NEW DELHI: Once a large exporter of oilmeal, India will soon start imports to meet growing domestic demand from bird and animal feed sectors due to lower availability from local mills. Around 15,000 oilseed crushing units have built 36 million tonnes edible oil production capacity over the last several years involving an investment of several thousand crores.
These units, however, have been operating at just 20-30% of installed capacity due to negative crushing parity. In fact, import of refined oil works out cheaper due to high minimum support price (MSP) fixed by the government and sustained low edible oil prices. India is currently outpriced by $150 a tonne in the world oilmeal markets.
As a consequence, the production of domestic oilmeals remained low. Of around 38.5 million tonnes of oilseed / oil bearing materials production in 2014-15 (Nov – Oct), oilmeals were procured to the tune of 26.20 million tonnes. Interestingly, both oilseed and meal production have declined in India, albeit marginally, since last year from the level of 41.7 million tonnes and 27.49 million tonnes respectively.
“Seed crushing mills in India, therefore, have reduced their operating capacity to the lowest in many years due to falling prices of oil and meals. Going by the trend, it looks like India will soon start with import of oilmeals from the world market,” said Atul Chaturvedi, Chief Executive Officer (CEO) of Adani Wilmar Ltd, the producer of Fortune brand edible oils.
Lower domestic production of soybean and rapeseed jacked up the prices in domestic market versus lower realization for meal and oil resulted in to drastic fall in crushing and export of soybean meal and rapeseed meal. Also, meal exports to Japan, Iran Thailand, Indonesia, Taiwan and Vietnam drastically reduced due to disparity in export in these regions against severe competition from other origins including China and Argentina.
