New Delhi। 20 March. (P.S.Saini) The Central Organisation for Oil Industry & Trade (COOIT) is the National Apex Body, of the entire vegetable oil and oilseeds sector in India and its membership includes sector-specific as well as state level Associations, big corporate houses, multinational corporations, small and medium enterprises engaged in oil milling, solvent extraction plants, vanaspati units and trade facilitators like commodity exchanges, brokers, commodity traders, laboratories, surveyors, etc. connected with the vegetable oil sector.
COOIT will be organising the 30th All India Seminar on Rabi Oilseeds Crop, to be jointly hosted by Delhi Vegetable Oil Traders Association and Rajdhani Vegetable Oil Suppliers Association, on Sunday the 22nd March, 2009 at Air Force Auditorium, Dhaula Kuan, New Delhi। The seminar will be attended by about 1000 delegates from all over India and abroad. The primary objective of the seminar is to finalise crop estimates of rabi oilseeds. In addition, the delegates also discuss Crop prospects, demand and supply situation of edible oils, price outlook, foreign trade, government policies etc.
We are starting the current year with a healthy sign marked by substantial increase in Kharif oilseed production and from all accounts, it looks that rabi oilseeds production will also be much higher as compared to previous year, mainly contributed by rapeseed/mustard।
Inspite of the higher indigenous availability of edible oils, we have seen a record import and it is estimated that in the current oil-year, imports may be over 7 million tonnes, which would be a record of sorts। The main reason for such surge in imports is the zero duty on crude oils (excluding soybean which has a 20% duty) and a very low 7.5% duty on refined oils.
Last year, the edible oil prices globally had reached a record high and on 1st April, 2008, the Government fully exempted all crude edible oils from customs duty। That was then and it may have had some justification, as a short term measure. But when the prices fell worldwide by over 50%, the situation called for an immediate review and reimposition of duty. Unfortunately, while 20% duty was levied on soybean oil in November, 2008, palm oil, which constitutes about 80% of total imports, was left at nil duty. Inspite of repeated requests from almost all quarters of the industry and trade as well as the farmers, the duty continues to be nil. This has not only resulted in record imports but also a substantial drop in the oilseed prices which the farmers are now getting, as compared to last two years.
With rising population and per capita consumption, we are seriously worried about the edible oil economy of the country, if the Government continues to pursue the short sighted policy of allowing zero duty imports and takes decisions more for political considerations and electoral gains rather than based on sound economic logic and in the long term interest of the farmers and the country as a whole। We only hope that the next Government will initiate policy measures for long term growth of edible oil sector, by ensuring remunerative returns to the millions of oilseed farmers.
Both P।M. Man Mohan Singh and the renowned Dr. Swaminathan have been repeatedly stressing the need for a second Green Resolution with focus on oilseeds and pulses. Putting a judicious cap on imports would be desirable in this context as well. India cannot afford a further increase in edible oil imports percentage, which is currently above 40% of our requirement.
COOIT’S INITIATIVE:So concerned are we about the stagnant oilseed production and the ever increasing gap between demand and supply that two year ago, we decided to involve COOIT directly in increasing oilseed productivity and act as a catalyst and an interface between the framers, the scientists, the input suppliers and other stake holders। We requested and were allotted to hold 100 front line demonstrations for rapeseed/mustard last year. These have brought in excellent results. The experience of dealing directly with farmers was an eye-opener; we gained firsthand knowledge of their problems, their way of thinking and learned about the bottlenecks and hurdles in the way of increasing production. Buoyed by the enthusiasm of the farmers and other stake-holders, we plan to double the number of Front Line Demonstrations this year and also include two other oilseed crops in our programme, namely, groundnut and sunflower.
We are also in the process of preparing a more ambitious time-bound plan of action for the next five years, for submission to the Ministry of Agriculture, which aims at increasing average productivity of oilseeds from the current one tonne per hectare to at least 1।3 tonnes per hectare.
CREATE AN OILSEED DEVELOPMENT FUND :The Government needs to realise sooner than later that immediate focus is required on increasing oilseed productivity and for this reason, we have suggested creation of an OILSEED DEVELOPMENT FUND, by putting aside at least 30% (about Rs। 3000 crores) of the customs duty collected from imports of edible oils and use the money for time bound programme to raise oilseed productivity from the present average of 1000 Kgs per hectare to at least 1300 Kgs per hectare. This is an achievable task, as has been demonstrated by Indian agriculture scientists who have got yields which are higher by 50% than the national average, by using improved technology, balanced and timely use of fertilizers and other measures.
MSP AND CUSTOMS DUTY:Currently, the edible oil prices, the import duties and MSP fixed by the Government, are looked at in isolation। Actually, these are inter-twined and have to be considered together. At zero import duty and low international edible oil prices, the domestic industry is bound to offer lower prices to farmers, to compete with imported oils. On the other hand, when international prices are high, the Indian farmer is bound to get better prices, as the industry can afford it. In between are the consumers and the Government's concerns for inflation. Time and again, we have said that edible oils do not contribute to rising inflation and the consumer must pay a reasonable price. The sole purpose of fixing MSP is to ensure that the farmer gets a remunerative return. Here again, the oilseed growers have always been at a disadvantage, vis-a-vis other food crops. Last year wheat MSP was raised by 33% while this year, the rapeseed/mustard MSP has got an increase of only Rs. 30 or a paltry 1.5%. The farmer of this principal oilseed crop feels short-charged, with low MSP and zero duty imports.
It is fortunate that for the past several years, the oilseed prices have always been higher than MSP, because of higher world prices and a rational customs duty structure। But with zero duty, this may no longer remain true. We feel that MSP of oilseeds should be fixed at a level that the farmer gets the same return from growing oilseeds as he does from other crops such as wheat or rice.
To summarise, COOIT suggests immediate action on following points, to save India’s oilseed economy from disaster and the farmers from having to sell at unremunerative prices :
1. Immediately create an Oilseed Development Fund by earmarking a part of the customs duty collected from imports of edible oils and this fund should be used exclusively for increasing oilseed production in the country, with a mission-like approach and a time-bound programme with set goals and objectives.2. Government could usefully examine the promising scope that exists in the southern coastal areas for increasing Oil Palm plantation keeping in view our increasing requirements for per capita edible oil consumption.3. Looking at the success of industry-state joint demonstrations in Rajasthan & U.P., for rapeseed/mustard we invite the central and state governments to allocate more funds and take more active participative interests in such demonstrations in different parts of the country covering all major oilseeds.4. The industry is willing to make suitable investments in agriculture sector and increasing oilseed productivity. However, some indirect incentives should be allowed to the industry. One way of doing this is to allow higher tax deduction on amounts directly invested in agriculture activities.5. Edible oils and oilseeds are subjected to VAT at different rates in different states. Being an essential item of daily diet, edible oils and oilseeds should be treated at par with other food items such as wheat, rice, sugar etc. We have time and again requested the state governments and the Empowered Committee of State Finance Ministers to exempt our trade and industry from VAT. We hope this just request would be considered favourably and exemption from VAT will be given to this sector soon.
