Industry Overview

Background

In India, Mustard / rapeseed is produced in states of Rajasthan, Uttar Pradesh, Haryana, Punjab, Gujarat, Madhya Pradesh, Jammu and Kashmir, West Bengal, Punjab, Assam, Bihar, Himachal Pradesh & Orissa Rajasthan and Uttar Pradesh account for majority share, contributing to over 50% of the total Indian produce that stands at an average of 5 million tons. These areas also have maximum area under cultivation for this crop. Indias oilseeds processing sector is made up of the three groups viz Ghanis, solvent extractors and oil refiners engaged separately.

Oilseeds Sector in India: Size

India is one of the worlds largest edible oil economies with 15,000 oil mills, 689 solvent extraction units, 251 Vanaspati plants and over 1,000 refineries employing more than one million people. The total market size is at US $ 23 bn. and import export trade is worth US $ 12 bn. India being deficient in oils has to import 50% of its consumption requirements. With an annual consumption of about 16 mn Tonnes, the per capita consumption is at 13.9 kgs, which is very low compared to world average of 20 kgs. China is currently at 17 kg. India is also a leading producer of oilseeds, contributing 8-10% of world oilseed production. India is estimated to account for around 6% of the worlds production of edible oils. Though it has the largest cultivated area under oilseeds in the world), crop yields tantamount to only 50-60% of the worlds average. India is the fifth largest producer of oilseeds in the world, behind US, China, Brazil, and Argentina. Three oilseeds - Groundnut, Soybean and Rapeseed/ Mustard - together account for over 80 per cent of aggregate cultivated oilseeds output. Mustard seed alone contributes to 1/5 of the total turnover of US $ 23 bn. Cottonseed, Copra and other oil-bearing material too contributes to domestic vegetable oil pool. With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing steadily. However, oilseeds output and in turn, vegetable oil production have been trailing consumption growth, necessitating imports to meet supply shortfall. The snapshot is as under

Oilseed Sector 2011-12

Structural Characteristics Broadly, edible oil/fat products can be categorized into four categories, vegetable refined oil, hydrogenated oil (vanaspati), bakery fats/margarine, and de-oiled cakes. The Indian edible oil industry can be classified into the following segments. Ghanis, small scale expellers, solvent extractors, oil refiners and vanaspati manufacturers. Oil mills crush oil seeds and extract oil, 70% of which is sold in the open market. The remaining 30% is refined and sold as branded oil. After the extraction of oil, residual seeds are processed further by solvent extractors, to make solventextracted oil. Most of the solvent extracted oil is used to make vanaspati'. The Indian edible oil industry is highly fragmented with a large number of small scale producers. The Ghanis belong to the SSI segment and usually serve the rural markets. Small scale expellers, much like the Ghanis, use metal screws to press or expel oil from seeds. However, they are larger than the Ghanis, oil expelling capacity being in the range of 5-10 tonnes per day, compared to around 50-60 kilos a day for Ghanis. Solvent extractors belong to the organized segment and are also the second largest after the SSI segment, in the domestic edible oil industry. They use modern technology to process low oil & high meal seeds (eg.soyabean, cottonseed) into edible oil and de-oiled cake. Oil refining also belongs to the organized sector and has recorded rapid growth in recent times. Refiners generally refine both expeller oils and solvent extracted oils. Vanaspati is made by hydrogenation of refined oil to vegetable shortening or spread and is similar to the milk product ghee and absorbs around 10% of the total edible oil supply in India. Due to increased consumer preference for nontraditional oils such as soyabean and sunflower oil, the organized sector has emerged as one of the fastest growing sectors in recent times clocking double digit growth. Branded products, though small portion of the total edible oils market, have been one of the main drivers of rapid growth.

Indian market for Rapeseed/Mustard Oil

India occupies 3rd position in the list of rapeseed / mustard producing countries. India also ranks as the third largest producer of mustard/ rape oil in the world. The entire Mustard oil production is consumed domestically. The demand comes mainly from eastern and northern belts. Two basic types of mustard oil are traded in the market - viz. Kacchi Ghani and Pakki Ghani (Expeller Grade Mustard Oil). Rapeseed/Mustard is traded in all major Indian commodity exchanges viz. National Commodity & Derivatives Exchange Ltd, Multi Commodity Exchange

of India Ltd, Multi Commodity Exchange of India ltd and National Board of Trade, Indore Mustard Oil: Key Market Influencers

Prices and demand-supply pattern of other edible oils in the country and abroad Monsoon in the country Pests, diseases and other environmental factors Speculation and Hoarding Consumption of by-products Production fluctuations

Mustard Oil trade

Almost 90% of the Mustard oil processing sector is unorganized in India with numerous small factories located throughout the mustard growing belt. With the removal of Excise and introduction of VAT etc, the organized sector now faces the advantage of taking over unorganized, loss-making units.

World & India Production of Oil and Fats 2011-2012

Indias Oilseeds & Veg Oil Production

Consumption of Various oils in India in 2011-2012

Consumption of Edible oil in India

Import of Vegetable Oil 2006-07 to 2010-11 (Nov-Oct)

Indias Vegetable Oil Production & Imports

Indias Growing Dependence on Imports

Major Constraints in Domestic Production of Oil seeds.

Edible Oil Demand and Import Projection Short & Long Term

Indias Population & consumption of Edible Oils 2012-2020.

Conclusion

Rajasthan - A Snapshot

As can be seen from above table Rajasthan alone contributes to nearly 1/5 of the total oil seed production in India.

Various Crops Grown in different parts of Rajasthan

Ganganagar district of Rajasthan continued to hold the number one position in the country in terms of both area and production of rapeseed-mustard, capturing 5.23 percent of area and 5.42 percent of the countrys total production of rapeseed-mustard. The other districts in Rajasthan important for the rapeseed-mustard production include: Alwar, Bharatpur, Bhilwara, Chittorgarh, Dholpur, Jaipur, Jalore, Kota, Nagaur, Pali, Sawai Madhopur and Tonk.