India is steadily making an exit from the $70-bn oilmeals markets, due to non-availability of seeds for crushing and emergence of alternative supply sources on bumper oilseed crops there. Seed crushing mills have sought immediate relaxation in government policies for India to regain its lost glory in global oilseed markets.

Until three years ago, India used to contribute over 5 per cent in global oilmeals trade with availability of abundance of oilseeds from local sources. India's oilmeals exports, however, have declined by a staggering 94 per cent at a mere 7,737 tonnes in May 2016 as compared to 121,339 tonnes in the corresponding month last year.

Falling oilmeals exports have worsened financial health of Indian seed crushing mills. Most of them, therefore, have reduced their operating capacity to less than 50 per cent to reduce their losses which they incur currently at around Rs 1,000-1,500 for per tonne of seed crushing.

"India will soon go out of global oilmeals markets if the current trend in its exports continues," said B V Mehta, Executive Director, Solvent Extractors' Association of India (SEA).

Over the last three years, India's oilmeals exports have witnessed a free fall due to rapid change in global business environment. From the level of 4.38 million tonnes in 2013-14, India's oilmeals exports slumped to 2.47 million tonnes in 2014-15 and further 1.21 million tonnes in 2015-16. Trade sources estimate less than one million tonnes of oilmeals exports from India during the current financial year i.e. 2016-17.

Indian oilmeals exporters have been facing multiple problems which affected its shipment. Because of the fixation of the minimum support price (MSP) of oilseeds, mills have been unable to buy seeds from farmers below the MSP resulting into higher cost of meal production. Since vegetable oil prices remained subdued, domestic crushing unit face negative parity. Thus, domestic mills focus on import of refined oil for blending and repacking directly in local units instead of crushing of locally originated seeds and concentrate on trading business rather than manufacturing of oil and its derivatives - oilmeals.

The scenario has changed due to bumper soybean output in the world's three major producing countries including Argentina, Brazil and United States. Consequently, countries like China have started importing soybean from all over to process locally. This has reduced China's dependence on imported oilmeals.

Meanwhile, Iran, the largest importer of Indian oilmeals until 2013-14, was facing global economic sanctions which prompted the Islamic country to turn to India for its bird/animal feed requirement. Since the economic sanctions have been lifted by the Western powers, Iran has almost stopped import of oilmeals from India now. Iran currently meets over a million tonnes of its oilmeals requirement from cheaper alternative sources including United States, Argentina and Brazil. Meals supply from these countries stands $100-150 lower than that from India.

Similarly, Japan used to import around half a million tonnes of oilmeals from India until three - four years ago, has now started importing oilmeals extracted from genetically modified (GM) seeds. Since, India produces meals from non-GM seeds, its extraction works out costlier than GM.

"Therefore, the government needs to change its policy for oilseeds and allow sowing of GM. Import of GM seeds should also be allowed for crushing locally. Otherwise, India's exports of meals would come to standstill," said Kanubhai Thakkar, Managing Director, Gokul Refoils and Solvent Ltd (producer of Gokul brand oils).

Import of oilseeds in India is currently non-remunerative due to levy 30 per cent tax. Also, import of GM oilseeds is not allowed in India.

"GM seeds fetch at least three times more output. Allowing GM plantings in oilseeds would not only bring higher output for farmers but also make cost of oil and oilmeal productions lower as farmers would be able to sell their seed output at lower than MSP in case markets turns unfavourable," said Thakkar.

Source:business-standard.