THE SOLVENT EXTRACTORS ASSOCIATION OF INDIA

Transcription

1 THE SOLVENT EXTRACTORS ASSOCIATION OF INDIA Action Plan for increasing production and productivity of oilseeds to check the rising import of Vegetable Oils Preamble: In the last 20 years, the edible oil and oil seeds scenario has undergone a vast change. Our dependence on imports which was only 3% in has gone over to 55% currently. The main reason for this dismal state of affairs is that oilseed production has remained almost stagnant, while demand has been growing much faster, both because of increase in per capita consumption and population growth. If indigenous production does not go up significantly, our dependence on imports may even go up over 75% within next few years. The Oilseeds production and the productivity is stagnant at around million tonnes and the productivity at Kg. per hectare. The Government and the industry needs to go to the root cause of the problem and take appropriate policy initiatives to boost the production and productivity in the country to check the rising import of vegetable oils. Policy initiatives a) Focus on Increasing Production and Productivity in all policy initiatives, top most importance should be given to increasing the productivity of oilseeds. At present our farm productivity is just 1000 / 1100 Kgs./ha. which is almost half of world average or one/third of the highest in the world. If we focus on increasing productivity by just 100 kgs. per hectare every year for the next five years, i.e. increase from a level of 1000kgs. to 1500 kgs. per hectare, we will be able to meet the growing demand and check the rising import of vegetable oils. We have crossed 10 million tonnes target for soybean and cottonseed. Now we must target to achieve atleast 15 million tonnes of Soyabean and Cottonseed each in next five years and at least 10 million tones of Rapeseed and Groundnut to meet the growing demand. Crop Indian Oilseed yields compared to World yields India Highest India India in Comparison to Highest % World Highest World Kg./ha Indian in Terms of World % Soybean % % Cotton % % Groundnut % % Sunflower % % Mustard % % 3

2 The following factors, if implemented diligently, can improve oil seed productivity significantly: Genetic upgradation of available cultivators of oilseeds to increase productivity per se, coupled with insulation against biotic and abiotic stresses through biotechnology and genetic-engineering approaches. Development of integrated nutrient and fertilizer-management schedules. Deploying integrated pest and disease-management modules to control the diverse biotic stresses and make the oilseed crops more sustainable. Development of post harvest technologies and agricultural implements, particularly with reference to seeding, harvesting and threshing operations of oilseed crops suited to small farmers fields. Providing proper irrigation through lift irrigation and water sprinkling. Feedback to farmers about soil quality & steps to be taken for improvement of its quality. Germination test of all planting material. Timely supply of appropriate inputs and incentives to farmers. Creation of a profitable oil seed marketing system. Support to oilseed growing farmers by private entrepreneurs through private partnership and PPP. To provide suitable transport, warehousing and other infrastructural facilities to reduce the loss of oilseed between farming and crushing mill, which is presently in the range of 5-10%. Creating overall awareness about deploying good farm-practices. b) Introduction of GM crop Most of the advanced countries like USA, Argentina, Brazil have moved to grow Genetically Modified (GM) Soybean to achieve higher production and productivity. There are certain advantages of GM crop viz. pest resistance, herbicide tolerance, disease resistance, cold tolerance, drought tolerance/salinity tolerance, which leads to higher productivity by about 20 to 25% from the conventional variety. GM crop may be one of the way to increase production in the country. BT cotton was introduced before few years only, which has doubled the cotton production in India. It is the high time to explore the possibility of introduction of GM Soybean crop (non terminator) in India to achieve higher production and productivity. However, the farmers various concerns and particularly about the seed price be addressed properly by not allowing monopolizing few seed companies to supply GM seed at exorbitant high price. To overcome this issue, only non terminator GM be allowed. c) Encourage Private Partnership in Oilseed Programme - Weighted Income Tax deduction Vegetable oil and oilseeds industry is conscious of the fact that there is need for pro-active approach on the part of the industry and enter into Oilseeds Extension Programme to provide to the farmers the necessary agri inputs to achieve higher productivity level. It is suggested that weighted Income Tax deduction of 200% be granted to companies undertaking Oilseeds Extension Programme. The private involvement in Oilseed Extension Programme will supplement Government's efforts and will go a long way in increasing oilseeds production and productivity in the country. 4

3 d) Encourage Production of Rice Bran Oil and its Value added Products Rice Bran Oil potential is over 16.0 lakh tons, against this potential the actual exploitation is 9.0 lakh tons. If full attention is paid and hurdles are removed, the production can be increased to atleast 12.0 lakh tons in next three years and maximum quantity can be made available as direct cooking medium and thereby reduce the import of edible oil to some extent. Besides refined rice bran oil, a number of value-added products including nutraceuticals can be produced from the by-products generated during the refining of rice bran oil. Although India is the second largest producer of paddy in the world, but the concept of production of value added products is in the infancy stages in the country. Also, value addition of ricebran and by products will give better return to farmers without raising the price of paddy. It needs to be encouraged through appropriate policy measures. At present most of these products attract excise 16%. There is an urgent need to grant general exemption from excise to "Refining of Rice Bran Oil and Processing of its By-Products" with a view to encourage value addition in this area in the country. e) Encourage Exploitation of the Large Untapped Potential of Non-traditional Vegetable Oils from TBOs. There is vast potential to procure TBOs because of very large forest areas in our country having many different types of oilseed bearing trees having collection potential of over 35.0 lakh tonnes. Presently, this Potential is hardly being explored and less than 5.0 lakh tons of TBOs are collected which gives 1.0 lakh tons of oils. If proper measures including allowing usage in manufacturing of chocolate (matter is pending with FSSAI)are undertaken, the collection can be increased substantially to 15 to 20.0 lakh tonnes and would generate employment in a big way thereby raising production of vegetable oils and also helping tribals and down trodden people of the society. f) Encourage Oil Palm Plantation declare Oil Palm Crop as Plantation Crop Today, palm is a rich source of vegetable oil in the world. Palm plantation gives the highest yield of 3.5 to 4.0 tons of vegetable oil per hectare, where as even the best high-ail-content oilseeds like groundnut or rapeseed give only kg of oil per hectare. The Government of India has identified about 10.0 lakh hectares suitable for palm cultivation against which hardly 1.45 lakh hectares are under palm cultivation and current production of crude palm oil is hardly 1.30 lakh tones per annum. The area under palm cultivation is expanding very slow due to various reasons, but one of the critical reasons is that palm has not been declared as "plantation crop" by the State Governments. If this is done, it would attract the entrepreneurs and also foreign investments to take up oil palm cultivation in a big way and help us to bridge the gap between demand and supply of edible oil to a great extent in the years to come. Government should exempt the land identified suitable for oil palm cultivation )10.0 lakh ha) from land ceiling act. If this is done, atleast additional 5.0 lakh ha can come under oilpalm plantation in next 5 years yielding over 20/25 lakh tonnes of palm oil per annum. Shift acreage from Grains to Rape-Mustard in Punjab & Haryana Punjab and Haryana were at the forefront of the Green Revolution and had taken up the challenge of feeding the nation with high production of grains. However, what was once a boon to the Nation has now become a bane. MSP driven production of Wheat and Rice in Punjab and Haryana has certainly assured a ready market and good returns to the farmer but created huge anomalies. On the one hand we are importing more than 10 million tones of 5

4 vegetable oil and on the other we are creating mountains of Wheat and Rice which is challenging our storage infrastructure and need to divert some Punjab/ Haryana land from wheat /rice cycle to rape/maize cycle.. This will also help in ensuring water level in these States does not drop further. Mustard is high Oil bearing seed (in excess of 40%) and its cultivation needs to be encouraged in Punjab/Haryana. It s a Rabi crop and its encouragement would mean lower Wheat acreage. It s a win-win situation - Lower Wheat and higher Oil bearing Mustard. The following steps would require for shifting from grains to rapeseed. Punjab and Haryana should take up the cudgels with crusades zeal. Central Govt. too should give the required thrust. Give marketing support in the initial years to ensure farmers get adequate returns. Highest minimum support price for Mustard grain in Punjab & Haryana and along with lowering or no upward revision of Wheat MPS would do the trick. Between Punjab and Haryana around 60 lakh hectares land is year marked for Wheat cultivation. Assuming we are able to wean away 50% of the available land for Mustard by 2025 the additional available crop would be 60 lakh MTs. translated into oil this is a whopping 25 lakh tones of additional edible oil. Tariff Measures a)import duty on Edible Oils Large imports of edible oils are primarily due to low prices of edible oils in the International Market and negligible import duty on their imports. It is tragic that the adverse impact on indigenous oil seeds sector has been ignored and import duties on edible oils continue to be at a minimal level. Farmers have got higher realization from other crops. Considering the situation, Govt. should frame a price band for edible oils in a manner of harmonizing the interests of domestic farmers, processors and consumers through imposition of import duty at an appropriate rate. The import duty would generate the revenue, which could also be utilized for oilseeds development programme and thereby raising the domestic production of oil seeds and vegetable oil to reduce our dependence on imports. It is suggested that import duty be revised with duty difference of 15% between crude and refined oils and linked with the price band of edible oil. Current Duty Suggested Duty Crude Oils 2.5% 10% Refined Oils 10% 25% b) GST on Oilseeds Sector The essential commodities are highly price sensitive and any inflationary impact is reflected in the Consumer Price Index. There are two tax rates structure is being contemplated under GST. Lower rate for certain essential goods and standard rate for others. The edible oil &: oilseeds deserve to be classified under lowest rate as this price sensitive essential commodity affects consumers. Moreover, edible oil being an agro based product, it impacts the lives of a large number of farmers who are involved in agriculture. It is, therefore, necessary that the sensitive essential items of mass consumption like edible oils, oil seeds and oilmeals should either be exempted wholly or taxed at lowest slab rate under the proposed GST structure and should be the same for all States. 6

5 c)exemption of Edible Oils, Oilcakes & Oilmeals from VAT There is upto 5% VAT on oilseeds, edible oil, oilcakes and oilmeals which is a heavy burden on the oilseeds sector and ultimately translates into higher prices of edible oils, oilcake, oilmeals and feeds for animal & poultry and lesser realization to the farmers for their produce. Central Government may impress upon the State Governments to exempt the edible oil, oilcakes and oilmeals from VAT, being the essential commodities in line with rice, wheat, pulses, sugar etc. d)exempt APMC Cess to reduce the cost of Edible Oils & Oilseeds The Agricultural Produce Market Committee (APMC) Acts mandate all farm produce should be brought to mandis for auctioning, making these platforms virtual monopolies. The farmer pays to transport his produce over long distances, before knowing the price at which his produce would be sold, or whether any other market would have paid a better price. The journey from farm to consumer involves multiple levels of transportation, handling expenses, commissions of agents and a mandi cess, adding nearly 20% cost of food prices. This absurdity was acknowledged years ago, and a new Model APMC Act recommended by the Centre in This Model Act must be implemented in all states. Unless farmers have the freedom to sell at farm-gate or other transparent platforms directly to buyers, transaction costs will remain high and drive consumer prices higher. Exemption of APMC cess will fetch better price to farmer for his produce. Secondly, India is importing nearly 60% of its requirement of edible oil which is not subject to APMC. However, the local production of oilseeds is subject to 1.6% of APMC Cess which result into 6-10% tax on edible oils. It is ironical that Indian farmer is being taxed while foreign farmers enjoy the exemption. We, therefore, suggest that similar fruit and vegetable, oilseeds also be removed from the APMC Act. This will enable the farmers to sell their produce directly to the industry to save double transportation, loss in transit and same time farmer will realize better value for its produce. Date: 3 rd Sept Encl: Statements (2) BVM/GDS 7

6 THE SOLVENT EXTRACTORS ASSOCIATION OF INDIA Domestic Oilseeds & Edible Oil Production Annexture - I Vis-à-vis Import of Edible Oils (Qty.in Lakh Tons) Year (Nov-Oct) Oilseeds Production Domestic Availability of Veg. Oils Import of Veg. Oils Self Sufficiency Edible Non- Total Edible Non- Total (%) Edible Edible (E) Oilseeds Production data Directorate of Economics & Statistics / Oil availability data, SEA Oilseed Production ( To ) (Qty. in Mn.T) Crop 13-14(E) Major Oilseeds Groundnut Rape / Mustard Soybean Other Six Sub-Total Others Cottonseed Copra Grand Total Source: GOI/SEA Demand / Supply of Edible Oils ( ) 1.76% Growth 3% Growth 4% Growth 5% Growth Year Per Capita Per Capita Per Capita In Bn. Kgs Mn T Kgs Mn T Kgs Mn T

7 Annexure-II Import of Edible Oils (Nov-Oct) (Qty. in Mn. T) Edible Oil (Proj) RBD Palmolein Crude Palm Oil Crude PKO Soybean Oil Sunseed Oil Others Total Value in Rs.Cr (Est.) Value in US$ Mn (Est.) Source: SEA Country-wise Import of Vegetable Oils (Qty. in 000 Tons) Country Jan. Dec. Jan. Dec. Jan.-Dec. Jan.- Dec Jan.- Dec Jan.- Dec Soybean Oil U.S.A Argentina Brazil Other Countries Total Sunflower Oil Ukrain Argentina Other Countries Total Palm Oil Indonesia Malaysia Thailand Other Countries Total Source: Oil World, ISTA Mielke Edible Oil Projection for Domestic Oil & Supplies & Import Requirement in & Current Pessimistic Normal Optimistic Pessimistic Normal (Qty. in Mn. T) Optimistic Domestic Supply Demand Import Requirement Source : SEA