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PATH OF PRESENTATION OVERVIEW GLOBLE SCENARIO STRUCTURE OF INDUSTRY SEGMENTATION OF EDIBLE OILS PRODUCTION STATISTICS OIL EXTRACTION & EXPRESSION METHODS SWOT ANALYSIS OF EDIBLE OILSEED SECTOR DEMAND FOR EDIBLE OILS AVAILABILITY OF EDIBLE OILS CONSUMPTION PATTERN OF CONSUMERS IMPORT & EXPORT STATUTARY REGULATIONS & DUTY REGIMES EDIBLE OIL: ON THE BOIL RECOMMENDATIONS FOR MARKETING FECTORS FOR FUTURE
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Page 1: Edible Oil

PATH OF PRESENTATION

OVERVIEWGLOBLE SCENARIO

STRUCTURE OF INDUSTRYSEGMENTATION OF EDIBLE OILS

PRODUCTION STATISTICSOIL EXTRACTION & EXPRESSION METHODS

SWOT ANALYSIS OF EDIBLE OILSEED SECTORDEMAND FOR EDIBLE OILS

AVAILABILITY OF EDIBLE OILSCONSUMPTION PATTERN OF CONSUMERS

IMPORT & EXPORTSTATUTARY REGULATIONS & DUTY REGIMES

EDIBLE OIL: ON THE BOILRECOMMENDATIONS FOR MARKETING

FECTORS FOR FUTURE

Page 2: Edible Oil

INRODUCTION

US CHINA

BRAZIL

INDIA

•Rs.600 billionTotal

market size

•Rs.130 billionImport-Export trade

•90 %CAGR

Share in GDP

Share in Agri GDP

Share in AreaGround

nutSoybea

n

• 7%

•14 million farmers involved

Oilseed Cultivatio

n

•1 million farmers involved

Oilseed Processin

g

•14.4% in import•48.8% in export

Contribution in

Agriculture

•2.2% in import•1.6% in export

Contribution in nation

Page 3: Edible Oil

GLOBAL SCENARIO

• Share in world oilseed area - 15.6%• Share in world oilseed production - 9.2% • Share in world oilseed output - 7.4%• Share in world oil meal production - 6.8%• Share in world oil meal export - 3.9%• Share in world vegetable oil production - 5.9%• Share in world vegetable oil import - 11.2%• Share in world’s edible oil consumption - 9.3%

Page 4: Edible Oil

5

Type of Vegetable Oil Industry

No. Of Units Annual capacity (Lakh MT)

Average Capacity Utilization

Oilseed crushing units

1,50,000 425 10-30 %

Solvent extraction unit

711 313 31 %

Refineries attached with Vanaspati Units

127 51 45 %

Refineries attached with solvent Units

297 36 27 %

Independent Refineries

585 35 36 %

Total Refineries 1009 122 35 %

Vanaspati units 264 53 18 %

Sources : Directorate of Vanaspati, Vegetable Oil & Fats

STRUCTUTRE OF INDUSTRY

Page 5: Edible Oil

Vanaspati Vegetable Oils

Capacity 27,20,000 3,03,68,000

Production 9,90,534 62,50,000

Utilisation 36% 21%

Installed Capacity and Prodution (MT /year) (2005-06)

Page 6: Edible Oil

CONT….

Item Potential*(in Lakh MT)

Production(in Lakh MT)

Untapped potential

(in Lakh MT)

Rice bran 9 5 4

Cotton seed 8.8 5 3.8

Oils from tree origin 6 1 5

Oilcakes 7 2.5 4.5

Total 30.8 13.5 17.3

Potential from Non Traditional sources

Page 7: Edible Oil

By Pack

Loose

Packaged

SEGMENTATION OF OILS

By Type

Conventional

Non conventional

Blended Edible Oil

Page 8: Edible Oil

PRODUCTION STATISTICS

(State – wise)

*Total Production : 24289.4 (in ‘000 tonne) * Total Area : 26512.7 (in ‘000 hactare)

Source : Ministry of Agriculture, GOI (2006 - 07)

Mad-hya

Pradesh

6086.7(23%)

Ra-jasthan

4508(17%)

Maharashtra3863(15%)

Andhra Prades

h2235(9%)

Gujarat2228(9%)

Others6991.3(27%)Madhya

pradesh; 5814.2; 24%

Gujarat; 2569; 11%

Rajasthan; 5166.8; 21%Maha-

rashtra3721.0

15%

Andhra Pradesh; 1362; 6%

Others; 5656.4; 23%

Page 9: Edible Oil

CONTI….....

(Crop – wise) (in ‘000 tonns)

• Source: Ministry of Agriculture, GOI ( 2006 - 07)

Groundnut; 5615.1; 21%

Castorseed; 628.4; 2%Nigerseed;

469; 2%

Sesamum; 1703.2; 6%

Rapeseed & Mustard; 6790; 26%

Linseed; 436.5; 2%

Safflower; 377; 1%

Sunflower; 2164.4; 8%

Soybean8328.7

31%

Groundnut

Castorseed

Nigerseed

Sesamum

Rapeseed & Mus-tard

Linseed

Safflower

Sunflower

Soyabean

Page 10: Edible Oil

CONTI…..

Average productivity of major oilseed crops in country (Tonn/ ha)

• Source : Oil World, August 2001

Soyabeans Cotton seeds Groundnut Sunflower Rapeseed/ Mustard

0

0.5

1

1.5

2

2.5

3

3.5

0.860000000000001

0.59 0.58

0.640000000000006

0.750000000000005

2.31

1.06 1.011.17

1.51

EU -153.34

Australia2.11

China2.08 EU - 15

1.73

EU – 152.98

IndiaWorld AverageHighest

Page 11: Edible Oil

CONTI..

1996-97 1997-98 1998-99 1999-00 2000-2001

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-080

10

20

30

40

50

60

7061.3

5760.4

50.346.1

50.22

38.78

58.9 59.862.9

6065.7

Edible oil Production (in Lakh tonn)

Page 12: Edible Oil

CONTI…..

• Total Edible oil Production : 65.7 Lakh Tonn (2007-08) (Source : Ministry of Agriculture)

12.8; 20%

16.8; 26%

1.6; 2%0.5; 1%5.1; 8%

14.4; 22%

0.1; 0%4.2; 6%

10.1; 15%

2007-08 Groundnut

Mustard

Sesamum

Safflower

Sunflower

Soybean

Nigerseed

Coconut

Cottonseed

Page 13: Edible Oil

Oil Extraction and Expression MethodsSTORAGE

CLEANING

DEHULLING

GRINDING

HEATING

PRESSING

REFINING

PURIFIED EDIBLE OIL

OIL CAKES

IMPURITIES

Page 14: Edible Oil

SWOT ANALYSIS FOR INDIAN EDIBLE OILSEED SECTOR

STRENGTHS WEAKNESSES Diverse agro – climatic situations Strong research network for development of oilseed technology Extension network for technology dissemination Production and distribution of quality oilseeds Human resource development Initiative from oil industry

Production situation

System constraints in public sector Transfer of oilseed technology

Processing situation

OPPORTUNITIES THREATS Production situation

Processing situation

Supplementary oil sources

Production situation

Processing situation

Page 15: Edible Oil

STRENGTH

• Diverse agro – climatic situations• Semi arid ecosystem > 50% of area

> 55% of prodn.• Sub humid & arid ecosystem ~ 20%

• Strong research network for

development of oilseed technology• In 1967, AICRP on oilseed ( 5 crops)• In 1972, 3 more crops• In 1977, Project Directorate• In 1979 & 1993, NRCs for groundnut

& mustard respectively.

Strong frontline extension network for technology dissemination

• Technology mission on oilseeds (TMO)• Integrates scheme on Oilseeds Pulses,

oilpalm and Maize (ISOPOM)• Prodn & Distribution of quality seeds Impact of technology

• Human resource development• Initiatives from oil industry• Contract farming – Punjab (100 acres) • SEA of Punjab with Punjab Agro –

Industries Corporation – projects.• SOPA, COOIT - Platform for

researchers, technocrats,

industry representatives and consumers.

Page 16: Edible Oil

WEAKNESS

• Production situation• 76% area under rainfed condition• Present level of seed replacement (6

– 8%)• Prone to 64 major diseases• Absence of market mechanism to

hedge the yield risk• System constraints in public sector

Transfer of oilseed technology- Multiplicities of technology transfer- Narrow focus of agricultural

extension system- Lack of an effective feedback system

- Little attention to disseminate oilseed technology

- Farmers Training Centre- Poor extension linkage- Ineffective communication- 90% of budget is allocated to salaries

and personal emoluments

• Processing situation• Outdated technology• Lower rate of utilization of installed

capacity• Low oil recoveries• High unit cost

Page 17: Edible Oil

OPPRTUNITIES

• Production situation• Encouraging germplasm front

with high level of resistance 19 (29.6%) and partial resistance 33 (51.5%)

• Extending oilseed cultivation in underutilized farming conditions

• Contingency farming

• Processing situation• Value addition• Increase oil recovery• Scope for by - products

• Supplementary oil sources

• From non traditional oil sources.

Page 18: Edible Oil

THREATS

• Production situation• Insufficient domestic supply• Continuous cultivation

without any crop rotation• Vagaries of monsoon and

pestilence• Liberalization of export

import policies

• Processing situation• Underutilization of

resources• Lack of assured market for

oilseeds• The standards set by import

countries are very high (Trade barriers)

Page 19: Edible Oil

DEMAND FOR EDIBLE OILS

1990-91

1992-93

1994-95

1996-97

1998-99

2000-01

2002-03

2004-05

2006-07

2008-09

2014-150

5

10

15

20

25

Vegetable oil (mn MT)

1990-91

1992-93

1994-95

1996-97

1998-99

2000-01

2002-03

2004-05

2006-07

2008-09

2014-150

500

1000

1500

2000

2500

Vanaspathi (in '000 MT)

Page 20: Edible Oil

DEMAND PROJECTION FOR FUTURE

According to NCAER,• Edible oil demand - 20.16 m ton/annum in the next 7 years, given

6% rise in per capita income. (Presently – 12.5 mton /annum)• Increase in per capita consumption 4% population = 1.8% overall growth in demand = 6%• This means present level of production needs to be increase by three times to meet the projected demand. (Projection made by Rebo bank for DAC)

2010 2015 20200

5

10

15

20

25

14.8

18.3

21.8

Edible oil demand (in mton)

Page 21: Edible Oil

AVAILABLITY OF EDIBLE OIL

Source : Solvent Extractors Association of India & Ministry of Agriculture

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008(E)

0

50

100

150

200

250

300

184.4

206.63

148.39

251.86243.54

279.789999999999

242.89

282.08

54.99 61.4646.64

71.4 72.4783.16

73.784.27

96.76104.68

90.29

124.3 117.89126.04

115.87 121.91

Production of Oilseeds in mT

Net availability of edible oils from all domestic sources in mT

Consumption of Edible Oils (from domestic and import sources)in mT

Page 22: Edible Oil

CONSUMPTION PATTERN OF CONSUMERS

US CHINA BRAZIL INDIA0

10

20

30

40

50

60

48

21.3

12.5 10.6

Per capita consumption (Kg/Annum)

Page 23: Edible Oil

CONT…..

32%

20%17%

7%

24%

Consumption Pattern

Palm oil Soya oil Rapeseed oil cottonseed oil others

Page 24: Edible Oil

28%

26%24%

22%

Edible oil

North East West South

45%

17%

26%

12%

Vanaspati

Page 25: Edible Oil

IMPORTS AND EXPORTS

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-080

1000000

2000000

3000000

4000000

5000000

6000000

4393421 44949534833808

4425182

5114449

4396587

5041607

44168334714760

5608410

Import of Edible oils (in MT)

Page 26: Edible Oil

Edible OilsYear 2006 - 07

Import from Countries During (2006-2007)Qty (lakh

Tonne) Value (cr. Rs.)

Soybean Oil 12.16 3103.68Argentina, Brazil, Indonesia, UAE,

Bangladesh, Nepal, USA China, Germany, Netherland

Palm Oil 27.66 5629.14Cambodia, China, Indonesia, Malaysia, Morocco, Sri Lanka, Bhutan, Singapore,

Bangladesh, UAE

Sunflower Oil 1.41 422.98Argentina, Russia, Ukraine, Germany, Japan,

Singapore UK, USA

Coconut Oil 0.15 51.86 Malaysia, Indonesia, Philippines

Other Oils 1.36 372.87

USA, Indonesia, Malaysia, Sri Lanka, Pakistan, Canada, Italy, Bangladesh, Neal, Belgium, Brazil, Georgia, Germany, Uk China, Czech,

Republic, France Japan, Switzerland, Singapore, UAE, Thailand, Republic of Korea,

Sweden, Estonia, Oman, Spain, Greece, Portugal, Netherlands, Australia

India 42.74 9580.53

Page 27: Edible Oil

EXPORTS

2002-03 2003-04 2004-05 2005-06 2006-070

10

20

30

40

50

60

70

80

90

22.77

40.18

33.6

50.59

73.04

26.53

54.49

46.1252.13

79.97

Exports of Oilseeds, Minor Oils and Fats and Oil Meals from India

Qty .(in Lakh Tonne)Value (in '00 Crore)

Page 28: Edible Oil

CONT..

1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-080

1000000

2000000

3000000

4000000

5000000

6000000

4139754

3311139

24284702336638

3020777

1896521

3323025

2690201

4423025

51707005442132

Oilmeal Export(MT)

Page 29: Edible Oil

30

STATUTARY REGULATIONS

VEGETABLE OIL PRODUCTS ORDER, 1998

Removal of multiple authorities and agenciesRemoval of BIS certificate

EDIBLE OILS PACKAGING ORDER1998

to sold only in packed be Packers will have to register themselves, pack will have to show all relevant particulars.

SOLVENT EXTRACTED OIL, DE-OILED MEAL AND EDIBLE FLOUR (CONTROL) ORDER, 1967

Page 30: Edible Oil

DUTY REGIMES

Custom DutyEdible oil Custom Duty

crude and refined forms of Palm Oil, Palmolein, Palm Kernel Oil, Soybean Oil, Rapeseed/Mustard Oil, Sunflower Oil, Safflower Oil, Groundnut Oil, Coconut Oil

Reduced to 0%

all grades of olive oil Reduced to 7.5% (Previously – On virgin olive oil – 45% On Refines olive oil-40%

other Vegetable Oils. Reduced to 7.5%

Page 31: Edible Oil

CONTI…

Import duty

Edible oils WTO Bindings

Current rates ofduty on CrudeEdible Oils

Current rates ofduty on RefinedEdible Oils

Virgin Olive oil 45% Nil 7.5%Other Olive oil 40% Nil 7.5%Soybean Oil 45% Nil 7.5%Palmolein, Palm oil, Groundnut oil, Sunflower oil, safflower oil, coconut oil

300% Nil 7.5%

Rapeseed / Mustard oil 75% Nil 7.5%

Page 33: Edible Oil

EDIBLE OIL : ON THE BOIL

Page 34: Edible Oil

FECTORS FOR FUTUREDemand Drivers # Macroeconomic factors -Population growth, per capita income, purchasing

power, oilseeds crop

# Other factors :Prices - Domestic/ International, Availability - oil, oilseeds

# Influence of branded products :`health’ message

# Growing preference for convenience foods

Key Success Factors # Raw material sourcing : improving yields, better quality oilseeds, regular supplies

# Branding for success :(Vanaspathi - Dalda, Oils - Sundrop)

# Better distribution network to improve reach

# Efficiency in operation: price competent and withstand overseas competition# Future trading : increase volatility

Future Next 5 Years, Edible oil – 6 -8% growth in demand.

Business Concern low import duties : lead to dumping

low realisation and idle capacities

Production slippages: forced to import

Excessive (cheap) imports: led to unremunerative prices, locally

farmers have shifted to other cash crops

Increasing health awareness : cholesterol level in oil.

Page 35: Edible Oil

MARKET SHARE OF MAJOR PLAYERS

Source: Ruchi soya

Page 36: Edible Oil

CONTI…

PLAYER BRANDS

Ruchi Soya Mahakosh, Nutrela, Nutri – Gold, Ruchi No. 1

Adani Wilmar Fortune, Raag

K. S. Oils Kalash, Double Sher, K. S. Gold

NDDB Dhara

Agro Tech Foods

Sundrop, Crystal, Rath, Sudham

HUL Dalda

Prakash Foods Gemini, Samrat, Anand, Dosti

Marico Saffola, Sweekar

Page 37: Edible Oil

RECOMMENDATIONS FOR MARKETING

• Better enforcement of regulated markets

• Strengthening the appropriate market institutions

• Introduction of forward marketing and contract farming

• Promotion of market integration

• Price incentives for edible oil shortage

• Better management of edible oil price fluctuation risk during shortage

• Improving quality of information and efficiency of its dissemination

• Rewarding better quality produce

• Strengthening regulations regarding quality

• Enhancing earning from oilcakes and oilmeals.

Page 38: Edible Oil

REFERENCES

• SAARCs OILS & FATS (March 08, July 08, August 08)• www.cooit.org• www.sea.nic.in• www.fcamin.nic.in• www.indiaagristat.com• www.indialawoffices.com

Page 40: Edible Oil

• THANK YOU

Page 41: Edible Oil
Page 42: Edible Oil
Page 47: Edible Oil

EDIBLE OILS9.6mMT

OILS8.61mMT

SUNFLOWER43%

MUSTARD23%

GROUND NUT14%

KARDI 9%

SOYA9%

OTHER2%

VANASPATHI0.99mMT

Page 49: Edible Oil

PACKAGED EDIBLE OILS

• With growing quality consciousness and plummeting price, the packaged edible oil sector will capture 50% of the market share within three years.

• The packaged edible oil consumption is only about 20% of the total 12.5 million tonne domestic consumption.

Page 50: Edible Oil

STATUTORY REGULATIONS

• Vegetable Oil Products (Regulation) Order, 1998

• dated 16-12-1998 replacing the earlier two Control Orders, namely, the Vegetable Oil Products (Control) Order, 1947 and the Vegetable Oil Products (Standards of Quality) Order, 1975

• Edible Oils Packaging (Regulation) Order, 1998• to ensure availability of safe and quality edible oils in packed form to the

consumers

• Solvent Extracted Oil, De-oiled Meal and Edible Flour (Control) order, 1967.