Edible Oil Industry in India

A MANAGEMENT RESEARCH PROJECT -I ON

“In Depth Study of Edible Oil Industry in India”

In the partial fulfillment of the requirement of Master of Business Administration (M.B.A.) Program (2002-2004) Hemchandracharya North Gujarat University, Patan.

Project Guide Prof. Bhavin Pandya Faculty Member, SVIM

Prepared By Samir Patel Rajendra Patel

S.V.INSTITUTE OF MANAGEMENT

Acknowledgements

Preparing a project of this nature is an arduous task and we were fortunate enough to get support from large number of persons to whom we shall always remain grateful. With immense pleasure we would like to express our sincere thanks and gratitude to Prof. Bhavin Pandya, Project Guide & Faculty Member, S.V. Institute of Management, for having given us this privilege of working under him and completing the study and for the valuable advice, guidance, precious time and support that he offered. We are desirous of placing on record profound indebtedness to Prof. Tejas Dave, Faculty Member, S.V. Institute of Management, for the valuable advice, guidance, precious time and support that he offered. We would be failing in duty if we do not acknowledge the gratitude to Prof. Hitesh Ruparel, HOD, S.V. Institute of Management, who motivated us a lot in carrying out this project and whose kind supervision, keen interest and valuable suggestions went all the in successful completion of this work.

Preface We know that food, cloth and shelter are the three basic requirements in the life cycle of a human being. Clothing and Shelter are important, but the most important is food, without which a living being can’t survive. Particularly, in India where Edible oil in one or other form is consumed in almost every household. The peculiar Indian food habits prefer fried vegetables and several other fried snacks. India is one of the world's leading producers of oil seeds and oil, contributing to 9.3% of world oilseed production and is the fourth largest oilseed producing country in the World next to USA, China, and Brazil, harvesting about 25 million tons of oilseeds per annum. The edible oil sector occupies a distinct position in Indian economy, as it provides job to millions of people, achieves on an average a domestic turn over of about US $ 10 billion per annum and earns foreign exchange of US $ 90 million per annum. India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard/rapeseed, sesame, linseed, Niger seed/castor are the major traditionally cultivated oilseeds. India is a vast country and inhabitants of several of its regions have developed specific preference for certain oils largely depending upon the oils available in the region.

India has emerged as the world’s largest importer of vegetable oils since 1998-99. Ever since that time, the annual imports have kept hovering. The edible oil industry is now one of the leading sustainers of the positive annual economic growth rates India has enjoyed for over a decade now. India’s demand for edible oil has been growing at a rate of 8-9 per annum. The national demand for edible oil gives investment opportunities into the edible oil industry. Trained, trainable as well as unskilled labour is readily available for prospective investors in the sector to utilize.

Considerable opportunities exist in the edible oil sector of the Indian economy. The edible oil sector has shown steady growth. The index of industrial production has been positive and this trend is expected to continue over the foreseeable future.

Table of Contents Sr.No

Chapters

Chapter 1: Introductions 1) 2) 3)



Executive Summary Introduction Research Study  Research Objectives Research Methodology Adopted Chapter 2: Industry Description 1)



2) Vegetable Oils

About Edible Oil • Choice of Oil Types of Edible Oils( History & Description) • • • • • • • • • • •



Cottonseed oil Linseed Oil Palm Kernel Oil Peanut (Groundnut) Oil Rapeseed Oil Soya bean Oil Sunflower Oil Sesame Oil Coconut Palm Oil Olive Oil Corn (maize) Oil

Marine Oils • Fish Oil



Animal Fats

Page No.

• Lard • Tallow Speciality Oils



Chapter 3: World Market of Edible Oil Global Scenario Global demand and supply situation Major Producers of Edible Oil

  

Chapter 4: Comprehensive Study of Indian Market       • • • •      • • • • • • • •

Overview of the Indian Edible Oil Industry Importance of Edible Oils in the Country’s Economy Types of Oils Commonly used in India Consumption Pattern of Edible Oils in India Developments in the Industry Trends in the Edible Oil Industry Raw material production National Milling Capacity Production of Edible oil & Fat Local Market Future of Indian Edible Industry PEST Analysis of the Industry Michael Porter’s Five Force Analysis Opportunities & Threats Analysis Statistical Profile of Indian Edible Oil Industry Status of the Edible Oil Industry Supply Situation in the Country Production of Oil Seeds & Net Availability Share of Major States in Area & Production Net Availability/Import/Actual Consumption Import of Edible oil under OGL Import of Edible oil on Govt. A/c (for PDS) Export of Edible oil

  •

Bibliography Annexure World Edible Oil Statistics

Executive Summary The Management Research Project has been undertaken to study the international market of Edible oil industry and to analyze comprehensively the Indian Market scenario. The research study was conducted to find out the factors which would influence the major developments taking place in this industry, at both the global as well as domestic level. This study was also conducted to understand the Import-Export scenario and government influences. With these objectives in mind, the information is collected from various publications related with this industry, websites, Government institutions and other secondary sources. Later on all this information was compiled in the form of presentable and highly comprehensible report. The important outcomes are: • The Edible Oil Market is highly fragmented. •

India is the fourth largest oilseed producing country in the World next to USA, China, and Brazil, harvesting about 25 million tons of oilseeds per annum.

•

There has been a persistent gap between demand and domestic availability of edible oils. India has emerged as the world’s largest importer of vegetable oils since 1998-99.

• World Vegetable oil importers market has been divided into two parts, first, the markets of American continent including Argentina and Brazil , and secondly the markets of South-East Asian countries including Malaysia and Indonesia. Now India has entered this cutthroat competitive market by the import contract of groundnut oil.

Introduction India is one of the world's leading producers of oil seeds and oil, contributing to 9.3% of world oilseed production. It produces the largest number of commercial varieties of oil seeds over nearly 28.4 million hectares of land. The major edible oils produced in India are groundnut, rapeseed, Soya, cottonseed, sesame seed, castor seed, sunflower, safflower etc. India is the fourth largest oilseed producing country in the World next to USA, China, and Brazil, harvesting about 25 million tons of oilseeds per annum. The edible oil sector occupies a distinct position in Indian economy, as it provides job to millions of people, achieves on an average a domestic turn over of about US $ 10 billion per annum and earns foreign exchange of US $ 90 million per annum. Soybean is the third largest oilseed crop in India next to Groundnut & Mustard and accounts for 25% of the total oilseeds produced in the country in a year. Soya oil contributes about 10% of total vegetable oils produced in the country. Groundnut is the most widely consumed and traded edible oil determining edible oil economics. India is the world’s second largest

producer of groundnut, next only to China. But groundnut being primarily a Kharif (monsoon) crop is vulnerable to vagaries of monsoon and also speculative activities. In 1996, the Government set up a Technology Mission on oil seeds, to increase production of other oil seeds and oil, and to reduce dependence on imports. The strategy followed was:  To increase productivity with better farm inputs and practices.  To increase area under oilseed crop.  To encourage winter (Rabi) oilseed crops. This led to a sharp increase in oilseed production driven mainly by rapeseed, sunflower, castor seed and Soya Oil seed production jumped from 6.1mn ton in the mid 80's to around 22mn ton currently. India is today world’s third largest producer of rapeseed and cottonseed and the largest producer of castor seed. Timely and adequate rain is expected to result in an all time high oilseed production of 142.4 lakh tonnes during the current year as compared to earlier record of 132.3 lakh tonnes in 1998-99 and 88.1 lakh tonnes for the year 2002-03 estimated. The total oilseeds crop (inclusive of nine major oilseeds and also copra and cottonseed) for this kharif season is estimated at 207.2 lakh tonnes giving marketable surplus for crushing 154.8 lakh tonnes and Kharif Oil availability 47.3 lakh tonnes compared to last year 140.5 , 100.9 and 33.1 lakh tonnes respectively.

According to trade estimates during the 2003-04 season, Gujarat is expected to top the kharif groundnut oilseed production at 33 lakh tonnes in shell out of the total 56 lakh tonne (in shell) estimate. Madhya Pradesh is expected to produce 42 lakh tonnes of Soya bean , followed by Maharashtra at 18.70 lakh tonne of the total expectation of 68.5 lakh tonne Soya bean production. Total production of Sunflower seed is expected to be 2.7 lakh tonne, torai at 1.5 lakh tonne, sesame seed at 3.8 lakh tonne, castor seed at 6.7 lakh tonne, niger seed at 0.7 lakh tonne, cottonseed at 46.5 lakh tonne (marketable surplus) and copra at 6.5 lakh tonne. Based on the marketable surplus and oil recovery rates, the total oil availability of this kharif crop is estimated at 47.4 lakh tonnes, as against previous kharif's 33.10 lakh tonne. The highest oil will be recovered from groundnut and Soya bean, both at 10.5 lakh tonne each, followed by rice bran oil at 6.5 lakh tonne, cottonseed oil at 5.2 lakh tonne and copra at 4.2 lakh tonne. Rest will be recovered from balance oilseed crops. India’s winter groundnut output is expected to top 5.5 million tones with the crop in good shape after sufficient rains. Incessant rain for a week in the groundnut-growing region of western Gujarat had threatened to damage the crop, but the rains have since stopped. Saurashtra grows nearly half of India’s winter groundnut-crop, which is sown in May-June and harvested in October-November. Groundnut output in the 2002 winter season fell to 3.03 million tones, by the country’s worst draught in 15 years.

Besides the normal monsoon, attractive oilseed prices in the last season had prompted farmers to allot more land to groundnuts. A larger area of Southern Andhra Pradesh, which grows nearly 20% of India’s winter groundnut, was being used for the cultivation of the oilseed.

Research Study Research Objectives The objectives of the study are explained below: The Project has been undertaken: 1.

To study the International market of Edible Oil.

2.

To study the Indian market of Edible Oil.

3.

To study the Import-Export process of Edible Oil.

4.

To study the Role of Government in this Industry.

5.

To analyze market scenario, future prospects and developments taking place in Edible oil industry.

Research Methodology Adopted Data Collection Method

: Secondary Method

Sources

: Publications • Oil World • The Economic Times • Business World Government Departments • The Edible Oil Wing of the Department of Food & Public Distribution

Trade Associations • Solvent Extractions Association of India (SEA)

Limitations •

It may be difficult to determine the accuracy of the data because the Methodology used in collecting the data may be unknown. • Time and Cost might be the limitations.

Chapter 2

Industry Description About Edible Oil

"Oils" is a collective term for more or less viscous, generally organicchemical liquids. Depending on their chemical composition, a distinction may be drawn between fatty, essential, mineral and silicone oils. Fatty oils include liquid, semisolid and solid products of vegetable and animal origin. They are also known as sweet oils. One very basic difference between the way of looking at Edible-Oils and the Industrial Oil technician's viewpoint should be understood. When he sees dark color, it represents the presence of "impurities" -- material that prevents the oil from being light colored, odorless and bland in taste. From our viewpoint, those "impurities" look desirable -- the things, which impart color, odor and flavor, are NUTRIENTS. It is both tragic and ironic that the removal of nutrients should be equated with "purity". Tragic because if those nutrients were present they would contribute to the health of the consumer.

Ironic because establishing the desired "purity" really results in producing poor quality food.

Choice of oil New methods of production, transportation and refining, mean that oils are available to suit any and every need. Given such a range of options, what factors should determine the choice of particular oil? The choice of oil as a food ingredient, or for cooking or frying, will usually involve a compromise. The factors that will need to be taken into account may include: •

Price: Like all other products, this will be governed by the laws of supply and demand. Supplies of oil-bearing crops will depend on acreage planted, the quality of the crop and, of course, the weather. Demand for all oils will inevitably grow in line with the increase in the world's population. Prices will reflect this fundamental demand, as well as being influenced by a whole host of technical factors, such as currency movements and the availability of transport and refining capacity.

•

Intended use: The specific characteristics of some oils mean that they have a relatively limited number of uses, while others are extremely versatile and lend themselves to being substituted one for another.

•

Taste

•

Appearance

•

Nutritional and health concerns: All oils are made from three main types of fatty acids: saturated, monounsaturated and polyunsaturated. For the most part, the human body is able to manufacture all the different types of fat it needs from the fat and other nutrients in the diet. The only fatty acids which need to be eaten are the so-called essential fatty acids or EFAs - linoleic and linolenic - (also known as Omega-3 and Omega-6 fatty acids). The overwhelming conclusion of current dietary research is that while the intake of saturated fats is both unhealthy and unnecessary, a minimum of 3% of calorie intake should be in the form of EFAs. There is an increasing body of opinion, based, for example, on the evidence of diets high in Olive Oil that the monounsaturated fats may be either neutral or benign.

But - there are a number of other important considerations to be borne in mind when looking at the nutritional or health implications of using a particular oil or fat: 1. During subjection to high temperatures, and especially if this is prolonged - as in many cooking or frying processes - polyunsaturated fats are converted to saturates. 2. Saturated fats are much more stable under heat than polyunsaturates. With care, saturated fats may last twice as long as polyunsaturated types.

3. During refining, many liquid oils are subjected to the process of hydrogenation, whereby hydrogen is bubbled through the oil at a controlled temperature. This is a completely harmless process and is widely used, (for example in the manufacture of margarine or extended-life oils from Soya or Sunflower oils), both to make the oil more stable, thereby increasing its useful life, and to harden it to a desired consistency at specific temperatures. Hydrogenation changes the chemical structure of the oil and increases the saturated fats content. The effect of this might be that semi-solid cooking oil made from base oil high in polyunsaturates, such as Sunflower, could actually have a higher level of saturated fats than non-hydrogenated oil such as Rapeseed. (Source: www.cybgroup.co.uk)

Types of Edible Oils (History & Description) Cottonseed Oil

Countries of origin

Europe Africa Asia

Sudan India, Pakistan

America

USA, Brazil

Australia

-

Cottonseed oil's history is closely related to the history of the modern vegetable oil refinery business. Cottonseed oil was the first vegetable oil

used in the United States and its development followed by several decades the 1793 invention of the cotton gin. David Wesson and other edible oil refining pioneers developed and employed their machinery first on cottonseed oil. Cottonseed oil is versatile oil prized by chefs for its unique ability to allow the flavor of foods to come through. Whether making salad dressing or deepfrying, cottonseed oil has many applications, such as snack foods, mayonnaise, pastries, baked goods, margarine, shortening and oil blends. Noted as slightly nutty or buttery flavored oil, cottonseed oil is well regarded for its ability to avoid overpowering the flavor of foods and its composition prevents an unpleasant greasiness on food. Other Products of Cottonseed Along with oil, linters, hulls and meal are also produced in the processing of cottonseed. Products such as paper, diapers, mattress padding and even currency are manufactured from linters. Dissolved cellulose derived from cottonseed linter pulp is used for products such as plastics, rocket propellants, rayon, pharmaceutical emulsions, cosmetics and photography and x-ray film.

Linseed Oil

Countries of origin Europe

Russia, Hungary

Africa

Egypt

Asia

India

America

USA, Canada, Argentina, Uruguay, Paraguay

Australia

-

Linseed comes from the family Linaceae, Genus Linum, which includes the vast majority of the herbs and shrubs found in temperate and sub-tropical regions bordering the Mediterranean Sea. Linseed/flax, linium usitassium is certainly not a new crop. Flaxfibre and linen have been discovered with remains of Stone Age man and it is known that flax was a well-established crop in the Nile Valley around 1000 BC. In terms of EU support for both linseed and fibre flax, a subsidy system of one sort or another has been in operation since 1976. In the early days of the

scheme, France was the single biggest producer of linseed. French production fell away significantly towards the end of the 1970s and it was not until linseed began to be grown in the UK during the early 1980s that linseed's EU fortunes were revived to any extent. Palm Kernel Oil

Countries of origin Europe

-

Africa

East and West Africa

Asia

Indonesia, Malaysia, India

America

-

Australia

-

Palm kernel oil is very similar to coconut oil in fatty acid composition and properties. The two trees also look rather similar, both are called "palms" but they belong to different genera. Coconut palm is "Cocos nucifera", while the oil palm, which gives both palm oil (PO) and PKO is "Elaeis guineensis". This tree is generally believed to have originated in the jungle forests of East

Africa and there is some evidence that palm oil was used in Egypt at the time of the Pharaohs, some 5000 years ago. The palm fruit looks like a plum. The outer fleshy mesocarp gives the palm oil, while the kernel (which is inside a hard shell) gives palm kernel oil. It is rather strange that the two oils from the same fruit are entirely different in fatty acid composition and properties. In palm oil, most of the fatty acids are C16 (i.e. have 16 carbon atoms) and higher, while in palm kernel oil, they are C14 and lower. Palm kernel oil and its hydrogenated and fractionated products are widely used either alone or in blends with other oils for biscuit doughs and filling creams, cake icings, ice-cream, imitation whipping cream, substitute chocolate and other coatings, sharp-melting margarines, etc. Malaysia, absorbing over half a million tonnes per annum for her oleo chemical industry, no doubt helped palm kernel oil prices, but it cannot be the main reason since, in spite of that, in the last five years world exports of palm kernel oil increased by 33%, as opposed to 25% for coconut oil. The good news for buyers is that the rate of Malaysia's oleo chemical expansion is bound to slow down and her palm kernel oil exports should start rising again. Future Prospects In world terms, palm kernel oil is still smaller than coconut oil by about one third, but the future belongs to it. It is a co-product of palm oil, it has lower cost of production and it is rising at a much faster rate. Furthermore, the coconut producing countries have exactly the climate and soil conditions

required for replanting with oil palms which are more profitable. In the working lifetime of most readers of this article, palm kernel oil will become the major lauric oil.

Peanut (groundnut) Oil

Countries of origin Europe

-

Africa

East Africa, West Africa

Asia

India, South-East Asia

America

Brazil

Australia

-

Peanuts (groundnuts) are pulses, the seeds of the leguminous plants (Arachis hypogaea) and belong to the same botanical family as beans, peas and lentils. The peanut, while grown in tropical and subtropical regions throughout the world, is native to the Western Hemisphere. It probably originated in South

America and spread throughout the New World as Spanish explorers discovered the peanut's versatility. When the Spaniards returned to Europe, peanuts went with them. Later, traders were responsible for spreading peanuts to Asia and Africa before making their way to North America. By the end of the nineteenth century, the development of equipment for production, harvesting and shelling peanuts, as well as processing techniques, contributed to the expansion of the peanut industry. The new twentieth century labor-saving equipment resulted in a rapid demand for peanut oil, roasted and salted peanuts, peanut butter and confections.

Peanut kernels range in oil content from about 43% to 54%, depending on the variety of the peanut and the seasonal growing conditions. Peanuts supply one-sixth of the world’s vegetable oil. Peanut oil is excellent quality cooking oil with a high smoke point (440º Fahrenheit), neutral flavour and odor. It allows food to cook very quickly with a crisp coating and little absorption. Peanut oil is liquid at room temperature. Highly aromatic 100% peanut oil and peanut extract are high value products with a strong roasted peanut flavour and nut aroma. These products have applications in flavour compounds, confections, sauces and baked goods.

Rapeseed Oil

Countries of Origin Europe

Belgium

Africa

-

Asia

China, India, Japan

America

Canada

Australia

-

Canola's roots are firmly planted in an oilseed crop known as "rapeseed". History suggests that ancient civilizations in Asia and Europe used rapeseed oil in lamps. Later it was used in foods and as cooking oil. Although the crop was grown in Europe in the 13th Century, its use was not extensive until the development of steam power, when it was found that rapeseed oil would cling to water and steam-washed metal surfaces better

than any other lubricant. In fact, the need for Canadian rapeseed production arose from the critical shortage of rapeseed oil that followed the World War II blockage of European and Asian sources of rapeseed oil in the early 1940s. The oil was urgently needed as a lubricant for the rapidly increasing number of steam engines in naval and merchant ships. Rapeseed oil for edible purposes was not fully exploited by Western nations until the end of World War II. The merits of the crop as a source of food were acknowledged by the agricultural industry who felt success could be achieved if proper processing techniques could be adopted. The first edible rapeseed oil extract in Canada was in 1956/57. This event marked the beginning of a rapidly expanding industry. All of the rapeseed varieties grown produced oils containing large amounts of eicosenoic and erucic acids, which are not considered essential for human growth.

Soya bean Oil

Countries of Origin Europe

Southern Europe, Russia

Africa

-

Asia

Japan, China

America

USA, Brazil, Canada

Australia

-

The Soya bean is one of the oldest vegetables known to man. Soya beans have been grown and consumed for more than 5000 years in China and the Far East. They are, however, a relative newcomer to the Western consumer, particularly when looking at Soya food consumption only. Soya bean has proved adaptable to a wide variety of climatic conditions. Although sub-

tropical in origin, cultivation now extends much farther. Soya beans only arrived in the United States in 1804 and were a relatively minor crop until the 1920s. Since then, commercial growing has been continuously increasing. Soya foods, for example, Soya milk, Soya nuts, tofu and tempeh, are the most visible form of soy containing foods to the consumer. Soya beans and Soya bean products have a much wider application area. They contain all components necessary for optimal food and feed application. Soya is not only an excellent source of vegetable protein (34 - 39%, with a balanced composition containing all the essential Amino acids) and of vegetable oil (18 - 20%, containing all the essential fatty acids), it is also rich in fibre, carbohydrates, phytoestrogens, steroids, vitamins and minerals. The functional properties of soy protein based ingredients and the versatility of Soya bean oil based components add to its widespread use. Other Uses A more recent derived development is the application in technical areas. Oil products are already used as fuel (biodiesel), in lubrication, printing ink formulations, and dust control and as pesticide and herbicide solvents. Technical protein applications still remain limited (wood adhesives, paper coatings).

Sunflower Oil

Countries of origin Europe

Turkey, Russia

Africa

South Africa, Tanzania

Asia

China

America

USA, Argentina, Canada

Australia

-

The history of world sunflower production in the last 20 years has been directly related to the political changes in the Soviet Union. The former Soviet Union was the largest producer of sunflower seed and also the largest consumer of sunflower oil. It was also a leader in the research and development of the crop. However, in the last few years, Argentina has become the largest producer of sunflower seed and international based seed companies have taken the hybrid seed and new genetics to all corners of the earth.

The decline in sunflower production in the former Soviet Union regions has limited the growth of sunflower as it relates to other oilseeds. From 1992/93 to 1997/98, the world's growth in sunflower production was just under 9 percent. This compares poorly to the other major oilseed crops, such as rapeseed's 24 percent growth and Soya bean's 23 percent growth. However, the changing role of country production has not impacted the volume of sunflower oil exports as dramatically when compared to the other oilseeds. The percentage increase of sunflower oil exports during the five year period of 1992/93 to 1997/98 was 39 percent, compared to rape oil of 42 percent and Soya bean oil of 48 percent. The difference, of course, is that Argentina and the US export a majority of the sunflower oil that they produce; the former Soviet Union only exported limited volumes to several of their trading partners, such as Cuba. Of those oils in common daily use, Sunflower has the highest level of polyunsaturates and which are effectively all of the more stable, linoleic variety. The actual level can vary from below 60% to over 70%, with the highest levels being found in crops grown in areas experiencing the largest variation between day and night-time temperatures.

Sesame Oil

Countries of origin Europe

Turkey

Africa

Sudan, Egypt

Asia

India, China, Burma

America

Mexico, Guatemala

Australia

-

Sesame seed is believed to be one of the oldest seeds to have been used as a condiment, as well as for the home-based production of oil. The English word sesame traces back to the Arabic word of simsim, the Coptis semsem and the early Egyptian word semsent. The earliest records mentioning the use of sesame seed as a spice come from the Assyrian myth which claims that the gods drank sesame wine the night before they created the earth. A more common name is Sesamum Indicum L. which clearly links the sesame seed to India. Sesame domestication began in Africa and, more particularly, in what is now known as Sudan. It traveled eastwards to Japan, leaving a clear trail in Egypt, India and China and westward to Latin America along with the slaves. China and India are today the largest producers of sesame seed. It is already known that some 5000 years ago, the Chinese were

burning sesame as a source of light and used it to produce soot for their ink blocks. Coconut Palm Oil

The coconut palm (Cocos nucifera, L) is commonly called the "Tree of Life" because of its myriad uses. All parts of the palm, from the roots to the leaves and particularly its fruit, have special uses as a provider of food, beverage, shelter, animal feed and as an important raw material for various industries like the oleochemical industry. Traditionally, it requires little attention throughout its life span of over 50 years, thus the reference as a "lazy man's crop". Commercial farms, however, are tended and developed for improved productivity. The coconut palm reaches a height of 20 meters or higher for the tall varieties, while dwarf varieties grow up to 3 meters upon maturity. The palm is propagated through seed nuts, normally from elite parents. These are stored in a shade to germinate in loose and friable soil provided with adequate moisture and drainage facilities. The sprouted seed nuts are transferred into polybags to allow proper selection of seedlings. Furthermore, the seedlings in polybags are protected from shock and other damages when transplanted in the fields. In the countries where it is produced, coconut oil is used mainly as cooking oil or frying oil. It is also an important raw material for margarine and

shortening production. In the Philippines, a 90/10 blend of coconut oil/corn oil is used as a milk fat in filled milk formulations. Olive Oil

Countries of origin

Europe

Greece, Spain, Portugal, other Mediterranean countries

Africa

-

Asia

-

America

West Coast, USA

Australia

-

Olive leaf fossils found in Pliocene deposits at Mongardino in Italy, fossilized remains discovered in strata from the Upper Paleolithic at the Relilai snail hatchery in North Africa and remnants of wild olive trees and stones uncovered in excavations of Aenolithic and Bronze Age sites in Spain, are cumulative evidence that the olive tree dates back to the twelfth millennium BC. The wild olive tree originated in Asia Minor where it is very abundant. In his treatise on "The Origin of Cultivated Plants" written in 1883, De Candolle identifies Syria as the birthplace of the olive. Other

contemporary botanists reported wild olive trees on the slopes of the Atlas mountains and the mountains of Tunisia. Olive cultivation began 6000 years ago on the Mediterranean coast of Syria and Palestine. From there, it spread to Anatolia (via Cyprus) and to Egypt (via Crete). In the 16th Century BC, the Phoenicians took the olive to the Greek Islands. Later, between the 14th and 12th Centuries BC, they introduced it to the Greek mainland where its cultivation spread. By the 6th Century BC, the olive was cultivated the length and breadth of the Mediterranean region, from Tripoli to Tunisia, from Sicily and Calabria in Southern Italy to Liguria in the North. When the Romans arrived in North Africa, the Berbers knew how to graft wild olives and olive cultivation spread through all the Roman territories. The olive crossed the seas with the discovery of the American continent in 1492. By 1560, olive trees were being grown in Mexico and then in Peru, California, Chile and Argentina. More recently, it has continued to spread and is now grown in South Africa, Australia, Japan and China. The traditional product of the Mediterranean and the basic ingredient of classic French and other cuisines. With its high levels of monounsaturates, Olive Oil is perceived as particularly healthy oil, and for this reason, and because of the enormous growth in the market for quality foods it has become extremely popular. Olive trees are extremely slow-growing and the area of production is still limited to the Mediterranean countries. The increasing demand for the different types of Olive Oil, and the traditionally regional and specialized nature of its production, means that Olive Oil will

continue to command a high price premium over all the commonly-used edible oils.

Corn or Maize Oil

Liquid oil extracted from the germ (seed) of maize. The crop is widely grown and some local production is available in many countries, including the UK and Europe. However, the only source of real international importance is the USA. The seed contains approx. 40% oil.

Marine Oils Fish Oil Produced from the flesh of fish with oil content between 0.5% and 15%, depending on fish species and point of fish's life cycle oil is extracted. The major producers are the USA (Menhaden), Japan (Sardines/Mackerel), Norway (Capelin), Iceland (Capelin), Peru (Anchovy), Chile (Sardine) and Denmark (Capelin/Tobis). In its crude state Fish Oil is totally liquid but contains certain fatty acids that are so highly unsaturated and therefore unstable that they can give rise to flavour reversion problems "within hours", even after traditional refining. Consequently, the vast majority of Fish Oil is hydrogenated. The most common uses of Fish Oil are in the production of economy retail margarines and economy bakery magarines and fats, as well being used as a shallowfrying medium.

Animal Fats Lard Pigs which have been subjected to ante and post mortem veterinary inspection and certified free from disease are slaughtered for meat production, in the course of that much of the fat is removed. Predominant sources are the kidney and back fats which are passed through a rendering process to produce what we know as Lard. First quality, freshly rendered material with low acidity, good color and a mild, traditional flavour is commonly referred to as "packers" lard, which can be simply cleaned/filtered and used directly for packing. Other qualities, which are too high in acidity or otherwise fail to meet the tighter analytical specifications, are subjected to full refining treatment prior to edible use. Tallow Tallow is produced in the same way as Lard. Whilst the word can cover material derived from various animals, the name is more commonly reserved for the fat obtained from cattle and referred to as Beef Tallow. It has a firmer consistency than Lard and melts at higher temperatures. The freshest, top quality production is known as premier jus, whilst a majority of the rendered tonnage requires full refining prior to edible use. A large percentage of the international trade in Tallow is for qualities considered unsuitable for human consumption but which have wide applications in the technical field.

Speciality Oils The sources of, and uses for, different oils are many and various. In addition, modern refining and processing techniques allow different oils to be blended together for particular uses, or , increasingly, individual oils to be tailored to give specific desired characteristics, be it taste, durability, temperature profile etc. Other oils currently available are: • • • • • • • • • •

Almond Arachis Borage Castor Cod Liver Evening Primrose Flaxseed Grapeseed Halibut Liver Hazelnut

Source: www.cybgroup.co.uk www.tis-gdv.de

•

Poppyseed Pumpkinseed Safflower Salmon Sesame Shark Liver Sild Walnut

•

Wheatgerm

• • • • • • •

Chapter 3:

World Market of Edible Oil

Global Scenario The oils and fats industry consists of processors of vegetable, animal and marine products that convert these products into edible oils and fats usually sold as food products in their own right, or sold as ingredients for further processing into other food products. Vegetable oils Vegetable oils are extracted from the fruits, flowers and seeds of plants, and essentially have the same constituents but its proportions may vary. The principle vegetable oils are soybean, palm, rapeseed, sunflower, corn, groundnut and cottonseed. Approximately 40% of the world’s edible oil requirements are met by Soya oil and crude palm oil (CPO), accounting for 17% and 23% of the total consumption respectively (GK Goh Research, 4 August 1999). Leading vegetable oil producers are the United States, the European Union and China, whereas major producers of CPO are Malaysia and Indonesia, followed by Nigeria, Argentina and Brazil. CPO, when converted into olein and stearine and its downstream derivatives, brings further added value. Thus CPO is mainly used to produce refined, bleached and deodorized palm oil (RBDPO), a major ingredient in margarine, shortening, and ice cream. RBDPO is further fractionated to produce RBD olein and RBD stearine, a by-product of the fractionation process. RBD olein is used mainly in the

manufacture of cooking oil and margarine and is used in industrial frying or processed foods like potato chips, French fries, instant noodles and other snack foods. RBD stearine is primarily used in the manufacturing of soaps and detergent and in the manufacture of margarine and shortenings for food. WORLD PRODUCTION OF 17 OILS & FATS: 1994 - 2001 ('000 TONNES) Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL

1994 14,304

1995 15,210

1996 16,282

1997 17,903

1998 16,919

1999 20,631

2000 21,825

2001 23,355

1,861 18,684 3,566 4,309 7,391 9,970 1,675 3,015 1,900 446 616 636

1,945 20,404 3,905 4,423 8,556 10,955 1,855 3,350 1,888 483 589 701

2,083 20,322 4,119 4,563 9,006 11,479 1,834 2,867 2,042 479 668 666

2,230 21,052 4,047 4,521 9,165 11,830 1,858 3,301 2,701 442 723 691

2,168 24,038 4,043 4,502 8,439 12,229 1,880 3,107 2,588 441 736 694

2,557 24,809 3,822 4,694 9,308 13,066 1,938 2,388 2,461 442 726 730

2,688 25,546 3,852 4,573 9,677 14,467 1,968 3,272 2,545 494 715 698

2,872 27,779 4,006 5,073 8,223 13,725 1,962 3,539 2,690 515 751 621

68,373 5,677 7,550 1,490 5,430

74,264 5,677 7,507 1,285 5,692

76,410 5,648 7,500 1,336 5,936

80,464 5,685 7,572 1,194 6,150

81,784 5,761 7,784 865 6,520

87,572 5,918 8,175 1,354 6,703

92,320 6,026 8,199 1,416 6,716

95,111 6,059 8,196 1,121 6,815

20,147

20,161

20,420

20,601

20,930

22,150

22,357

22,191

88,520

94,425

96,830

101,065

102,714

109,722

114,677

117,302

Source: • •

Oil World Annual 2001, 2000, 1999, 1998 & Oil World Weekly (22 March & 5 April 2002) MPOB - For data on Malaysia.

Global demand and supply situation Although demand for oils and fats was affected by the Asian economic crisis, Oil World, the leading forecaster of supply and demand in the edible oils industry still projected a growth of 3.2% and 4.1% for 1999 and 2000 respectively. These forecasts assume an expected recovery of the Southeast Asian economies as well as a decrease in demand for animal fat due to concern over its high cholesterol content. Historically, demand for edible oil has increased in line with population growth. The average growth in global demand for palm oil has been 7.6% per year from 1991 to 1996 (ING Barings Research Report, June 1999).

Source: Oil World, May 2003.

Major Producers of Edible Oil Linseed Oil Canada remains the world's largest producer of linseed and is the single biggest exporting country. It has also been the provider of many Europeangrown varieties, although in recent years Hungary has also emerged as a strong presence in the development of linseed varieties, particularly for winter sowing. Palm Kernel Oil The largest palm kernel oil producing country by far is Malaysia, which accounts for more than 52.8% of world production, while two countries, Malaysia and Indonesia together, account for about 80% of production and 90% of exports. No other country produces more than 8% or exports more than 3%. A record production of 19.904 million tonnes was registered in 1999; an increase of 19.3 percent over the previous year's production of 16.681 million tonnes. Palm oil share in the global oils and fats production jumped from 16.26 percent in 1998 to 18.7 percent in 1999. The year saw significant rebounds

in

palm

oil

supply,

exports

and

consumption.

Palm oil is expected to demonstrate an annual growth of 4.57% over the next five years. Production is expected to reach 26.2 million tonnes by the year 2005, and anticipated to account for around 20% of the global oils and fats supply.

Malaysia and Indonesia will be at the forefront of this production growth, with production forecasts of some 12.2 million tonnes by the year 2005 in Malaysia, while Indonesia is expected to reach 9.4 million tonnes in production. Peanut Oil World peanut production totals approximately 29 million MT. India and China are among the largest producers of peanuts, accounting for approximately 2/3 of total world production. The majority of their production is consumed internally, particularly crushed for oil use. Total exports of peanuts top 1.5 million MT, with the largest market being Europe. Among the other major importing countries are Indonesia, Canada and Japan. The US is one of the world's leading edible peanut exporters; with an average annual export of approximately 240,000 MT. Argentina, China and India are also major suppliers to the world market. Share of world exports varies based on crop conditions and internal market demand (particularly in China). Changing weather patterns, infrastructure improvements, seed varieties - all are factors which influence a market which increasingly demands innovation and quality (at a reasonable price). Demand for peanuts has been steady in North America and Europe, although under competition within a dynamic snack market. Two significant factors affecting peanuts in the world market are (1) consumer concerns for nutritious foods and (2) stricter import standards for food safety and quality.

Rapeseed Oil Canada has become a market leader by developing, producing and marketing canola as a world oilseed. This achievement would have been impossible without the canola breeding research that has been conducted by dedicated Canadian scientists who had the support of the government and on-going funding of the canola industry. Soya bean Oil In the United States, nearly 400,000 farmers grow Soya beans on more than 29 million hectares of land. At a record of $17.7 billion, Soya beans are the second most valuable US cash crop after corn. The United States exports almost half of its Soya bean production to the world market. It is also the world's largest consumer of Soya beans, Soya bean meal and Soya bean oil. A growing world population, rising incomes and changing diets around the world are pushing up the market for Soya beans and derived products. Vegetable protein and vegetable oils replace or add to animal protein and fats. Eating more eggs and meat requires the production of more animal feed. The European Union is the major importer whilst China is the strongest growing market for Soya beans, meal oil. Southeast Asian countries, Turkey and the Turkish Republics, are the other major growth markets for Soya beans, meal and oil.

Sunflower Oil The former Soviet Union was the largest producer of sunflower seed and also the largest consumer of sunflower oil. It was also a leader in the research and development of the crop. However, in the last few years, Argentina has become the largest producer of sunflower seed and international based seed companies have taken the hybrid seed and new genetics to all corners of the earth. From 1992/93 to 1997/98, the world's growth in sunflower production was just under 9 percent. This compares poorly to the other major oilseed crops, such as rapeseed's 24 percent growth and Soya bean’s 23% growth. However, the changing role of country production has not impacted the volume of sunflower oil exports as dramatically when compared to the other oilseeds. The percentage increase of sunflower oil exports during the five year period of 1992/93 to 1997/98 was 39 percent, compared to rape oil of 42 percent and Soya bean oil of 48 percent. The difference, of course, is that Argentina and the US export a majority of the sunflower oil that they produce; the former Soviet Union only exported limited volumes to several of their trading partners, such as Cuba Sesame seed Oil China and India are today the largest producers of sesame seed. The largest producers in Asia are China and India; in Africa it is Sudan followed by Nigeria while, in Central America, it is Mexico and Guatemala.

Coconut Oil World production of coconut averaged 9.65 million metric tons, copra terms (1992-96 average), which is equivalent to about 51.068 billion nuts. Of this total, close to 70% is supplied by the major producers’ viz. Indonesia, India and the Philippines. Of the three leading producers, the Philippines is the biggest supplier to world trade in the form of coconut oil, which accounts for some 80% of her total coconut production. Indonesia and India use the bulk of their production internally, both as food nuts and as coconut oil. Coconut is widely traded in the world market in the form of coconut oil. Coconut oil accounted for 6.39% of world vegetable oils market during the 90's. Olive Oil During the 3 years (1997/98-1999/00), world olive oil production averaged around 2.3 million tonnes; with the European Union accounting for 78.2% of this volume. Along with the European Union, other important world olive oil producers are Tunisia (7.2%), Turkey (3.7%) and Syria (3.7%). Together they produced, on average, 92.8% of the world's olive oil during the previously mentioned 3 year period. Most of the comparatively smaller producing countries (such as Algeria, Cyprus, Israel, Jordan, Morocco and Palestine) are also located in the Mediterranean area. Olive oil production outside the Mediterranean Basin accounts for less than 2% of world production. As for production, olive oil consumption is largely concentrated in the Mediterranean Basin, particularly within the European Union and, more

specifically, in its producing countries (Italy, Spain, Greece, Portugal and France). Between 1997/98 and 1999/00, the European Union accounted for 71.3% of average world consumption, which amounted to 2.4 million tonnes. In the non-Mediterranean group, the United States was by far the most important consumer country, with an average consumption figure of 151,100 tonnes, the equivalent of 6.2% of average world consumption and well above the consumption levels of important producer countries like Syria (3.7%), Tunisia (2.2%) and Turkey (3.1%). Other important consumer countries outside the Mediterranean are Australia, Brazil, Canada and Japan. Together with the United States, consumption in these countries has increased at an average annual rate of 10% since the International Olive Oil Council started to run promotional campaigns in these markets. The IOOC promotion started in 1983/84 in the United States, 1989/90 in Australia, 1991/92 in Japan, 1993/94 in Canada and 1997/98 in Brazil.

Chapter 4

Comprehensive Study of Indian Market

Overview of the Indian Edible Oil Industry India has a vibrant private sector driven edible oil industry. With the right macro-economic policies now in place, the sub-sector has made a huge turn around and it is no longer an eyesore. The edible oil industry is now one of the leading sustainers of the positive annual economic growth rates India has enjoyed for over a decade now. India’s demand for edible oil has been growing at a rate of 8-9 per annum. The national demand for edible oil is projected to reach over 110.25 lakh MT in 2005 up from 100.96 lakh MT in 2001. National production as of 2001 stood at 54.54 lakh MT making India a net importer of edible oil to the tune of over 46.92 lakh MT. This gives investment opportunities into the edible oil industry. Trained, trainable as well as unskilled labour is readily available for prospective investors in the sector to utilize.

Importance of Edible Oils in the Country’s Economy Oilseeds and edible oils are two of the most sensitive essential commodities. India is one of the largest producers of oilseeds in the world and this sector occupies an important position in the agricultural economy covering an area of 24.38 million hectares and accounting for the production of 20.87 million tonnes of oilseeds during the year 1999-2000. India contributes about 9% of the world oilseeds production, about 7% of the global production of protein meal and is the 4th largest edible oil economy in the world. Export of oil meals, oilseeds and minor oils for the financial year 1999-2000 slightly declined from 3.96 million MTs in 1998-99 to 3.15 million tons in 19992000. However, in terms of value, realization has gone up from Rs.3180/crores to Rs.3327/- crores. The share of India in the world oil meal export market is about 7%.

Types of oils commonly used in India India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard/rapeseed, sesame, linseed, Niger seed/castor are the major traditionally cultivated oilseeds. Soya bean and sunflower have also assumed importance in recent years. Coconut is most important amongst the plantation crops. Efforts are being made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu in addition to Kerala and Andaman & Nicobar Islands. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important. In addition, oilseeds of tree and forest origin which grow mostly in tribal inhabited areas are also a significant source of oils.

Consumption Pattern of Edible Oils in India India is a vast country and inhabitants of several of its regions have developed specific preference for certain oils largely depending upon the oils available in the region. For example, people in the South and West prefer groundnut oil while those in the East and North use mustard seed/rapeseed oil. Likewise several pockets in the South have a preference for coconut and Sesame oil. Inhabitants of northern plain are basically hard fat consumers and therefore prefer Vanaspati, a term used to denote a partially hydrogenated edible oil mixture. Vanaspati has an important role in our edible oil economy. Its production is about one million MT annually. It has around 13% share of the edible oil market. It has the ability to absorb a heterogeneous variety of oils which do not generally find direct marketing opportunities because of consumers’ preference for traditional oil such as groundnut oil, mustard oil, sesame oil etc. For example, newer oils like Soya bean, sunflower, ricebran and cottonseed and oils from tree and forest sources have found their way to the edible pool largely through vanaspati route. Of late, things have changed through technological means such as refining, bleaching and De-odouraisation, all oils have been rendered practically colorless, odorless and tasteless and, therefore, have become easily interchangeable in the kitchen. Newer oils which were not known before have entered the kitchen, like those of cottonseed, sunflower, palm oil or its liquid fraction, palmolein, Soya bean and ricebran. All of them are again essentially bland, processed edible oils. About 60-70% predominantly

groundnut and mustard seeds are used to make non-refined or filtered oils. These tend to have a strong and distinctive test preferred by most traditional customers. About 70% of these filtered oils produced are by the organized and semiorganized sector plants producing from 2000-10000 MT per month. It is often branded by large manufacturers. The lower quality and generally lower cost filtered oil produced is mainly by the small scale village based processors. The oil is mostly sold loose directly to the consumers from a variety of containers, often within 2-3 days of production. These local crushers will produce between half and two MTs per month. This decentralized production and marketing pattern may account for around 20% of all edible oils in the country. The share of raw oil, refined oil and vanaspati in the total edible oil market is respectively 42.0%, 42.7% and 13.4%.

Developments in the Industry

All agricultural activities in the country will be guided under the Plan for the Modernization of Agriculture (PMA). The PMA is part of the Government of India’s broader strategy of poverty eradication contained in the Poverty Eradication Action Plan (PEAP). Strategically the PMA objectives include: •

Deepening decentralization

•

Reduction in public sector activities in favour of the private sector

•

Adoption of productivity enhancing technologies

The overall government policy framework in the agricultural sector therefore continues to emphasize private sector participation and investments. This emphasis is highlighted in a comprehensive strategy to deal with major constraints to private sector development

Specifically, in the edible oil industry: •

The sub-sector has been fully liberalized to create competition in production, processing and marketing,

•

Τ he taxation system is being harmonized so that oil millers operate on a level playing field, and

•

Institutions that promote raw material production have been set up and are adequately financed.

Trends in the edible oil industry

Raw material production Production of raw material in the edible oil industry has shown an upward trend. In 2001, 208.72 lakh MT of locally available oilseeds were crushed and this scenario is projected to grow positively. Today, the number of farm families involved in oilseeds growing has been expanding. This trend has reduced the reliance on imports to meet the national edible oil.

Institutional support to raw material production A number of institutions have been created to boost production of raw materials for crushing:  The National Agricultural Research Organization (NARO) spearheads research in the production and dissemination of improved varieties for vegetable oil processing. 

The Cotton Development Organization (CDO) was set up to revive the cotton industry. Already modest progress has been recorded in the supply of crushable cottonseed.



Solvent Extractions Association of India (SEA), a private sector organization, is very instrumental in coordinating the rehabilitation and development of edible oil sub-sector. SEA has established a sustainable seed multiplication and distribution system in the country.

National milling capacity There are presently 1,50,000 oil crushing units utilizing 10-30% of their capacity,785 Solvent Extraction Units utilizing 32% of their capacity,950 Refineries utilizing 32% of their capacity and 222 Vanaspati Units utilizing 41% of their capacity, in the country. The large-scale processors have sophisticated refining, downstream manufacturing and packaging facilities. Medium-scale mills follow a similar design of 4 or 5 low-capacity expellers, a decorticator, a low-pressure boiler and a crude oil neutralizing vessel.

Production of edible oil and fat Large-scale commercial production of refined vegetable oil and fat is a possible investment. National demand for vegetable oil exceeds local production, making India a net importer of Edible oil and fat. Currently, national demand stands at about 108.65 lakh MT and about 45% of this is met by imports. Out right purchase of existing mills or joint venture arrangement with the owners are possible investments in this area. By Indian standards, a large-scale oil processing facility is estimated to require a minimum of US $ 350,000 – 450,000 on equipment and accessories.

Local Market



The local market for oil in India is comprised of households, baking and confectionery industry, and the food service industry. Most urban areas have a range of cooking oils in shops and markets.



National demand for vegetable oil is growing at 8-9% p.a. Demand for vegetable oil is expected to reach 110.25 lakh MT in 2005. This is an indicator of potential investment in the sub sector.

Future of Indian Edible oil Industry

•

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.

•

Raw material sourcing : focus on improving yields, getting better quality oilseeds , ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (e.g. Vanaspati - Dada, Oils - Sun drop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition

•

Demand Drivers

•

•

Key Success Factors

Future

• •

•

Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based assistance to farmers of eliminate unofficial markets

•

In the next five years, the market for - edible oils will grow by 8 to 9% to 14.65 million MT

• •

Business Concerns

• • • •

Free imports, low import duties and slump in global prices - lead to `dumping’ Domestic industries of edible oils affected - low realization and idle capacities in oil industries Production slippages have also forced imports Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally Hence, farmers have shifted to other cash crops Increasing health awareness - impact of oils usage on individual’s cholesterol levels

PEST Analysis of the Edible Oil Industry (Indian Context) Political and Legal Factors The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Political Factors include Government regulations and legal issues and define both formal and informal rules under which the firm must operate. Import Policy Being Followed For Edible Oils There has been a persistent gap between demand and domestic availability of edible oils. The Government, with a view to avoiding scarcity of this item and consequential rise in prices, has been allowing import of edible oils. In pursuance of the policy of liberalization of the Government, there have been progressive changes in the Import policy in respect of edible oils during the past few years. Edible oil which was in the negative list of imports was first

decanalised partially in April, 1994 with permission to import edible vegetable palmolein under OGL at 65% duty. This was followed by enlarging the basket of oils under OGL import in March, 1995, when all edible oils (except coconut oil, palm kernel oil, RBD Palm Oil and RBD Palm Stearin), were brought under OGL import at 30% duty, and then further reduction in duty to 20% plus 2% surcharge in the regular budget for the year 1996-97. Another surcharge of 3% was later imposed bringing the total duty to 25%. In order to increase imports and to curb the high domestic prices, this duty was further reduced by 10% in July, 1998. In order to harmonize the interests of domestic oilseeds growers, consumers and processors and to regulate large import of edible oils to the extent possible, the duty structure on edible oils has been revised four times in a span of 14 months. The latest revision was effected on 1.3.2001. The custom duty on CPO meant for vanaspati manufacture has been raised from 25% to 75% except in case of sick vanaspati units where duty was kept a 55%. However, vide Notification No. 44/2001-Custom dated 26.4.2001 issued by the Deptt. of Revenue, Ministry of Finance, entries relating to concessional rate of custom duty @ 55% on Crude Palm Oil (CPO) for sick vanaspati units has been omitted. Now, there is a uniform rate of duty @ 75% on CPO for all the vanaspati units, whether sick or otherwise. The duty on refined oil has been raised to 85% (basic) except in the cases of refined Soya bean Oil and refined Mustard Oil where the duties are 45% (basic) and 75% (basic) respectively,. Special Additional Duty (SAD) is levied on import of refined oils at the rate of 4%. The Government has allowed import of oilseeds. However, virtually, there has been no import of oilseeds largely because of the following of safety

measures imposed by the Government- (i) A splitting /cracking requirement of Soya bean at the port (ii) Quarantine restriction

Important Import-Export Measures Some

of

the

important

measures

recently

taken

are:-

(i) Exports of all oilseeds such as HPS groundnut, sesame seeds, sunflower seeds, mustard seeds, etc. when exported for consumption purpose, have been

made

free

without

any

quantitative/licensing

requirements.

(ii) Free import of Soya bean in split/cracked form has been allowed. Free import of rapeseed/sunflower has also been allowed, subject to quarantine requirement. Import duty on Edible oil is 45%. (iii) Export of vegetable oils such as coconut oil, cottonseed oil, corn oil, Kardi oil, linseed oil, mustard oil, Niger seed oil, palm oil, palm kernel oil, rapeseed oil, Riceb ran oil, salad oil, sunflower oil, sesame seed oil, Soya bean oil have been made free. (iv) Export of Groundnut

Orders Control (i) Edible Oils Packaging (Regulation) Order, 1998 (ii) Vegetable Oil Products (Regulation) Order, 1998 (iii) Solvent Extracted Oils, De-oiled Meal and Edible Flour (Control) Order, 1967, and (iv) Pulses, Edible Oilseeds and Edible Oils (Storage) Control Order, 1977. These Control Orders provide for "in-process" surveillance in respect of the quality, packaging, labeling, production, oils used in vanaspati, etc. through regular inspection of the manufacturing processes, factory records, drawal of samples, etc. A well-equipped laboratory is available with the Directorate for analytical testing of samples. (i) Edible oils Packaging (Regulation) Order 1998 In order to ensure availability of safe and quality edible oils in packed form at pre-determined prices to the consumers, the Central Govt. promulgated on 17th September, 1998 a Packaging Order under the Essential Commodities Act, 1955 to make packaging of edible oils, sold in retail, compulsory unless

specifically exempted by the concerned State Govt. Uniform methods for testing the quality of edible oils, including the Thin Layer Chromatography (TLC) method for detection of argemone oil was prescribed and circulated to all State Govts. and manufacturers. Laboratory facilities (560 in number) both in the public and private sector were identified and notified by the Chief Director (Vanaspati, Vegetable Oils and Fats) where testing of edible oil samples could be carried out so that consumers could be assured of quality edible oils. The salient features of the Packaging Order are: (i) Edible oils including edible mustard oil will be allowed to be sold only in packed form from 15th December, 1998. (ii)Packers will have to register themselves with a registering authority (iii) The packer will have to have his own analytical facilities or adequate arrangements for testing the samples of edible oils to the satisfaction of the government. (iv) Only oils which conform to the standards of quality as specified in the Prevention of Food Adulteration Act, 1954 and Rules made there under will be allowed to be packed. (v) Each container or pack will have to show all relevant particulars so that the consumer is not misled, so also the identity of the packer becomes clear. (vi) Edible oils shall be packed in conformity with the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and the Prevention of

Food Adulteration Act, 1954 and Rules made there under (vii) The State Governments will have power to relax any requirement of the packaging order for meeting special circumstances.

(viii)The power for implementation of the Order is basically delegated to the State Governments. The Central Govt. is aware that the production of edible oils is a highly decentralized industry. A substantial quantity of oil production is in the small scale or unorganized sector. Further, a sizeable proportion of the population is living below the poverty line. It may be difficult for them to afford the additional cost of packaged oils. It is in view of these situations that the State Governments have been empowered to exempt any edible oils from the provisions of this Order in specific circumstances Scope of the Packaging Order All units packing edible oils, namely, oils specified in the Prevention of Food Adulteration Act and Rules there under, including vanaspati, bakery shortening and margarine are covered under this Order. Some of the important requirements to be complied with are that the packers will have to have facilities to pack and store edible oils under hygienic conditions. They have to have properly equipped analytical laboratory or arrangement of a common laboratory so as to enable to test the quality of oil for checking its conformity to the prescribed standards of quality

Eligibility to carry on the Packing Activity Every person who intends to carry on the business of a packer shall make an application to the registering authority in the form specified in Schedule-II together with the fee to be paid to the State Governments, in such manner as may be specified by the State Government Whom the Application for Registration has to be made The application for registration is to be made to the Registering Authority. The registering authority means any Officer of the State Government notified by that Government to exercise the powers and functions of the registering authority within the locas areas as specified in the Notification for the purpose of this Order

Role of the Edible Oils Commissioner The Edible Oils Commissioner is the representative of the Central Government. He may, if it deems fit for the purpose of giving effect to the provisions of this Order, issue directions which are not inconsistent with the provisions of this Order. The address for correspondence with the Edible Oils Commissioner is The Chief Director cum Edible Oils Commissioner Directorate of Vanspati, Vegetable Oils and Fats Department of Food and Public Distribution

Ministry of Consumer Affairs, Food & Public Distribution Government of India 5th Floor, Block 2, CGO Complex, Lodhi Road, NEW DELHI-110 003 (Phone/Fax Number : 91-11-436 2270)

(ii) The Vegetable Oil Products (Regulation) Order, 1998 The vanaspati industry was controlled by this Department through two Control Orders issued under the Essential Commodities Act, 1955, namely, (i) Vegetable Oil Products (Control) Order, 1947 and (ii) Vegetable Oil Products (Standards of Quality) Order, 1975. These two Orders were issued at a time when the vanaspati industry was at a primitive stage and strict control over manufacture and distribution of the product was required. The controls exercised were very stringent and covered both the manufacturer and the dealer. Looking to the current status of the vegetable products industry in the country, Government has carried out a thorough review and has had intensive consultations with the industry. It has been decided that in future, it would be sufficient if control is limited to the manufacturing stage only. Therefore, the earlier Orders have now been replaced with a single new Order called the Vegetable Oil Products (Regulation) Order, 1998. This Order, promulgated on 16th December, 1998, reduces the area of control and

limits the role of this Department to the manufacturing stage of the vegetable oil product. Overlap with other agencies like the BIS and PFA has also been removed. The standards of quality now prescribed under the Schedules have been tightened and all requirements which were vague and non- measurable and thus open to arbitrary interpretation have been done away with. This new simplified Order is also expected to result in price reduction of the vanaspati product at the consumer level. Term "Vegetable Oil Products" denote The term "Vegetable Oil Products" means any product obtained for edible purposes by subjecting one or more edible oils to any or a combination of any of the processes or operations namely, refining, blending, hydrogenation or interesterification and winterization (process by which edible fats and oils are fractionated through cooling) and includes any other process which may be notified by the Central Government in the official Gazette. In short "Vegetable Oil Products" include refined edible oils, vanaspati, margarine, bakery shortening, fat spread including blended edible oils with refined edible oils as one of the components How to Obtain Registration under this Order For obtaining registration, an application has to be made to the Vegetable Oil Products Commissioner, Ministry of Consumer Affairs, Food & Public Distribution, Department of Food & Public Distribution, Directorate of Vanaspati, Vegetable Oils & Fats, New Delhi in the form specified in Schedule-I.

Whom to Contact in Case for Details Joint Secretary (Sugar & Edible Oils) - 91-11-338 1177 VOP Commissioner - 91-11-436 2270 Director (Vanaspati) - 91-11-436 2888

iii) Solvent Extracted Oil, De-Oiled Meal and Edible Flour (Control) Order, 1967 In the process of rationalization, the Solvent Extracted Oil, De-oiled Meal and Edible Flour (Control) Order, 1967, known as SEO Control Order, has also been reviewed and amendments are being proposed. Under the existing Order, the Solvent Extracted Product Units have to obtain five different types of licenses. This is now proposed to be reduced to one. Similarly, the period of validity of license is also proposed to be increased and procedure for getting a license is being simplified. Under these proposed amendments also, stringent controls will be exercised at the manufacturing stage only Eligibility to apply for SEO License All units who are producing vegetable oils by use of solvent, for example, food-grade hexane and having well equipped laboratory to check the quality of oil according to the prescribed standards of quality are eligible for SEO License. For the purpose they have to submit the application to the Edible Oils Commissioner in the form specified under Schedule-II Fee for Registration/License

A license fee of Rs.500/- is payable in the form of demand draft in favour of Pay & Accounts Officer, Department of Food & Public Distribution, New Delhi.

Can anybody buy Solvent Extracted Oil No. Only those who are having SEO License or Registered User Certificate (RU) issued by the Directorate of Vanaspati, Vegetable Oils and Fats can buy and use solvent extracted oils. Registered User Certificate can be issued for solvent extracted oils meant for human consumption when it is called RU (Edible) Certificate or it can be issued for industrial purposes when it is called RU (Industrial) Certificate iv) Storage Control Order, 1977 A major step which is likely to have salutary effect on the future prospect of the industry has been the exemption of oilseeds and edible oils from the purview of the Pulses, Edible Oilseeds and Edible Oils (Storage Control) Order, 1977 with effect from 10th November, 1997. However, the State Government/UT Administrations have been advised that if they find it appropriate, they can regulate the storage, distribution, etc. of edible oils and oilseeds subject to certain conditions, in terms of the provisions under Section 5 of the Essential Commodities Act. Applicability of the three Regulatory Orders being administered by the Directorate of Vanaspati, Vegetable Oils and Fats

All the three Orders, namely, Vegetable Oil Products (Regulation) Order, 1998; SEO (Control) Order, 1967 and the Edible Oils Packaging (Regulation) Order, 1998 are statutory in nature. All these three Orders derive their powers under the Essential Commodities Act. The violation of any of the provisions of the Order attracts penal action under the provisions of the Essential Commodities Act Quality of Oils being monitored The monitoring of quality is done in terms of the provisions of the Orders mentioned earlier and as per the procedures prescribed in the Inspection Manual. For the purpose of ensuring proper quality control in addition to surprise inspection from Headquarters, a minimum of 12 inspections per unit are carried out annually. Field officers are also located in nine different zones organized in such a way as to enable proper monitoring. A well equipped laboratory exclusively devoted to the analytical work pertaining to fats and oils is available with the Directorate of Vanaspati, Vegetable Oils & Fats for analytical checking of the samples drawn. The Directorate is staffed by qualified Chemists with experience in the analysis of fats and oils. Irregularities pointed out by the Field Officers in their Inspection Reports are considered for appropriate action against the defaulting units. The samples drawn by the Field Officers are sent to Laboratory of the Directorate for analysis for checking conformity with the requirements prescribed under the Orders mentioned earlier. In case of failure of samples, concerned State Governments are required to launch prosecution against the defaulting units. On an average, the Directorate has been analyzing about 4000 samples per annum. However, at the height of the mustard oil controversy in Aug-Sept

1998, the Directorate through its Consumer Service Centre analyzed 2930 samples in a short period of three months, of which 224 samples failed PFA standards. Consumer Service Centre at Super Bazaar New has been closed as number of samples at Super Bazaar received negligible and Directorate has not sufficient staff to analyze the samples. Tax policy Recent actions taken in the area of Fats and Oils. Some of the recent actions taken in the area of fats and oils are as under:  Vanaspati and margarine continue to be exempted from Central Excise and placed at par with the refined edible oils.  Import duty on edible oils has been reduced to 15% ad-valorom.  There has been further reduction in duty on fatty acids and crude palm stearin from 40% to 32%. However, a surcharge as special custom duty on imported stocks @ 2% has been levied.  Special Additional Duty (SAD) has been removed for Vanaspati.  Upward revision of unsaponifiable matter in vanaspati to 3.4% maximum so as to allow increased usage of rice bran oil beyond 30% has been accepted by the Government. A Notification in this regard is being issued.

 Use of all edible oils including expeller mustard oil and coconut oil has

been

allowed

in

the

manufacture

of

vanaspati.

 Flavouring of margarine with wider range of permitted flavours has also been accepted by the Government. A Notification in this regard is being issued.  A Consumer Service Central (CSC) has been set up at Super Bazaar, Connaught Place, New Delhi. The CSC is run by the Directorate and has been operational since 17-03-1997. It provides service to the consumer and consumer organizations in the detection of common adulterants in edible fats and oils including vanaspati, margarine, and butter/ghee. The fee per test is Rs.10/- only. The scope of the testing facilities will be extended to other food items in due course. The measure has been hailed as a landmark event in the history of consumer movement by the consumer organizations. Government had to close the centre as samples of Vanaspati/Edible Oils were not received sufficient.  Permission has been accorded on experimental basis for manufacture and marketing of a new product category distinct from vanaspati so as to help product diversification and meet changing consumer needs

Economic factors Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. The following are examples of factors in the macro economy. Economic growth: India’s GDP to grow at 7.4% in 2003-04, courtesy higher agri. growth For year the raison d etre of Indian policymaking was raising food grains production. And not without reason feeding rapidly rising mouths apart, the performance of the sector had all along influenced the growth pattern of our Gross Domestic Product (GDP) decisively as well. But all this changed with the beginning of the reform process in the early nineties. Agriculture was no more the key sector to accelerate GDP growth rate. The service sector replaced it with its fast rising share in GDP. Its share in GDP increased from about 48% in 1993-94 to more than 56% in 2002-03. Agricultures share in GDP, in contrast, fell from 31% to 22% during the same period.

But that is a thing of the past now. A monsoon failure last to last year witnessed a massive 14% fall in aggregate food grains production from 212 million tonne in 2001-02 to 182.5 million tonne in 2002-03. In actual terms, food-grains production had fallen by a hefty 29.5 million tonne in a single year. The Union government may not be concerned yet as the news of a good monsoon in the current year has already improved the prospect of higher production food grains production is projected to grow by 14% to 208.2 million tonne in 2003-04. A good harvest this year will, in turn, help to raise Food grains stock next year too. What is significant, however, is that the prospect of higher agriculture production in 2003-04 has improved the prospect of higher GDP growth too. It is now projected to grow by 7.4% and increase of 3.1 percentage points over 4.3% achieved in 2002-03. That is, despite the shift in priority agriculture still remains a key factor in deciding the magnitude of GDP growth rate. In fact, in 2002-03 when foodgrains production declined, GDP Growth too had fallen. But then neither 2002-03 nor 2003-04 are exceptions. The magnitude of GDP growth has generally followed the same direction as that of agricultural growth. GDP grew by less than 5% three times during the last seven years and each time food grains production had fallen. GDP growth was higher that 5% in two year following higher growth in food grains production. Only once in 1999-2000 GDP grew by 6.1% despite a relatively low 3% growth in food grains production.

That agricultural production in India has a fluctuating trend is now a new thing. Agriculture her still depends largely on monsoon rains and the intensity of the latter has significant influence on production. Significantly, even the agriculturally rich state with better irrigation network; have witnessed sharp changes in their production of late. Punjab witnessed a fall in food grains production the last 10 year. In addition, its production rose by just about 0.5% once and by 1% in another year. Haryana too witnessed a similar fluctuating trend in its food grains production during the last 10 years. Production declined twice, increased by just about 1% once and remained unchanged in two years. GDP By Industry of Origin Share in gross domestic product (%) Sector Agriculture Industry Service

0203* 22.14 21.18 56.05

2Jan 23.78 21.52 54.61

009901 00 98-99 23.85 24.99 26.42 22.01 21.56 21.98 54.14 53.44 51.6 * Revised estimates

97-98 26.5 22.68 50.82

96-97 28.46 23.07 48.47

Annul growth of sector-wise value added at constant prices (%) Sector Agriculture Industry Service GDP * CMIE estimates

0304* 10.7 5

3Feb 3.2 6

2Jan 5.7 3.3

0001 -0.4 6.6

7.3 7.4

7.1 4.3

6.8 5.6

5.6 4.4

9900 0.3 4.8 10. 1 6.1

98-99 6.2 3.7

97-98 -2.4 4.3

8.3 6.5

9.8 4.8

Social Factors Social factors include the demographic and cultural aspects of the external macro-environment. The social and cultural influences on business vary from country to country. These factors affect customer’s needs and the size of potential markets.

GREEN PRODUCTIVITY DEMONSTRATION IN EDIBLE OIL INDUSTRY IN INDIA

In conjunction with the Agenda – 21 of Rio Earth Summit, 1992, Asian Productivity Organization (APO), Tokyo launched Green Productivity Program – a strategy for enhancing productivity and environmental performance for overall socio-economic development in South East Asian Countries. Since then, a number of activities on Green Productivity demonstration, dissemination and awareness have been initiated by APO.

Subsequently, The Manila Declaration on Green Productivity was announced by APO on 6th December, 1996 in its First World Conference on Green Productivity. Under the Green Productivity Demonstrated Program, APO sponsored a project in Edible Oil sector to the National Productivity

Council, India. India is the fourth largest oilseed producing country in the World next to USA, China, and Brazil, harvesting about 25 million tons of oilseeds per annum.

The edible oil sector occupies a distinct position in Indian economy, as it provides job to millions of people, achieves on an average a domestic turn over of about US $ 10 billion per annum and earns foreign exchange of US $ 90 million per annum. Soybean is the third largest oilseed crop in India next to Groundnut & Mustard and accounts for 25% of the total oilseeds produced in the country in a year. Soy oil contributes about 10% of total vegetable oils produced in the country. In addition to the economic importance of the sector, edible oil processing industries have been identified as one of the most polluting sectors in India.

The processing of soy seed to produce oil gives rise to the generation of substantial amount of water pollutants, gaseous emissions and hazardous as well as non-hazardous solid wastes. Soy oil processing industry being the water and chemical intensive industry, affect the environment significantly.

With a view to enhance productivity and environmental performance in edible oil sector M/s. Rama Phosphate Ltd. (Oil Division), Indore, India – a Soy Oil Processing industry was selected for GPDP. The unit was established in the year 1993, having a employees strength of 150 with the annual turn over of US $ 20 million. The unit has capacity of soy seed processing up to 500 ton/day, solvent extraction up to 500 ton/day and oil

refining up to 100 ton/day. The unit also produces by-products like De-oiled cake and acid oil. The GP methodology was applied to identify the problems, their causes & effects by using GP tools & techniques like ecomapping, concentration diagrams, control charts, fish bone diagram, brainstorming, etc. The major problem areas identified were the hexane and oil losses in the plant. After identification and analysis of the problem areas, the GP team focused on the steam generation, supply and distribution as the top priority area. The seed preparation was also identified as one of the major focus area.

Based on the brainstorming and discussions with the top management & steering committee members, a total of 36 number of GP options were generated.

These

options

were

classified

based

on

the

techniques/technologies and short, medium and long term options as well. Based on the technique/technology, the various GP options were about 36% house keeping, 8% material substitution, 11% recycle/reuse, 3% recovery and 42% technology (equipment modification and/or change) based options. All the GP options were subjected to technical feasibility, economical viability and environmental acceptability. Out of 36 number of GP options, 18 options have been implemented by the management till January, 2002. The management has invested about US $ 4, 25,500 while implementing GP options and the pay back period has been estimated to be about 15 months. The unit has achieved the reduction in hexane loss of about 13% and oil losses in De-oiled cake (DOC) of about 20%. Recognizing the efforts of the unit, APO has given award to the management. In addition, the unit has also

received the ISO 14001 certificate by adopting GP approach. The management has informed that they have also received best quality product award consecutively second year.

Health consciousness Steps Taken by Government in the wake of the Dropsy Epidemic. In the wake of the dropsy epidemic Delhi High Court banned the sale of loose mustard oil in Delhi on 26th August, 1998. Several States including Delhi banned the sale of loose mustard oil. As a consequence, availability of mustard

oil

reduced

considerably

and

prices

went

up.

In order to improve the situation and restore the confidence of the consumers, trade and industry as also of the farmers, the Hon’ble Minister for Food & Consumer Affairs and the Secretary, Department of Sugar & Edible Oils held a series of meetings with the Government officials as also with the trade & industry, and the following measures were taken:(i) State Governments were advised, as a precautionary measure, not to allow the edible oils to be marketed in loose form.

(ii) The Department of sugar & Edible Oils, (Directorate of Vanaspati, Vegetable Oils & Fats) intensified Quality Control measures so as to ensure quality of edible oil including vanaspati; (iii) Operation of a few manufacturing units whose products were found adulterated were suspended till they ensured adequate analytical facilities for checking the purity of the samples to the satisfaction of the Government of India. (iv) Use of mustard oil in the manufacture of vanaspati was banned on 11.9.1998. The ban was lifted on 5.11.1998 only after adequate quality measures were ensured; Again an order has been issued on 12.06.2000 for use of indigenous oils @25% by weight and use of 30% expeller mustard oil in the manufacture of Vanaspati Crude Palm Oil (CPO) and its fraction thereof shall not be used by the producers other than those who are equipped with fully capture hydrogen generation facilities. (v) Monitoring of quality of edible oil was made stringent and surprise checks and frequency of regular inspections also increased. (vi) In order to expeditiously normalize the sale of safe edible oil in the market to the consumers, on the recommendations of the Coordinating Group, 39 laboratories of the DMI/BIS were initially accorded recognition for the purpose of analysis of edible oil samples. Department has so far recommended for according recognition to a total of 560 laboratories equipped with necessary analytical facilities. Among the laboratories

recommended for according recognition are the laboratories of NDDB at Mother Dairy, Delhi, a laboratory of Delhi Vegetable Oil Traders Association also at Delhi, etc; (ix) In order to ensure uniformity of approach and uniformity of results, the procedure for sampling and methods of analysis for fats and oils including the Thin Layer Chromatography (TLC) method for detection of argemone oil in edible oil in all testing laboratories was prescribed.

(x) A number of Institutes such as Central Food Technological Research Institute (CFTRI), Mysore; Department of Applied Chemistry, Calcutta University; Ganesh Scientific Research Foundation, New Delhi; Mechanical Engineering

Research

and

Development

Organization

(MERADO),

Ludhiana; Harcourt Butler Technological Institute, Kanpur have availed of this facility and have made important contributions.

Technological Factors:

Technological Mission on Oil Seeds (1986) There are two major features which have very significantly contributed to the development of this sector. One was the setting up of the Technology Mission on Oilseeds in 1986. This gave a thrust to Government's efforts for augmenting the production of oilseeds. This is evident by the very impressive increase in the production of oilseeds from about 11.3 million tonnes in 1986-87 to 24.9 million tonnes in 1998-2000. There was some setback in 1999-2000 because of the unseasonal rain followed by inclement weather. The production of oilseeds declined to 20.8 million tonnes in 19992000. However, as per available information, the oilseeds scenario in 200001 was expected to be again discouraging. Because of the swift measures taken by the Government to restore the confidence of the consumers, trade and industry and the farmers, the mustard oil controversy does not seem to

have had a perceptible adverse effect on the farmers. In fact, as per available information, mustard seed production in 2000-01 could decline from 6 million tonnes. The other dominant feature which has had significant impact on the present status of edible oilseeds/oil industry has been the programme of liberalization under which the Government's economic policy allows greater freedom to the open market and encourages healthy competition and self regulation rather than protection and control. Controls and regulations have been relaxed resulting in a highly competitive market dominated by both domestic and multinational players. R&D Plan Schemes This Department is operating three Plan Schemes which are as under: R&D Programme for "Development of Vegetable Oils". This is mainly to augment the availability of quality products; "Modernization of the Laboratory of the Directorate of VVO&F. This is for introducing modern equipments for testing of oils and fats; and "Strengthening of Directorate of VVO&F". This is for providing more technical staff to widen the scope of monitoring the oils industry. The basic objective of the Plan Schemes is to coordinate and concentrate research efforts designed to improve the yield of oils and co-products, both quantitatively and qualitatively. The R&D work is basically carried out in three phases:- Phase-I: Research and Development Phase-II: Technology propagation including demonstration of the technology developed Phase-III: Efforts for the adoption of technology by the industry.

The thrust areas identified by STAC for R&D work are: Application of frontier areas of technology such as membrane refining technology, biointeresterification etc. of oilseed/oil processing. Technology for upgradation of non-edible oils to edible oils/edible grade oils such as neem oil, castor oil, non-edible rice bran oil etc. Detoxification of oilseeds/oil-cakes/extraction. Upgradation of huller rice bran and refining of rice bran oil. Development of Soya bean oil with improved stability. Storage suitability of unrefined and refined edible vegetable oils. Work relating to nutritional aspects of newer oils particularly with regard to the suitability for human consumption. Development of simple, reliable, low cost analytical methods/techniques for detection/determination of adulterants in fats and oils including vanaspati. Development of low cost safe packaging material for edible oils etc. Proposals for tie-up arrangement between R&D institution/organization and industry for up-scaling of technology developed. Popularization of technology found suitable. There are 13 on-going R&D projects which are running in the various Institutes, namely, CFTRI, Mysore, IICT, Hyderabad, OTRI, Anantapur, University of Mumbai, University of Kolkata, GSRF, RRL, Trivandrum, RRL, Jorhat. The total outlay for the year 2000-2001 is Rs. 40 lakhs. Some of the Technologies got Recognised for Improvement in Quality of Products and Co-products of Vegetable Oils Industry. The need for modernisation of equipments and technological up gradation of process so as to enable optimal use of available sources, improved efficiency operation, improvement in the quality of products and co-products, etc. has

been stressed upon. Recognition of newer process technologies such as extruder-expander technology, intereterification, physical refining, refined, bleached, hydrogenated, winterized and deodorized (RBHWD) soya bean with improved stability etc. is a result of the sustained efforts of the Directorare of Vanaspati, Vegetable Oils and Fats (DVVO&F). Revision of technical parameters without compromising with the quality of the product has also been a continuing efforts of the Directorate. In 1996, the Government set up a Technology Mission on oil seeds, to increase production of other oil seeds and oil, and to reduce dependence on imports. The strategy followed was to:• Increase productivity with better farm inputs and practices. • Increase area under oilseed crop. • Encourage winter (Rabi) oilseed crops. This led to a sharp increase in oilseed production driven mainly by rapeseed, sunflower, castor seed and Soya Oil seed production jumped from 6.1mn ton in the mid 80's to around 22mn ton currently. India is today world’s third largest producer of rapeseed and cottonseed and the largest producer of castor seed.

Opportunities & Threats Analysis Opportunities: Investment Opportunities The edible oil industry is now one of the leading sustainers of the positive annual economic growth rates India has enjoyed for over a decade now. India’s demand for edible oil has been growing at a rate of 8-9% per annum. The national demand for edible oil is projected to reach over 110.25 lakh MT in 2005 up from 100.96 lakh MT in 2001. National production as of 2001 stood at 54.54 lakh MT making India a net importer of edible oil to the tune of over 46.92 lakh MT. This gives investment opportunities into the edible oil industry. Strategic location India is strategically positioned within the South of the Asian continent that includes the SAARC countries, an economic grouping with a market of over 1500 million people. This location gives India a commanding importance as a base for regional trade and investment.

Predictable and stable economic environment Since 1985, India has been on the path of economic reconstruction and development, which has made her the new face of emerging Asia. The economic reforms undertaken, coupled with political stability, have contributed to growth rates averaging 6.5% over the last decade. Inflation has consistently been maintained below 6 %. India is now rated the second best improving Countries in the Asian continent after China.

Cheap but quality labour

The quality of labour force is one of India’s main strengths. With hundreds of universities and polytechnics, all levels of skills and training needed to run the edible oil industry are adequately covered.

India’s labour is cheap compared to that of most developed countries. Trained, trainable as well as unskilled labour is readily available for prospective investors in the sector to utilise.

Macroeconomic factors •

Population growth:-

•

Per capita income:

•

Purchasing power:

•

Oilseeds crop:

Threats: Monsoon dependent Agriculture Raw materials supply of edible oil industry is directly related with the agricultural production of oil seeds. That agricultural production in India has a fluctuating trend is now a new thing. Agriculture here still depends largely on monsoon rains and the intensity of the latter has significant influence on production. Significantly, even the agriculturally rich state with better irrigation network; have witnessed sharp changes in their production of late.

Micheal Porter’s five force analysis 1) Threat of new entrants: A firm profitability will tend to be a higher when other firm’s are blocked from entering the industry. New entrants can reduce the industry profitability because they add new production capacity and can substantially erode existing firm market position In the Edible Oil industry threat of new entrants is moderate because of these reasons. 1. Higher capital requirement:In this industry high investment is required and there is a high fixed cost so new entrant can’t enter easily. 2. Higher economies of scale:In this industry production cost per unit is high so economies of scale are very low in edible oil industry. 3. Less capacity utilization:-

In this industry particularly in India, there is a very less capacity utilization of total available production capacity.

Type of Vegetable Oil Industry Capacity Utilization Oilseed Crushing Units

10 - 30 %

Solvent Extraction Units

32 %

Refineries(Independent &Attached

with

Vanaspati, 32 %

Solvent Extraction Plant) Vanaspati Units

41 %

4. Customer Loyalty:In this industry switching probability is low so customers hesitate to switch to other new brands. 2) The nature of rivalry industry: The intensity of rivalry in an industry is a sufficient determinant of industry attractiveness and profitability the intensity of rivalry can influence cost of supplies, of distribution can attracting customer so directly affect profitability In edible oil industry rivalry among firms is very high because of these reasons 1. Fragmented Market 2. Well established local players 3. High fixed cost 4. Availability of different Edible oils 3) Bargaining power of suppliers:

In edible oil industry various seeds are the raw material, so there is a need to purchase them from other people (suppliers). The supply of oilseeds also depends upon certain uncontrollable factors like monsoon, production, etc. because of these factors the bargaining power of suppliers is moderate.

4)

Bargaining power of buyers: Buyers of an industry’s product or service can sometimes exert considerable pressure on existing firm to secure lower price or better service. In this industry the bargaining power of the buyers is very low, because the prices of the oils are provided according to the demand-supply & production trends and government influence.

5)

Threat of substitute product:

Substitutes are alternative product types that perform essentially the same function. In edible oil industry there are no perfect substitutes as it is an essential requirement.

Table of five force analysis 1

Threat of new entrants

Moderate

2

Rivalry among existing

High

3 4 5

firms Bargaining power of suppliers Bargaining power of buyers Threat of substitute product

Moderate Low Very low

Statistical Profile of Indian Edible Oil Industry Status of the Edible Oil Industry The market liberalization and delicensing of the industry in 1990-91 has resulted in both increased capacity and intense competition at low margin. The status of the Edible Oil Industry is summarized below:-

Type of Vegetable Oil No. Industry Oilseed Crushing Units

of Annual Capacity Capacity

Units (Lakh MTs) Utilization 1,50,000 425 (In terms of 10 - 30 % (Approx.) Oil Seeds) 337 (In terms of

Solvent Extraction Units 785

Oil-bearing

32 %

material) Refineries(Independent &Attached Vanaspati, Extraction Plant) Vanaspati Units

with 950

60 (In terms of

Solvent (Approx.) Oil) 222

32 %

48.76 (In terms of 41 %

Vanaspati) (Source: Directorate of VVOF)

•

Oil seeds crushing units include crushing units in the small scale sector as also in the organized sector. The capacity utilization generally ranges from an average of 10% for the ghanis (small scale sector) to around 30% in case of the expellers in the organized sector.

•

Unrestricted growth of the industry consequent upon de-licensing of the vegetable oil industry.

•

Creation of capacity totally incommensurate with availability of raw materials.

•

Obsolete technology.

•

Very low margin because of stiff competition, inefficiency of operations etc.

•

Speculative nature of the trade.

Supply Situation of Oilseeds and Edible Oils in the Country To enhance the production of oilseeds, the strategy for area expansion was adopted in the late 1980s and early 1990s by the Technology Mission on Oilseeds & Pulses (TMOP), which was set up in May, 1986. The production of oilseeds, which increased significantly in the 1980s, has hit a plateau in the 1990s. In fact, the target fixed by the Ministry of Agriculture was during the year 1990-91 to 1993-94. In the year 1997-98 to 1999-2000 the production of oilseed has considerably reduced which is evident from the following table –

Year 1995-96 1996-97 1997-98 1998-99 1999-2000

Target@ 22.50 23.00 25.50 27.00 28.00

Production@ 22.10 24.38 21.32 24.75 20.87

2000-01

28.00

18.20

Source: @ Ministry of Agriculture

PRODUCTION OF OILSEEDS AND NET AVAILABILITY OF EDIBLE OILS FROM ALL SOURCES

[Figures in NAME OF THE OIL A.PRIMARY SOURCE Groundnut Rapeseed & Mustard Soya bean Sunflower Sesame Nigerseed Safflower Castor Linseed Sub Total B.SECONDARY SOURCE Coconut Cottonseed Rice-bran Solvent Extracted Oils Tree & Forest Origin

1999-2000 Oilseeds Oils 53.11 59.58 67.92 8.00 5.18 1.50 2.77 7.77 2.89 208.72

12.22 18.47 10.87 2.64 1.61 0.45 0.83 3.11 0.87 51.07 4.50 5.00 5.00 2.50

Lakh MT] 2000-2001 * Oilseeds Oils 64.10 40.90 50.90 6.60 5.40 1.00 1.70 9.00 2.40 182.00

14.74 12.68 8.14 2.18 1.67 0.30 0.51 3.60 0.72 44.54 5.60 4.60 4.80 2.00

Share of Major States in Area and Production of Oilseeds

State Madhya Pradesh Gujarat Andhra Pradesh Rajasthan Maharashtra Karnataka Uttar Pradesh Others All India

% of Total 24.13 11.61 11.53 11.4 10.84 9.46 6.02 15.01 100

State Madhya Pradesh Andhra Pradesh Maharashtra Rajasthan Gujarat Tamil Nadu Karnataka Others All India

(Source: www.kisanwatch.org )

% of Total 22.55 12.99 11.36 11.03 9.24 8.59 7.45 16.79 100

Net Availability of Edible Oils/Import/Actual Consumption There has been a persistent gap between demand and domestic availability of edible oils. The Government, with a view to avoiding scarcity of this item and consequential rise in prices, has been allowing import of edible oils. The net availability of Edible Oils from all domestic sources, Actual Consumption and Import during the years 1996-97 to 2000-01 are as under SUPPLY OF EDIBLE OILS FOR THE YEARS 1996-97 to 2000-01 (In Lakh MT)

YEAR

Net availability

Actual

of Edible Oils

Consumption/Demand*

Import @

from all domestic sources 1996-97

70.89

83.72

11.29

1997-98

60.32

87.69

23.78

1998-99

69.61

91.99

41.96

1999-00

61.07

96.43

39.75

2000-01

54.54(T)

100.96*

46.92

Source: Ministry of Agriculture * Computed as per parameter given by Planning Commission @ Actual Consumption / Demand Important Factors Responsible for Low Production of Oilseeds and Hence of Oils

A major reason for the low production of oilseeds is the low productivity of our oilseeds compared to the situation in other countries as may be observed from the table below:Productivity of Oils Seeds:-

( Tonne/ Hectare) Oilseed

India

Soya bean Cottonseed Groundnut Sunflower Rapeseed/Mustard

0.85 0.59 0.59 0.62 0.75

World Average 2.29 1.06 1.02 1.18 1.49

Highest 3.28(EU-15) 2.07(Australia) 2.13(China) 1.73(EU-15) 2.96(EU-15)

(Source: Oil World (31, August, 2001) A number of factors seem responsible for this situation :(i) Only about 20% of the oilseed crops are being irrigated. Thus the extent and spread of rainfall has a critical role in production. (ii) There is limitation of land availability for crops other than food grains in the country. (iii) Lack of Hybrid/HYV seeds. As per the available information, the availability of this quality of seeds is grossly inadequate to meet the requirement. (iv)

Susceptibility

of

oilseeds

to

pests

and

diseases.

(v) Oilseeds production is yet to receive the desired priority in the extension set-up in the country.

Volume of Imported Edible Oils under OGL and on Government Account (i) Import of Edible Oil under OGL With decimalization, import of edible oil under OGL started in 1994-95, peaked during the subsequent years due to reduction in duty and enlarged basked of oils under OGL. Based on the reports received from the post Customs, the details of edible oils imported under OGL has been as under

IMPORT OF EDIBLE OILS DURING OIL YEARS 1996-97 1997-98, 1998-99, 1999-2000 AND 2000-01 (in Lakh MT ) Oil Year Imported Quantity 1996-97 12.87 1997-98 11.30 1998-99 23.78 1999-2000 41.96 2000-01 22.47 Source : DGCI&S , Kolkata ii) Import of Edible Oil on Government Account (for PDS) The Government of India has been engaged in import of edible oils through the State Trading Corporation (STC) as the canalising agency for a number of years. Till 1988-89 a variety of edible oils like RBD palmolein, palm oil, rapeseed oil, soya bean oil, sunflower oil, etc. were being imported both in crude and refined form, which were also supplied to the vanaspati industry for manufacturing vanaspati, in addition to distribution to consumers for direct use under the network of the Public Distribution System (PDS). From 1989-90, onwards imports through STC have been made only for distribution through PDS. As production of indigenous edible oils has increased considerably, and import of edible oils is also made under OGL, a limited quantity is now being imported for PDS mainly to meet the enhanced demand of edible oils during the festival season, which incidentally falls during the lean supply season. Edible Oil (RBD Palmolein) imported during the last five years, for PDS has been as under

(Lakh MTs)

Year (April - March) 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01

Import of Edible Oil for PDS 2.02 1.49 0.89 1.67 0.82 -

Indication the Central Issue Price For Oil For Public Distribution System (PDS). The Central Issue Prices of oil supplied to States/UTs for Public Distribution System have been revised w.e.f. 1st August, 1998. These prices are as under :(i) Oil Supplied in Bulk – Rs 30,000 per MT (ii)Oil Supplied in 15 kg tin – Rs 33,000 per MT States/UTs have been advised to fix the end retail prices themselves. Supply of oil to the States/ UTs at the above CIPs also involves an element of subsidy, as the actual cost of oil is more than the CIP, and the Edible Oil Account of STC is, therefore, running in deficit which the Central Government has to reimburse through its budgetary provisions

EXPORT: The total exports during 1999-2000 in terms of quantity declined from 3.96 Million MT to 3.15 Million MT and FOB earnings increased from Rs.332/Crores to Rs. 189/- Crores mainly due to drastic fall in exports of rapeseed meal and rice bran extractions and lesser of FOB realisation. The exports of oilseeds, minor oils/fats and oilmeals during the last five years are as under [Value in Rs/Crores] [Qty. In Lakh MT]

YEAR

OILSEEDS

Quant

Value

ity

MINOR

OILCAKE/EXTR

OILS/FATS

ACTIONS

Quanti

Quanti Value

Value

ty

ty

1995-96

1.63

422.45

1.78

442.7

43.14

2361.46

1996-97

2.39

574.76

1.95

507.4

43.00

3157.05

1997-98

3.40

907.06

1.89

509.1

41.70

3236.20

1998-99

1.40

522.96

1.96

614.6

36.26

2042.90

1999-00

2.40

672.10

2.37

918.6

26.76

1736.90

Source : Solvent Extraction Association Of India (SEAI), Mumbai

Business Concerns •

Free imports, low import duties and slump in global prices - lead to `dumping’

•

Domestic industries of edible oils affected - low realization and idle capacities in oil industries

•

Production slippages have also forced imports

•

Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally

•

Hence, farmers have shifted to other cash crops

•

Increasing health awareness - impact of oils usage on individual’s cholesterol levels

Bibliography Websites

:

www.agribizz.com www.kisanwatch.org www.indiainfoline.com www.cybgroup.co.uk www.tis-gdv.de www.holdiko.com

Magazines

:

Oil World Business Today

Newspapers

:

The Economic Times

The Financial Express

Annexures WORLD PRODUCTION OF 17 OILS & FATS :1994 - 2001 ('000 TONNES)

Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil

1994 14,304

1995 15,210

1996 16,282

1997 17,903

1998 16,919

1999 20,631

2000 21,825

2001 23,355

1,861 18,684 3,566 4,309 7,391 9,970 1,675 3,015 1,900 446 616 636

1,945 20,404 3,905 4,423 8,556 10,955 1,855 3,350 1,888 483 589 701

2,083 20,322 4,119 4,563 9,006 11,479 1,834 2,867 2,042 479 668 666

2,230 21,052 4,047 4,521 9,165 11,830 1,858 3,301 2,701 442 723 691

2,168 24,038 4,043 4,502 8,439 12,229 1,880 3,107 2,588 441 736 694

2,557 24,809 3,822 4,694 9,308 13,066 1,938 2,388 2,461 442 726 730

2,688 25,546 3,852 4,573 9,677 14,467 1,968 3,272 2,545 494 715 698

2,872 27,779 4,006 5,073 8,223 13,725 1,962 3,539 2,690 515 751 621

Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL

68,373 5,677 7,550 1,490 5,430

74,264 5,677 7,507 1,285 5,692

76,410 5,648 7,500 1,336 5,936

80,464 5,685 7,572 1,194 6,150

81,784 5,761 7,784 865 6,520

87,572 5,918 8,175 1,354 6,703

92,320 6,026 8,199 1,416 6,716

95,111 6,059 8,196 1,121 6,815

20,147

20,161

20,420

20,601

20,930

22,150

22,357

22,191

88,520

94,425

96,830

101,065

102,714

109,722

114,677

117,302

Source: • Oil World Annual 2001, 2000, 1999, 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB - For data on Malaysia.

WORLD IMPORT OF 17 OILS & FATS :1994 - 2001 ('000 TONNES)

Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil

1994 10614

1995 10,457

1996 10,770

1997 12,269

1998 11,305

1999 13,867

2000 15,252

2001 17,368

896 4,693 232 269 2,006 1,778 484 1,571 443

801 5,392 272 261 2,903 1,888 622 1,635 404

931 5,042 237 246 2,610 1,834 614 1,385 323

1,054 6,901 242 258 3,430 1,872 670 1,773 509

1,026 7,658 220 254 2,838 2,209 810 1,975 467

1,250 7,574 195 240 2,916 1,813 690 1,156 556

1,260 6,696 195 243 3,019 1,877 776 1,873 523

1,335 7,866 237 247 2,315 1,205 706 2,221 540

Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL

196 23 132

296 22 191

262 22 129

254 22 135

249 21 112

232 23 131

265 25 140

251 23 110

23,337 629 2,254 789 170

25,144 606 2,570 906 179

24,405 546 2,178 810 125

29,389 633 1,971 743 126

29,144 605 2,318 417 160

30,643 599 2,357 687 214

32,144 689 2,268 827 202

34,424 690 2,060 781 148

3,842

4,261

3,659

3,473

3,500

3,857

3,986

3,679

27,179

29,405

28,064

32,862

32,644

34,500

36,130

38,103

Source: • Oil World Annual 2001, 2000, 1999, 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB - For data on Malaysia.

WORLD EXPORT OF 17 OILS & FATS:1994 -2001 ( '000 TONNES)

Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil

1994 10,760

1995 10,195

1996 10,763

1997 12,173

1998 10,897

1999 13,868

2000 15,004

2001 17,371

890 4,786 254 253 1,996 1,852

796 5,665 263 262 2,913 1,899

945 4,883 238 252 2,645 1,781

1,050 6,776 236 256 3,416 1,917

1,046 7,933 255 254 2,773 2,234

1,294 7,595 199 244 2,950 1,737

1,197 6,855 216 242 3,088 1,862

1,308 7,981 232 245 2,318 1,205

Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL

504 1,481 443 188 23 122

586 1,704 385 302 22 188

599 1,353 306 264 22 138

704 1,919 509 235 23 130

804 1,864 476 250 23 128

690 1,046 565 237 23 148

755 2,036 508 277 26 126

704 2,106 542 256 25 112

23,552 628 2,254 823 179

25,180 573 2,553 895 172

24,189 554 2,154 770 139

29,344 645 2,008 745 134

28,937 588 2,347 429 161

30,596 603 2,343 716 212

32,192 703 2,242 832 200

34,405 674 2,115 718 156

3,884

4,193

3,617

3,532

3,525

3,874

3,977

3,663

27,436

29,373

27,806

32,876

32,462

34,470

36,169

38,068

Source: • Oil World Annual 2001, 2000, 1999, 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB - For data on Malaysia.

WORLD OPENING STOCK OF 17 OILS & FATS 1994 - 2001('000 TONNES)

Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil

1994 2,910

1995 2,247

1996 2,879

1997 3,111

1998 3,246

1999 2,851

2000 3,789

2001 4,049

272 2,211

192 2,059

211 2,743

242 2,837

264 2,553

263 2,623

257 2,948

438 3,251

Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL

323 350 989 719 133 417 829 68 45 75

359 372 1,098 983 123 427 684 72 46 83

410 492 1,183 1,277 185 461 555 84 48 92

405 521 1,384 1,198 160 399 621 90 45 96

436 493 1,228 1,292 150 483 1,005 71 45 87

385 494 1,162 1,280 159 580 1,138 66 46 103

378 449 1,366 1,415 190 374 1,162 65 48 112

378 461 1,583 1,436 227 478 1,030 65 47 110

9,341 819 542 261 327

8,745 693 555 403 391

10,620 676 613 294 453

11,109 660 498 309 442

11,353 613 578 222 465

11,150 624 632 162 464

12,553 635 641 278 434

13,553 616 735 260 443

1,949

2,042

2,036

1,909

1,878

1,882

1,988

2,054

11,290

10,787

12,656

13,018

13,231

13,032

14,541

15,607

Source: • Oil World Annual 2001, 2000, 1999, 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB - For data on Malaysia.

WORLD ENDING STOCK OF 17 OILS & FATS : 1994 - 2001 ('000 TONNES)

Oils/Fats Palm Oil Palm Kernel Oil Soya bean Oil Cottonseed Oil Groundnut Oil Sunflower Oil Rapeseed Oil Corn Oil Coconut Oil Olive Oil Castor Oil Sesame Oil Linseed Oil Total Vegetable Oils Butter

1994 2,247

1995 2,879

1996 3,111

1997 3,246

1998 2,851

1999 3,789

2000 4,049

2001 3,749

192 2,059 359 372 1,098 983 123 427 684 72 46 83

211 2,743 410 492 1,183 1,277 185 461 555 84 48 92

242 2,837 405 521 1,384 1,198 160 399 621 90 45 96

264 2,553 436 493 1,228 1,292 150 483 1,005 71 45 87

263 2,623 385 494 1,162 1,280 159 580 1,138 66 46 103

257 2,948 378 449 1,366 1,415 190 374 1,162 65 48 112

438 3,251 378 461 1,583 1,436 227 478 1,030 65 47 110

578 3,626 370 480 1,108 1,127 170 568 969 86 47 83

8,745 693

10,620 676

11,109 660

11,353 613

11,150 624

12,553 635

13,553 616

12,961 620

Tallow Fish Oil Lard Total Animal Oils/Fats GRAND TOTAL

555 403 391

613 294 453

498 309 442

578 222 465

632 162 464

641 278 434

735 260 443

674 160 442

2,042

2,036

1,909

1,878

1,882

1,988

2,054

1,896

10,787

12,656

13,018

13,231

13,032

14,541

15,607

14,857

Source: • Oil World Annual 2001, 2000, 1999, 1998 & Oil World Weekly (22 March & 5 April 2002) • MPOB - For data on Malaysia.