Presentation on

Indias Short and Long

g term Demand Supply
pp y
& Import of Vegetable Oils with Special Reference to
Indonesian Export Policy and its Impact on
Import by India
y
By
Dr. B. V. Mehta, Executive Director
The Solvent Extractors Association of India
At
10th Indonesian Palm Oil Conference 2014
26th 28th November, 2014

INDIA

India Largest Importer of Palm Oil

from Indonesia

BOLLYWOOD

Indian Economy

Indian Macro-economic Overview

India a fast growing significant economy
in spite of global slowdown
Strong Macro-economic fundamentals
GDP Value: Over US$ 2.31 Trillion (Tn)
Purchasing Power Parity (PPP): US$ 5.12 Tn
Forex Reserve: US$ 314 Bn
FDI Flow US$ 28 Bn (2013)
Savings Rate 30.2% of GDP (2012-13),
includes Household Savings Rate of 22.1%

India's Overall GDP Growth

9.6
6 9.3
95 9
9.5

8.6

GDP Gro
owth Rate ((%)

8.5

9.3

7.5
67
6.7

6.1

5.8
4.4

3.8

6.2
4.5 4.9

Average GDP growth in last five years (FY08-09 to FY12-13) was 7.1%
For FY13
FY13-14,
14, the GDP growth is forecasted at 4.9%
GDP is expected to grow at 6 to 7.5% in next 3 years
Source : CMIE

Indian Agricultural Scenario

I di
Indian
A
Agriculture
i l
S
Scenario
i

India is well connected with cellular phone having 950 Million users and with the talk time rate
cheapest in the world.

Agriiculture GDP Growth Rate (%))

Agriculture Sector GDP Growth

Agriculture Sector growth depends heavily on monsoon performance

For 2013-14, growth is reported at 4.7% compared to 1.4% in previous year
Source : CMIE

Indian Oilseed Sector

Demand - Supply
pp y
and
Import of Vegetable Oils

10

Oilseed Sector 2013-14

Area Under Oilseed Cultivation

Average yield

26-27 Mn. Ha.

1000 kg

Output of 9 cultivated Oilseeds

Output of Cottonseed & Copra

26.7
11 9
11.9
38.6

Total

Production of Oilcake/meal
Production of Vegetable Oils
Demand of Veg. Oils (Edible)
Import of Veg. Oil 2012-13 (Nov-Oct) (Edible)

Per Capita consumption (2013)

Per capita consumption is rising by 3 to 4% per annum

MnT = Million Tonnes

MnT
MnT
MnT

25-26
25
26 MnT
8.20 MnT
18.3 MnT
10.4 MnT
14 0
14.0

kg

11

Indian Oilseeds Production

(2008-09
(2008
09 to 2013-14)
2013 14)
Crop
Major
j Oilseeds
Groundnut
Rape/Mustard
S b
Soybean
Sesamum
Sunflower
Safflower
Niger
Linseed
Castor
Sub Total
Sub-Total
Others
Cottonseed
C
Copra
Grand Total
Source : COOIT / SEA

Qty : Mn T

08-09

09-10

10-11

11-12

12-13

13-14

5.92
6.70
8 90
8.90
0.58
1.15
. 5
0.16
0.04
0.13
1.02
24.65

5.12
6.03
8 50
8.50
0.76
0.99
0.15
0.08
0.16
0.97
22.76

5.84
7.10
9 50
9.50
0.66
0.66
0.14
0.10
0.16
1.19
25.44

6.02
6.03
10 65
10.65
0.76
0.62
0.6
0.10
0.09
0.13
1.62
26.02

4.33
6.85
10 70
10.70
0.60
0.62
0.6
0.09
0.08
0.12
1.35
24.73

6.48
7.38
10 23
10.23
0.65
0.58
0.10
0.07
0.12
1.12
26.73

8.93
0 65
0.65
34.23

9.15
0 66
0.66
32.57

10.07
0 65
0.65
36.16

10.94
0 65
0.65
37.61

10.23
0 60
0.60
35.56

11.16
0 70
0.70
38.59

12

Indian Oilseeds Productivity Very Low

In Comparison With World Average

Groundnut -

64% of World Average

Soybean -

43% of World Average

Mustardseed -

53% of World Average

Sunflower -

39% of World Average

Sesameseed -

72% of World Average

13

World & India Production of

Oils & Fats 2013
2013-14
14
Qty : Mn T

Oil & Fats

Other Oils
& Fats

Palm Oil

GN
RBO
RBO
Cotton Seed
Sun Oil

Soya Oil

Rape Oil

Palm Oil

58.46

0.13

Soya Oil

43.78

1.39

Rape Oil

25.69

2.53

Sun Oil

15.64

0.18

Cottonseed Oil

4.86

1.08

G
Groundnut
d t Oil

4 11
4.11

0 58
0.58

Rice Bran Oil

1.20

0.93

Other Oils & Fats

WORLD

World India

TOTAL

42.69
42
69 2
2.93
93
196.43 9.75

Major
j
Vegetable
g
oils p
produced in India are Rapeseed
p
Oil,, Soybean
y
oil,,
Cottonseed Oil, Rice Bran Oil & Groundnut Oil
Source: Oilworld 2014 & SEA Data Bank for India

14

Consumption

15

Per Capita (kg) Disappearance of Oils and Fats

in Selected Countries and World
Country

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09

EU-28

60.5

59.3

58.7

59.6

61.1

59.4

U.S.A.

57.7

57.4

56.0

52.6

50.2

51.0

Argentina

74.0

69.1

90.8

78.5

65.6

46.4

China

25.9

25.4

24.7

24.1

23.5

22.6

India

16 0
16.0

15 6
15.6

15 1
15.1

14 7
14.7

14 4
14.4

14 1
14.1

Indonesia

42.6

37.3

33.1

29.4

25.6

23.4

Thailand

31.5

30.5

29.4

27.3

24.6

23.0

Taiwan

34.1

33.1

34.5

34.6

33.7

32.3

Pakistan

21.8

21.7

21.7

21.6

21.8

21.7

Bangladesh

11.9

11.6

11.2

10.3

9.7

9.2

World

27.0

26.4

25.9

25.2

24.6

23.8

Number shown includes consumption of oils and fats for Bioenergy and
Non Edible purpose
Source : Oil World 2014

16

Consumption Pattern
Consumption trends in India are marked, not just by rising
overall consumption,
p
, but by
y changing
g g the p
patterns of
consumption as well
In the early 1970s, almost all vegetable oils consumed in India
comprised Groundnut, Rapeseed & Cottonseed Oil. Palm,
Soybean
y
& Sunflower Oil accounted for jjust 4%
However over the years, Palm Oil and Soybean Oil have
become the leading Edible Oil consumed because the
domestic production of Groundnut, Rapeseed & Cottonseed
Oil have not been able to keep pace with the increasing
demand

17

Change in Edible Oil Consumption in India

2001-02
2001
02 to 2012-13
2012 13
Qty : 000 T

Particulars

2001-02
2001
02

2012-13
2012
13

Qty

Qty

P l Oil
Palm

2944

29 08
29.08

8572

49 49
49.49

Soy Oil

2258

22.30

2729

15.76

Mustard Oil

1721

17.00

2043

11.80

Sunflower Oil

309

3.05

1171

6.76

Cotton Oil

443

4.38

1130

6.52

G
Groundnut
d t Oil

1216

12 01
12.01

148

0 85
0.85

Source : GGN Research

18

Consumption Projection for 2014/15

& Comparison with 2013/14
INDIA

2014/15

2013/14

2012/13

Population (Million)

1,283

1,268

1,256

Per Capita Consumption (Kg.)

15.00

14.40

13.80

Consumption Growth Per Capita

5.6%

4.50%

5.0%

Total Edible Oils Required Lac MT

193.00

182.80

174.0

19

I di Governments
Indian
G
t
Policy Changes
&
Its Impact on Vegetable Oils

20

Edible Oils Industry Policy Background

Up to 1992, India was nearly self sufficient in terms of
its Edible Oil requirement
In 1994,
1994 Edible Oil imports brought under OGL (Freely
Allowed)
From 1994-1999, the rate of Customs Duty was the
same for Crude Oils and Refined Oils
In 1999,
999, the Indian Government introduced Duty
y
Difference between Crude Oils and Refined Oils to
encourage value addition of refining within the country
21

Edible Oils Industry Policy Background

After this, huge port based refining capacity were set
up in the country,
country mainly at Kakinada,
Kakinada Kandla,
Kandla Haldia,
Haldia
JNPT & Krishnapatinam
Current capacity of refining is 20 Million Tonnes and
Investment over US$ 2.5 Bn. However,, the utiliised
capacity is less than 50%
Import Duty structure in India has undergone many
changes since inception to take care of the consumers
i
interest
on one side
id and
d farmers
f
on the
h other
h

22

India - Import Duty Structure on Edible Oils

November,, 2014
WTO
Bound
Rate

Duty on
Crude
Edible
Oils

Duty on
Refined
Edible
Oils

Current
Tariff Value
US$/Tn

Soybean Oil

45%

2.5%

10%

847

Palmolein

300%

2.5%

10%

767

Palm Oil (Crude)

300%

2.5%

10%

734

Sunflower Oil

300%

2.5%

10%

p
Oil
Rape/Mustard

75%

2.5%

10%

Item Description

(14.11.2014)

The duty on crude oil is 2.5% while refined oil is 10%

Import Duty is payable on Tariff Value as announced by the
Government of India on fortnightly basis

23

Duty Structure by Indonesia & Malaysia

Indonesia introduced, an aggressive pro their refining
industry Export Duty structure in October 2011,
2011 higher
duty on CPO & Lower Duty on RBD Palmolein
Malaysia too, to protect their refining industry followed
similar structure like Indonesia
Inverted Duty structure by Indonesia and Malaysia
changed the Import Pattern in India

24

Average Landed Cost of RBD Olein & CPO

US $ / T CIF India

Year (Nov Oct)

RBD Olein

CPO

Difference

2007 08
2007-08

1094

1003

91

2008-09

701

629

72

2009-10

856

811

45

2010-11

1188

1129

58

2011-12

1050

1010

40

2012-13
2012
13

832

802

30

839

845

(-) 6

745

725

20

2013-14 (Up to Sept)

31stt Oct 2014

25

Impact of Nil Duty by Indonesia & Malaysia

Nil Export duty by Malaysia from 1st Sept

Nil Export duty by Indonesia from 1st Oct
Reaction by Indian Farmer and Veg Oil
Industry

26

Import of Palm Oil and Soft Oil by India

(Qty in 000 Tonnes)
Year
(Nov.-Oct)

Soft Oils
Palm Oil

Total

2009-10

6499

28

26%

8823

2010-11

803

14

22%

8371

1079

1135

98

23%

9981

80%

1091

973

28

20%

10384

69%

1509

1951

200

31%

11618

Soybean
Oil

Sunflower
Oil

Rapeseed
Oil

74%

1666

630

6547

78%

1007

2011-12

7669

77%

2012-13

8292
7956

2013-14

Source : SEA Data Bank

27

India has
promising
demand
growth
th
28

India has Promising Demand Growth

Demand Drivers in India are

Average GDP growth rate for period FY08-09

FY08 09 to FY12-13
FY12 13 was 7.1%
7 1%
Big emerging Indian middle class
Double digit growth of out of home consumption of edible oils
Per capita consumption of Edible oils in India at 14.40 kgg ((2013-14))
is still a lot below threshold level of consumption

Even with a moderate population growth,

growth the absolute increase in
number of people is quite higher

Indian

Edible Oils
O
demand is both switchable and elastic:

Switchable to other oils to quite an extent & is elastic to an extent

29

Edible Oil Production, Demand & Import

20
18

Qty : Mn T

16
14
12
10
8
6
4
2
0

Consumption of Veg. Oils

Domestic Avaibility of Veg. Oils

Import of Veg Oils

For the year 2013-14,

2013-14 the consumption estimated at 18.0
18 0 MnT.
MnT
The Demand-Supply Gap of 11.0 MnT bridged through Import

30

Demand / Consumption of Edible Oils in India

Projections up to 2025
30

Consumption in MnT

25
20
15
10
5
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
For Demand Scenario upto 2025
High growth in income levels,
levels increasing trend in spending & better living standards
High growth in consumption of edible oils and the consumption may reach 26.78 MnT by
2025 from present level of 18 MnT, ie, a 3% growth every year from 2012-13 onwards

31

Edible Oil Demand- Long Term Projection

Population
@ 1.76%
Growth
Year
In Bn.

Consumption
@ 3% Growth

Consumption
@ 4% Growth

Per
C it
Capita
(In Kg)

M T
MnT

Per
C it
Capita
(In Kg)

Consumption
@ 5% Growth

M T
MnT

Per
C it
Capita
(In Kg)

M T
MnT

2013

1.22

14.3

17.44

14.4

17.56

14.5

17.69

2015

1.25

15.2

19.00

15.6

19.5

15.9

19.87

2017

1.28

16.0

20.48

16.8

21.50

17.4

22.27

2019

1 31
1.31

17 0
17.0

22 27
22.27

18 0
18.0

23 58
23.58

19 1
19.1

25 02
25.02

2021

1.34

18.0

23.79

19.5

25.70

21.0

27.72

2023

1.38

19.0

25.24

21.1

27.80

23.2

30.56

2025

1.42

20.2

26.78

22.8

30.0

25.6

33.69

(Excluding Non-edible Oils)

Consumption will be higher,

higher if growth is taken at 4% or 5%

32

Import of Edible Oil by India

33

Import of Vegetable Oils

Edible,, Vanaspati
p & Non-edible
2006-07 To 2013-14 (Nov Oct)
(Qty in MnT)

Vegetable
Oils

13-14

12-13

11-12

10-11

09-10

08-09

07-08

Edible Oils

11.60

10.40

9.98

8.37

8.82

8.18

5.61

Non-edible

0.20

0.29

0.21

0.29

0.42

0.46

0.65

Vanaspati

--

--

--

--

--

0.02

0.05

11.80

10.69

10.19

8.66

9.24

8.66

6.31

Total

Import of Vegetable Oils is rising every year to bridge the DemandSupply gap
Import of edible oil has doubled in last seven years
Source : SEA

34

Estimated Edible Oil-wise Import during 2013-14

(Qty. in MnT)

+/- in
2013-14
MnT

2012-13

2013-14

MnT

MnT

CPO
OLN

5.89
2.22

6.25
1.57

0.36
(-) 0.65

CPKO

0.18

0.13

(-) 0.05

TTL PALM

8.29

7.95

(-) 0.34

SBO

1.09

1.95

0.84

SUN

0.97

1.50

0.53

RAPE

0 01
0.01

0 20
0.20

0 19
0.19

TTL SOFT

2.09

3.65

1.56

TOTAL

10.38

11.60

1.22

OILS

35

Edible Oil Import Requirement for 2014/15

& Comparison with 2013/14
Figures in MnT
2013/14

2014/15

Opening Stock

1.41

1.8

Domestic Production

7.05

7.0

Total

8.46

8.8

Consumption

18 28
18.28

19 3
19.3

Deficit

9.82

10.5

Closing Stock

1.80

2.0

Import Required Edible Oils

11 62
11.62

12 5
12.5

Source : GGN

36

India Country Wise Import Of Edible Oils

(Jan Dec)
Country
Soybean Oil
USA
U.S.A.
Argentina
Brazil
Other Countries
Total
Sunflower Oil
Ukrain
Argentina
Other Countries
Total
Palm Oil
Indonesia
Malaysia
Thailand
Other Countries
Total
Other Oils
Grand Total
Source: OIL WORLD

2014
Jan-June

2013

2012

(Figures in 000T)

2011

2010

659
218
69
947

95
803
233
42
1174

18
817
313
32
1180

746
144
51
941

146
693
202
66
1107

795
1
796

1058
23
3
1084

1055
37
24
1116

812
43
16
871

494
93
56
643

2077

5879

5308

5011

5255

1124
72
3272
158
5173

2384
209
1
8472
401
11131

2494
4
11
7817
282
10395

1677
49
8
6745
228
8785

1542
28
3
6828
351
8929

37

Import of Edible Oil Projection for 2014-15

IMPORT BREAK-UP
BREAK UP (M
(MnT)
T)
Oil

2013/14 ((P))

2014/15 ((F))

+/-

Palm (Edible)

7.95

8.65

0.70

Soybean Oil

1.95

2.20

0.25

Sun Oil

1.50

1.40

((-)) 0.01

Rapeseed Oil

0.20

0.25

0.05

TOTAL

11.62

12.50

0.88

38

Long term Projection for Domestic Oil Supplies

& Import Requirement in 2015
2015-16
16 & 2020-21
2020 21
(Figures in MnT)

Edible Oil

2013-14

2015-16

2020-21

Domestic Supply
pp y

7.1

7.3

9.4

Demand

18.3

20.3

25.7

Import Required

11.6

13.0

16.3

Growth in domestic production is not catching up with the growth in

consumption and hence imports by India may increase to 13.0 MnT in
2015-16 and to 16.3 MnT in 2020-21 in normal scenario

39

Scope for Sustainable

Palm
a O
Oil in India
da

40

Whether India is ready to Embrace

Sustainability ?
Indias Domestic Oil Palm Plantation is environmentally
sound as its grown on the land which were earlier under
cultivation
lti ti
and
d nott forest
f
t land.
l d
India Supports sustainability and about 25 companies are
registered for certified Palm Oil.
People in the EU & developed countries can afford to pay
a higher price for certified Palm Oil but in India, where
millions are struggling to food
f
and to clothe themselves,
will be reluctant to pay higher price for Certified Palm Oil

41

Way Forward to Promote

Certified Palm Oil in India
Average
g Indian buyer
y / consumer is looking
g solely
y at the
cost. Onus is on the Exporting Countries to make
sustainable attractive palm oil.
If Palm Oil producing countries wish to promote the
export of sustainable palm oil,
oil it must rectify its export
tax structure. At the very least, it must reduce export
taxes on Certified Sustainable Crude Palm oil to
encourage its Import by India and other developing
countries.
SEA is willing to join hands with ISPO/RSPO to promote
usage
g of certified p
palm oil in India,, p
provided duty
y
structure is made attractive for Indian refiners &
consumers.
42

Conclusion
India has been an importer of edible oil for long years
because of a mismatch between demand and domestic
production. In recent years, the supply shortfall has widened
rapidly, driven by rising incomes and population pressure.

Every increase in income translates to a rise in demand for

food products including cooking oil. Consumption-driven
demand growth has outstripped domestic supply growth,
increasing the country's import dependence.

Cont..

43

Conclusion

Cont..

Government of India is seriously considering to reduce the

Duty on Oilseeds from present 30% to 5 or 10%. If this
happens it would encourage import of high content oilseeds
happens,
like Rapeseed and Sunflower seeds. This will change the
current level of Import of Vegetable Oil by India, as it
happened in China.

Possibility of change of import duty on edible oils.

Cont..

44

Conclusion
Cont..

How much of this incremental import demand of vegetable oils,

particularly palm oil or soft oils, will be able to garner, would of
course, depend on relative prices of various oils, tariff structure,
landed cost & domestic supply. It would be in the vegetable oil
producers' interest to look at India as a large market that is
producers
going to be available for a very long-term for long years - and
do all that is required to sustain and service it.

Make in India A New Mantra

Mantra.

45

Dr. B. V. Mehta
Executive Director

The Solvent Extractors Association of India

A Premier Association of Vegetable Oil Industry & Trade in India
ISO 9001:2008 Organisation
142, Jolly Maker Chambers No. II, 14th Floor, 225, Nariman Point, Mumbai 400 021
Tel: (+91-22) 2202 1475. 2282 2979, Fax.: (+91-22) 2202 1692
Email: solvent@mtnl.net.in , Website:www.seaofindia.com

File : 10th Indonesian Palm Oil Conference, Bandung, Indonesia, 27-28th Nov, 2014/ Word/Presentations

46