries are big importers of edible oils. China is also the biggest
importer of seeds and grains. India, however, still exports protein despite a huge
protein deficiency in the diets of the 40 per cent of the population that live below
the poverty line.

Table 3.4.4
Production ranking and global market share of Indian Agriculture
Rank (by Share ( percentage of
Segment
production) world production)
Cereals 3 10
Sugar crops 2 15
Fruits and
2 9
vegetables
Roots and tubers 4 5
Milk 1 15
Meat 6 2
Oil seeds 5 7
Pulses 3 24
th
Source: Indias edible oil industry in a global perspective 25 July - 2011

It is recognized from the above table that India is one of the top three
producers of the worlds major agricultural commodities. It is number one in milk
with 15 per cent of the market share, third in the production of pulses with 24 per
cent share, and fifth in the production of oilseeds with 7 per cent share. India
consumes about US$ 200 billion worth of food per year. The country is self

85
sufficient in food grain needs and is able to feed its over one billion inhabitants.
India is currently producing about 240 million tonnes of food grains, and this shall
grow by at least 25 per cent by 2020.

India has the highest percentage of arable land 57 per cent versus 16
per cent average in the rest of the world. Unfortunately, however, the productivity
is very low. Indian farmers and the administration are both seriously perturbed by
this matter and are taking measures to amend the situation. Agriculture
administrators toured Argentina to study soybean cultivation and farm practices,
so that the productivity of the Indian soya crop could be increased from its
present dismal state.

Table 3.4.5
Per capita consumption of edible oil in India vs. World
(Kg per annum)
S. No Year India World
1 2000-2001 11.1 18.95

2 2001-2002 11.8 19.37

3 2002-2003 11.3 19.80

4 2003-2004 11.5 20.24

5 2004-2005 11.8 21.13

6 2005-2006 11.7 22.18

7 2006-2007 12.2 22.84

8 2007-2008 12.6 23.46

9 2008-2009 14.0 23.89

10 2009-2010 13.3 24.54

Source: Oil world annual

3.5 EDIBLE OIL SCENARIO

The Indian edible oil sector has many typical characteristics distinctly
different from other countries especially those in the western hemisphere. The
oil basket available to the consumers has many varieties major domestic oils
are: groundnut, mustard or rapeseed, cottonseed, soybean and sunflower. Minor
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domestic oils are: rice bran, mahua (Madhuca longifolia), sesame, safflower and
coconut.

Imported oils are mainly palm, soybean and sunflower. About 60-70 per
cent of groundnut and mustard oil, and almost 100 per cent of coconut oil is
consumed in crude form without refining because of their distinct flavours and
aroma, all other oils are marketed only after refining. Market shares of raw oil,
refined oil and Vanaspati (partially hydrogenated vegetable oil) are respectively
42 per cent, 43 per cent and 13 per cent.

The government has frozen the tariff value on import of oils and the
present rate of duty is nil on crude oils and 7.5 per cent on refined oils. This
policy has remained unchanged since 2008. Thus, the Indian market is being
flooded by imported oil mainly palm, soyabean and sunflower. The South
American industries for soybean oil, Malaysia and Indonesia for palm oil have
discovered India as a dumping ground for their produce. India still has an
insatiable appetite for edible oil as the income levels rise.

Over the past decade, world class edible oil refineries have been set up in
India where superior quality refined oil is produced at a low processing cost. The
days of small sized batch refineries of 50 ton per day capacities are over.
However, the capacity utilisation of Indian refineries is still at a meager 35 per
cent of installed capacity. Refined soyabean oil is actively traded on futures
exchanges and accounts for their biggest turnovers. Thus, the Indian edible oil
situation is going to persistently influence the world demand and supply to a large
extent.

3.6 EDIBLE OIL CONSUMPTION IN INDIA

India is a leading player in edible oils, being the worlds largest importer
(ahead of the EU and China) and the worlds third-largest consumer (after China

87
and the EU). Each year, India consumes over 10 million tons of edible oils.
Edible oils have a high penetration of 90 per cent in India.

However, per capita consumption of edible oils is around 11 kg per year.

This is considerably lower than in most developed countries. Palm oil (mainly
imported) and soya bean oil account for almost half of total edible oil
consumption in India, followed by mustard and groundnut oil. In India, most
vegetable oil is purchased by household or industrial buyers (food processors,
restaurants and hotels) for frying or baking needs and is sold as loose oil or
vanaspati (partially hydrogenated vegetable oil). Only a small percentage of
edible oils are sold in branded form at the retail level.

Notably, Indias annual current per capita consumption of about 12.7

kilogrammes is well below the world average of 20 kilogrammes, thus providing
growth opportunities for the Indian edible oil industry. These opportunities have
attracted investments from some of the worlds leading global players.

Figures pertaining to estimated production of major cultivated oilseeds,

availability of edible oils from all domestic sources and consumption of edible
oils (from Domestic and Import Sources) during the last 10 years is given in
table 3.6.1.

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 Table 3.6.1
Net availability of edible oil from all domestic sources
(In lakh tonne)
Availability of Edible
Net availability of
Production Oils (from domestic
S.No Year edible oils from all
of Oilseeds* and import
domestic sources
sources)**
1 2000-2001 184.40 54.99 96.76
2 2001-2002 206.63 61.46 104.68
3 2002-2003 148.39 46.64 90.29
4 2003-2004 251.86 71.40 124.30
5 2004-2005 243.54 72.47 117.89
6 2005-2006 279.79 83.16 126.04
7 2006-2007 242.89 73.70 115.87
8 2007-2008 297.55 86.54 142.62
9 2008-2009 277.19 81.83 166.39
10 2009-2010 248.83 88.23 167.69
Source: (i) Production of oilseeds: Ministry of Agriculture (ii) Net availability and consumption of
edible oils: Directorate of Vanaspati, Vegetable Oils and Fat

3.7 CONSUMPTION PATTERN OF EDIBLE OIL IN INDIA

India is a vast country and inhabitants of several of its regions have
developed specific preference for certain oils largely depending upon the oils
available in the region. For example, people in the South and West prefer
groundnut oil while those in the East and North use mustard/rapeseed oil.
Likewise several pockets in the South have a preference for coconut and sesame
oil. Inhabitants of northern plain are basically hard fat consumers and
therefore, prefer Vanaspati, a term used to denote a partially hydrogenated
edible oil mixture. Vanaspati has an important role in our edible oil economy and
its production is about 1.2 million tonnes annually. It has around 10 per cent
share of the edible oil market. It has the ability to absorb a heterogeneous variety
of oils, which do not generally find direct marketing opportunities because of
consumers preference for traditional oils such as groundnut oil, mustard oil,

89
sesame oil etc. For example, newer oils like soyabean, sunflower, rice bran and
cottonseed and oils from oilseeds of tree and forest origin had found their way to
the edible pool largely through vanaspati route. Of late, things have changed.

Through technological means such as refining, bleaching and de-

odouraisation, all oils have been rendered practically colourless, odourless and
tasteless and, therefore, have become easily interchangeable in the kitchen.
Newer oils which were not known before have entered the kitchen, like those of
cottonseed, sunflower, palm oil or its liquid fraction (palmolein), soyabean and
rice bran. These tend to have a strong and distinctive taste preferred by most
traditional customers. The share of raw oil, refined oil and vanaspati in the total
edible oil market is estimated at 35 per cent, 55 per cent and 10 per cent
respectively.

3.8 TYPES OF OIL COMMONLY USED IN INDIA

India is fortunate in having a wide range of oilseeds crops grown in its
different agro climatic zones. Groundnut, mustard or rapeseed, sesame,
safflower, linseed, nigerseed or castor seeds are the major traditionally cultivated
oilseeds. Soyabean and sunflower have also assumed importance in recent
years. Coconut is most important amongst the plantation crops. Efforts are being
made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu in addition to
Kerala and Andaman Nicobar Islands. Among the non-conventional oils, rice
bran oil and cottonseed oil are the most important. In addition, oilseeds of tree
and forest origin, which grow mostly in tribal inhabited areas, are also a
significant source of oils.

3.8.1 Sunflower oil

Sunflowers originated in North America and were then introduced into
Europe. They are believed to have been grown first in Mexico by the native
Indians as far back as 3000 B.C. The seeds were ground or pounded and used

90
in flour for bread making. Spanish explorers introduced this exotic plant into
Europe around middle of sixteenth century.

Still, it was greatly used for ornamental purpose, until it was cultivated by
the Russians for oil. The Russians cultivated sunflowers for its oil in the middle of
the eighteenth century, and production on a commercial basis started only in the
nineteenth century. Two varieties were grown, the oil yielding type, and another
one for direct consumption.

Sunflower seeds were taken back to America around this time, where
new, high yielding hybrids were grown. In the 1950s, sunflower oil was
popularized as an important vegetable oil all around the world. Sunflower oil is
very popular in Europe and it is the third most important vegetable oil of the
world.

Sunflower oil is especially suitable for frying, as it does not smoke even at
high temperatures. It can also be used for shallow frying and as salad dressing,
as it has a light texture and taste. One important non food use of sunflower oil is
use as an ingredient in skin care products, as it is easily absorbed by the skin. Its
use ranges from use in lotions and creams to soaps, because of its light texture.

Also, the high linoleic acid content favours its use in soaps, as this gives it
a skin softening quality. Therefore the details of production, Availability and
consumption sunflower oil is depicted in table 3.8.1.

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 Table No.3.8.1
Production of sunflower seeds, net availability and consumption of
sunflower oil
(In lakh tonne)
S.No Year Oil Seeds Oils
1 2000-2001 6.60 2.18
2 2001-2002 8.7 3.0
3 2002-2003 9.10 3.0
4 2003-2004 10.86 3.58
5 2004-2005 12.24 4.04
6 2005-2006 14.88 4.91
7 2006-2007 12.28 4.05
8 2007-2008 14.63 4.83
9 2008-2009 12.52 4.13
10 2009-2010 10.78 3.54
Source: The Solvent Extractors Association of India, Mumbai

3.8.2 GROUNDNUT OIL

Groundnuts have many uses. They can be eaten as straight food, used in
recipes, made into solvents and oils, used in make-up, medicines, textile
materials, peanut butter, as well as many other uses. Popular confections made
from groundnut include salted peanuts, peanut butter (sandwiches, peanut candy
bars, peanut butter cookies, and cups), peanut brittle, and shelled nuts
(plain/roasted). Peanuts, served by them, are one of the most popular nuts in the
world.

They are often eaten as snacks, served at cocktail parties and are
sometimes added as a nutritional side dish with lunch. Salted peanuts are usually
roasted in oil and packed in retail-size plastic bags or hermetically sealed cans.
Dry roasted, salted groundnuts are also marketed in significant quantities.
Groundnut is often a major ingredient in mixed nuts because of their
inexpensiveness compared to Brazil nuts, cashews, walnuts, and so on.
Although peanut butter has been a tradition on camping trips and the like

92
because of its high protein count and the fact that it resists spoiling for long
periods of time, the primary use of peanut butter is in the home, but large
quantities are also used in the commercial manufacture of sandwiches, candy,
and bakery products. Boiled peanuts are a preparation of raw, unshelled green
peanuts groundnut boiled in brine and eaten as a snack in the United States.
More recently, fried peanut recipes have emerged - allowing both shell and nut to
be eaten. Peanuts are also used in a wide variety of other areas, such as
cosmetics, nitroglycerin, plastics, dyes and paints.

Groundnut is often used in cooking, because it has a mild flavour and a

relatively high smoke point. Due to its high mono unsaturated content, it is
considered healthier than saturated oils, and is resistant to rancidity. There are
several types of peanut oil including: aromatic roasted peanut oil, refined peanut
oil, extra virgin or cold pressed peanut oil and peanut extract. The production of
groundnut seeds net availability and consumption of groundnut oil is depicted in
table 3.8.2.

Table 3.8.2
Production of groundnut seeds, net availability and consumption of
groundnut oil
(In lakh tonne)
S. No Year Oil Seeds Oils
1 2000-2001 64.10 14.74
2 2001-2002 70.07 14.00
3 2002-2003 43.63 10.04
4 2003-2004 83.32 19.17
5 2004-2005 70.24 16.16
6 2005-2006 78.67 18.09
7 2006-2007 48.64 11.19
8 2007-2008 91.83 21.12
9 2008-2009 73.38 16.88
10 2009-2010 45.28 14.33
Source: The Solvent Extractors Association of India, Mumbai

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3.8.3 SESAME OIL
Sesame oil (also known as gingili oil or til oil) is an edible vegetable oil
derived from sesame seeds. Besides being used as a cooking oil in South India,
it is often used as a flavour enhancer in Chinese, Japanese, Korean, and to a
lesser extent Southeast Asian cuisine.

The oil from the nutrient rich seed is popular in alternative medicine - from
traditional massages and treatments to modern day fads. Ancient Indian medical
system perceives sesame oil to pacify stress related symptoms and on-going
research indicates that the rich presence of anti-oxidants and poly-unsaturated
fats in sesame oil could help in controlling blood pressure. The oil is popular in
Asia and is also one of the earliest known crop-based oil, but world-wide mass
modern production continues to be limited even today due to the inefficient
manual harvesting process required to extract the oil.

In the Tamil language of India, Sesame Oil is called "Nalla Ennai" (and in
Malayalam language it's called "Nalla Enna", both literally translated in English to
"good oil". In the Telugu language of India, Sesame Oil is called "Nuvvula Noone"
(Nuvvulu means sesame and Noone means oil) or "Manchi Noone" (Manchi
means good and Noone means oil). In the Kannada language of India, Sesame
Oil is called "yellenne" (from "yellu" for sesame) and "Ollenne" meaning "good
oil". It is also called as Gingelly Oil in India. In Marathi it is called Teel Tel .In Sri
Lanka Sinhalese called it "Thala Thel" (NEI itself means oil in Tamil (common
name for any type of oil). Since this oil is made from ELLU, it is also called ELLU
NEI. In short ELNEI. In Bengali it is Teel Tel.

Sesame oil is reputed to penetrate the skin easily and is used in India for
oil massage. In Maharashtra, Sesame oil (Teel Tel) is specially used for
massaging the foot. It is also used for hair and scalp massage. Sesame oil is
used in the manufacture of ayurvedic drugs. In Hinduism, sesame or "til" oil is
used deepa or oil lamps kept in front of shrines for the deities. Sesame oil is used
for performing puja in Hindu temples. Also, particularly in South India, sesame oil

94
is applied to the stone deities in the temple's shrines. It is only used on deities
made of black granite. The production of sesame oil seeds, net availability and
consumption of sesame oil is given in table 3.8.3.

Table 3.8.3
Production of sesame oil seeds, net availability and consumption of
sesame oil
(In Lakh tonne)
S.
Year Oil Seeds Oils
No
1 2000-2001 5.40 1.67
2 2001-2002 7.90 2.6
3 2002-2003 4.34 1.35
4 2003-2004 8.15 2.53
5 2004-2005 7.11 2.20
6 2005-2006 6.97 2.16
7 2006-2007 6.18 1.92
8 2007-2008 7.57 2.35
9 2008-2009 7.33 2.27
10 2009-2010 5.52 1.71
Source: The Solvent Extractors Association of India, Mumbai

3.8.4 CASTOR OIL

Castor oil has a long history of traditional medical use dating back to
ancient Egypt. Derived from the castor bean (Ricinus communis), the oil was
once used internally as a laxative but is now primarily used externally due to its
potential toxicity. Castor oil has been used therapeutically in ancient India, China,
Persia, Egypt, Africa, Greece, Rome, the Americas, and in 17th century Europe.
This oil is also known as Palma Christi or the "Palm of Christ". Edgar Cayce
mentions castor oil many, many times in his readings. Today it is used as an
emollient and skin softener, treatment of gastrointestinal problems, lacerations,
and other skin disorders such as psoriasis. Also used to boost our immune
system and it is also found in many skin care products.
95
 Castor oil is a vegetable oil obtained from the castor bean (technically
castor seed as the castor plant, Ricinus communis (Euphorbiaceae), is not a
member of the bean family). Castor oil (CAS number 8001-79-4) is a colourless
to very pale yellow liquid with mild or no odour or taste. Its boiling point is 313 C
(595 F) and its density is 961 kg/m. It is a triglyceride in which approximately 90
percent of fatty acid chains are ricinoleic acid. Oleic and linoleic acids are the
other significant components. The Production of caster seeds, net availability
and consumption of castor oil is shown in table 3.8.4.

Table 3.8.4
Production of castor seeds, net availability and
consumption of castor oil
(In lakh tonne)
S. No Year Oil Seeds Oils
1 2000-2001 9.00 3.60
2 2001-2002 6.00 2.50
3 2002-2003 4.28 1.71
4 2003-2004 8.01 3.20
5 2004-2005 8.26 3.30
6 2005-2006 9.67 3.87
7 2006-2007 7.62 3.05
8 2007-2008 10.53 4.21
9 2008-2009 11.15 4.46
10 2009-2010 9.46 3.78
Source: The Solvent Extractors Association of India, Mumbai

3.9 DEMAND FOR EDIBLE OIL

Demand for edible oils vegetable oil consumption in the country is

continuously rising and has sharply increased in the last couple of years to
roughly 11.2 kg per head per year. This is still lower than the world average
consumption level of 17.8 kg and that in neighboring countries like Pakistan (16.1
kg). The developed western world has a per capita consumption of 44 to 48 kg.
per year. According to projections from the National Council of Applied Economic
Research (NCAER), per capita consumption of edible oils is likely to reach 13.95,

96
14.83 and 16.17 kg by 2009-2010 in per capita income grows by 4 per cent, 5
per cent and 6 per cent respectively. The details of edible oil demand is shown in
table 3.9.1.

Table 3.9.1
EDIBLE OIL DEMAND

ESTIMATE/YEAR 1999-2000 2004-05 2009-10 2014-15

Per Capita *
9.81 11.55 13.95 16.00
Low estimate
Medium estimate 9.89 11.63 14.83 18.16
High estimate 9.97 12.10 16.17 22.60
Total Demand**
10.10 13.30 17.40 22.80
Low estimate
Medium estimate 10.20 13.90 19.00 25.90
High estimate 10.30 14.60 20.70 29.40
Source: The Solvent Extractors Association of India, Mumbai *in Kg per annum ** in million
tones

3.10 IMPORT AND EXPORT OF EDIBLE OIL

3.10.1 Import of edible oil
The gap between demand and production of edible oil in India has
increased sharply in recent years. Since 2000-01, production of oilseeds grew at
the rate of 4.7 per cent per annum, but edible oil consumption increased at the
rate of 6.5 per cent per annum. Additionally, further increase in areas under
oilseed cultivation is a challenge due to lack of arable land and competition from
grains and other cash crops. "Under normal circumstances, oilseeds compete
with food grains for acreage. However, due to government policies favouring
production of competing crops over oilseeds, a higher share of irrigated land has
gone to grains and cereals crop, said Pawan Kumar, Rabo India Analyst. He
further added, Low quality seed, low access to inputs, poor farming practices,
and the fact that much of India's oilseed crop is cultivated in unirrigated areas is
the reason for oilseed productivity to be lower than the global average.
Therefore it is essential to import the edible oils from other countries. Particulars
of edible oil import is given in table 3.10.1.

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 Table 3.10.1
Quantities of edible oil imported during the last 10 years
S. No Year Import of edible oils
Quantity Value
(in Lakh tones) (Rs. in crores)
1 2000-2001 41.77 5976.53
2 2001-2002 43.22 6464.97
3 2002-2003 43.65 8779.64
4 2003-2004 52.90 11683.24
5 2004-2005 45.42 10755.65
6 2005-2006 42.88 8960.99
7 2006-2007 42.17 9580.53
8 2007-2008 49.03 10298.68
9 2008-2009 67.20 15,837.46
10 2009-2010 80.83 26,483.33
Source:*DGCI&S, Kolkata, and Ministry of Commerce & Industry

3.10.2 Export of edible oil and oilseeds

India has been a major importer of edible oils historically. The country
used to meet around 30-40 per cent of its needs through imports till 1980s.
However, the government then launched the 'Oilseeds Technology Mission
(OTM) in 1986. The programme was aimed at making the country self sufficient
in the production of oil seeds. Along with other incentives, the programme also
relied on strict quantitative restrictions on edible oil imports and offering relatively
higher increase in minimum support price for edible oils compared to wheat and
rice. The programme worked well and the area under edible seeds as well as the
yield started increasing during early 1990s.

As a result of the OSM programme, India witnessed consistent increase in

total output and from importing 30-40 per cent of annual requirements in early
1980s, India turned into net exporter of the commodity by mid 1990s. The
situation, however, did not last long. In order to fulfill its obligations towards the
GATT, India started to reduce the import restriction towards later 1990s. All
quantitative restrictions were done away and edible oil was brought under Open

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General License, which meant that imports could be made freely after paying
duty.

This led to a serious slump in the domestic oil seeds market as the prices
fell sharply in line with the low international prices prevailing at that time. As a
result, the tremendous growth in acreage and production witnessed in oil seeds
under the OTM program vanished by the turn of century. Thus, the Indian edible
oil industry has lived through a complete cycle by the start of last decade. In the
last decade, total production has been a function of international prices and its
impact on area under cultivation along with monsoon scenario and its impact on
yield (output per hectare). The details of export of oil seeds and edible oil is given
in table 3.10.2.

Table 3.10.2
Export of oilseed, and edible oil-
(Qty.in lakh tonne)
(Value in Rs.Crores)
Oil Seeds Oils
S.No Year
Qty. Value Qty. Value
1 2000-2001 3.23 837.7 2.32 843.8
2 2001-2002 3.73 860.4 2.09 581.3
3 2002-2003 2.10 591.6 1.65 530.7
4 2003-2004 3.85 1287.3 2.62 1096.6
5 2004-2005 3.66 1261.2 2.60 1027.7
6 2005-2006 4.18 1314.5 1.84 635.97
7 2006-2007 5.23 1825.26 1.89 668.96
8 2007-2008 6.03 2756.0 1.99 914.0
9 2008-2009 5.27 2797.48 3.11 1851.4
10 2009-2010 2.92 1573.01 3.47 1793.41
Source: Solvent Extractors Association of India, Mumbai

3.11 PROFILE OF NAMAKKAL DISTRICT

Namakkal District is a newly formed district from Salem District. It has

been functioning since 01-01-1997. It consists of 4 Taluks namely Namakkal,
Rasipuram, Tiruchengode and Paramathi Velur. The district is bounded by
salem on the north, Karur on the south, Trichy on the east and Erode on the

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west. The geographical area of the district is 3363. 35 K.m. This lies between
11.00 and 11.360 North Latitude and 77.280 and 78.300 East Longitude.

For administrative purposes the district has been divided into 2 revenue
divisions, 4 taluks. Since it produces major part of eggs sent to all over other
parts of our country, and is also called poultry town as it contains quite
a number of poultry farms hence it is called egg city. Namakkal finds a place of
importance in the map of India because of its Lorry body building industry, a
unique feature of the town. More than 150 Lorry body building workshops and
with a number of subsidiary industries of auto body works are operating since
1960s. There are many lorries, trailers and L.P.G. and tanker lorries in
Namakkal district. Therefore it is otherwise called as transport city .

The formation of Railway route Salem to Karur is soon to be completed by

end of this year 2012. One of the most famous Government Veterinary College is
also situated near by Namakkal Town. More and more private educational
institutions are coming up in recent years which blossomed for the district. The
famous Anjaneyaswami Statue which has its height of 6.7 Mts. was built in 996
AD. The Narasimma Samy temple along with Amman temple is situated behind
the west of the rock fort in the heart of the town.

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