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 Page No.

Chapter 1:
Introductions

1) Executive Summary
2) Introduction
3) Research Study
 Research Objectives
 Research Methodology Adopted

Chapter 2:
Industry Description

1) About Edible Oil

• Choice of Oil
2) Types of Edible Oils( History & Description)
 Vegetable Oils
• 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
 • 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 cut-
throat 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 organic-

chemical 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 Sudan
Asia 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 deep-
frying, 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 shallow-
frying 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 • Poppyseed
• Arachis • Pumpkinseed
• Borage • Safflower
• Castor • Salmon
• Cod Liver • Sesame
• Evening Primrose • Shark Liver
• Flaxseed • Sild
• Grapeseed • Walnut
• Halibut Liver
• Wheatgerm
• Hazelnut

Source:

www.cybgroup.co.uk
www.tis-gdv.de
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 1994 1995 1996 1997 1998 1999 2000 2001

Palm Oil 14,304 15,210 16,282 17,903 16,919 20,631 21,825 23,355
Palm Kernel
Oil 1,861 1,945 2,083 2,230 2,168 2,557 2,688 2,872
Soya bean Oil 18,684 20,404 20,322 21,052 24,038 24,809 25,546 27,779
Cottonseed Oil 3,566 3,905 4,119 4,047 4,043 3,822 3,852 4,006
Groundnut Oil 4,309 4,423 4,563 4,521 4,502 4,694 4,573 5,073
Sunflower Oil 7,391 8,556 9,006 9,165 8,439 9,308 9,677 8,223
Rapeseed Oil 9,970 10,955 11,479 11,830 12,229 13,066 14,467 13,725
Corn Oil 1,675 1,855 1,834 1,858 1,880 1,938 1,968 1,962
Coconut Oil 3,015 3,350 2,867 3,301 3,107 2,388 3,272 3,539
Olive Oil 1,900 1,888 2,042 2,701 2,588 2,461 2,545 2,690
Castor Oil 446 483 479 442 441 442 494 515
Sesame Oil 616 589 668 723 736 726 715 751
Linseed Oil 636 701 666 691 694 730 698 621
Total
Vegetable Oils 68,373 74,264 76,410 80,464 81,784 87,572 92,320 95,111
Butter 5,677 5,677 5,648 5,685 5,761 5,918 6,026 6,059
Tallow 7,550 7,507 7,500 7,572 7,784 8,175 8,199 8,196
Fish Oil 1,490 1,285 1,336 1,194 865 1,354 1,416 1,121
Lard 5,430 5,692 5,936 6,150 6,520 6,703 6,716 6,815
Total Animal
Oils/Fats 20,147 20,161 20,420 20,601 20,930 22,150 22,357 22,191
GRAND
TOTAL 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 European-
grown 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 1999-
2000. 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 semi-
organized 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,
Demand
Availability - oil, oilseeds
Drivers
• 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)
Key Success • Better distribution network to improve reach
Factors • Efficiency in operation - to become price competent
and withstand overseas competition

• 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
Future - edible oils will grow by 8 to 9% to 14.65 million MT
 • 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
Business
• Excessive (cheap) imports of oilseeds - led to
Concerns
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 (%)
02- 2- 00- 99-
Sector 03* Jan 01 00 98-99 97-98 96-97
Agriculture 22.14 23.78 23.85 24.99 26.42 26.5 28.46
Industry 21.18 21.52 22.01 21.56 21.98 22.68 23.07
Service 56.05 54.61 54.14 53.44 51.6 50.82 48.47
* Revised estimates
Annul growth of sector-wise value added at constant prices (%)
03- 3- 2- 00- 99-
Sector 04* Feb Jan 01 00 98-99 97-98
Agriculture 10.7 3.2 5.7 -0.4 0.3 6.2 -2.4
Industry 5 6 3.3 6.6 4.8 3.7 4.3
10.
Service 7.3 7.1 6.8 5.6 1 8.3 9.8
GDP 7.4 4.3 5.6 4.4 6.1 6.5 4.8
* CMIE estimates
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 eco-
mapping, 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 1999-
2000. However, as per available information, the oilseeds scenario in 2000-
01 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, bio-
interesterification 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

 firms
3 Bargaining power of Moderate
suppliers
4 Bargaining power of Low
buyers
5 Threat of substitute Very low
product

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. of Annual Capacity Capacity

Industry Units (Lakh MTs) Utilization
1,50,000 425 (In terms of
Oilseed Crushing Units 10 - 30 %
(Approx.) Oil Seeds)
337 (In terms of
Solvent Extraction Units 785 Oil-bearing 32 %
material)
Refineries(Independent
&Attached with 950 60 (In terms of
32 %
Vanaspati, Solvent (Approx.) Oil)
Extraction Plant)
Vanaspati Units 222 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 Target@ Production@

1995-96 22.50 22.10
1996-97 23.00 24.38
1997-98 25.50 21.32
1998-99 27.00 24.75
1999-2000 28.00 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
Lakh MT]
NAME OF THE OIL 1999-2000 2000-2001 *
Oilseeds Oils Oilseeds Oils
A.PRIMARY SOURCE
Groundnut 53.11 12.22 64.10 14.74
Rapeseed & Mustard 59.58 18.47 40.90 12.68
Soya bean 67.92 10.87 50.90 8.14
Sunflower 8.00 2.64 6.60 2.18
Sesame 5.18 1.61 5.40 1.67
Nigerseed 1.50 0.45 1.00 0.30
Safflower 2.77 0.83 1.70 0.51
Castor 7.77 3.11 9.00 3.60
Linseed 2.89 0.87 2.40 0.72
Sub Total 208.72 51.07 182.00 44.54
B.SECONDARY SOURCE
Coconut 4.50 5.60
Cottonseed 5.00 4.60
Rice-bran 5.00 4.80
Solvent Extracted Oils 2.50 2.00
Tree & Forest Origin
Share of Major States in Area and Production of Oilseeds

State % of Total
Madhya Pradesh 24.13
Gujarat 11.61
Andhra Pradesh 11.53
Rajasthan 11.4
Maharashtra 10.84
Karnataka 9.46
Uttar Pradesh 6.02
Others 15.01
All India 100
 State % of Total
Madhya Pradesh 22.55
Andhra Pradesh 12.99
Maharashtra 11.36
Rajasthan 11.03
Gujarat 9.24
Tamil Nadu 8.59
Karnataka 7.45
Others 16.79
All India 100

(Source: www.kisanwatch.org )
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 Import @

of Edible Oils Consumption/Demand*
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)

World
Oilseed India Highest
Average
Soya bean 0.85 2.29 3.28(EU-15)
Cottonseed 0.59 1.06 2.07(Australia)
Groundnut 0.59 1.02 2.13(China)
Sunflower 0.62 1.18 1.73(EU-15)
Rapeseed/Mustard 0.75 1.49 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) Import of Edible Oil for PDS
1995-96 2.02
1996-97 1.49
1997-98 0.89
1998-99 1.67
1999-2000 0.82
2000-01 -

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 MINOR OILCAKE/EXTR
OILS/FATS ACTIONS

Quant Value Quanti Value Quanti Value

ity 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 1994 1995 1996 1997 1998 1999 2000 2001

Palm Oil 14,304 15,210 16,282 17,903 16,919 20,631 21,825 23,355
Palm Kernel
Oil 1,861 1,945 2,083 2,230 2,168 2,557 2,688 2,872
Soya bean Oil 18,684 20,404 20,322 21,052 24,038 24,809 25,546 27,779
Cottonseed Oil 3,566 3,905 4,119 4,047 4,043 3,822 3,852 4,006
Groundnut Oil 4,309 4,423 4,563 4,521 4,502 4,694 4,573 5,073
Sunflower Oil 7,391 8,556 9,006 9,165 8,439 9,308 9,677 8,223
Rapeseed Oil 9,970 10,955 11,479 11,830 12,229 13,066 14,467 13,725
Corn Oil 1,675 1,855 1,834 1,858 1,880 1,938 1,968 1,962
Coconut Oil 3,015 3,350 2,867 3,301 3,107 2,388 3,272 3,539
Olive Oil 1,900 1,888 2,042 2,701 2,588 2,461 2,545 2,690
Castor Oil 446 483 479 442 441 442 494 515
Sesame Oil 616 589 668 723 736 726 715 751
Linseed Oil 636 701 666 691 694 730 698 621
Total
Vegetable Oils 68,373 74,264 76,410 80,464 81,784 87,572 92,320 95,111
Butter 5,677 5,677 5,648 5,685 5,761 5,918 6,026 6,059
Tallow 7,550 7,507 7,500 7,572 7,784 8,175 8,199 8,196
Fish Oil 1,490 1,285 1,336 1,194 865 1,354 1,416 1,121
Lard 5,430 5,692 5,936 6,150 6,520 6,703 6,716 6,815
Total Animal
Oils/Fats 20,147 20,161 20,420 20,601 20,930 22,150 22,357 22,191
GRAND
TOTAL 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 1994 1995 1996 1997 1998 1999 2000 2001

Palm Oil 10614 10,457 10,770 12,269 11,305 13,867 15,252 17,368
Palm Kernel
Oil 896 801 931 1,054 1,026 1,250 1,260 1,335
Soya bean Oil 4,693 5,392 5,042 6,901 7,658 7,574 6,696 7,866
Cottonseed Oil 232 272 237 242 220 195 195 237
Groundnut Oil 269 261 246 258 254 240 243 247
Sunflower Oil 2,006 2,903 2,610 3,430 2,838 2,916 3,019 2,315
Rapeseed Oil 1,778 1,888 1,834 1,872 2,209 1,813 1,877 1,205
Corn Oil 484 622 614 670 810 690 776 706
Coconut Oil 1,571 1,635 1,385 1,773 1,975 1,156 1,873 2,221
Olive Oil 443 404 323 509 467 556 523 540
Castor Oil 196 296 262 254 249 232 265 251
Sesame Oil 23 22 22 22 21 23 25 23
Linseed Oil 132 191 129 135 112 131 140 110
Total
Vegetable Oils 23,337 25,144 24,405 29,389 29,144 30,643 32,144 34,424
Butter 629 606 546 633 605 599 689 690
Tallow 2,254 2,570 2,178 1,971 2,318 2,357 2,268 2,060
Fish Oil 789 906 810 743 417 687 827 781
Lard 170 179 125 126 160 214 202 148
Total Animal
Oils/Fats 3,842 4,261 3,659 3,473 3,500 3,857 3,986 3,679
GRAND
TOTAL 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 1994 1995 1996 1997 1998 1999 2000 2001

Palm Oil 10,760 10,195 10,763 12,173 10,897 13,868 15,004 17,371
Palm Kernel
Oil 890 796 945 1,050 1,046 1,294 1,197 1,308
Soya bean Oil 4,786 5,665 4,883 6,776 7,933 7,595 6,855 7,981
Cottonseed Oil 254 263 238 236 255 199 216 232
Groundnut Oil 253 262 252 256 254 244 242 245
Sunflower Oil 1,996 2,913 2,645 3,416 2,773 2,950 3,088 2,318
Rapeseed Oil 1,852 1,899 1,781 1,917 2,234 1,737 1,862 1,205
Corn Oil 504 586 599 704 804 690 755 704
Coconut Oil 1,481 1,704 1,353 1,919 1,864 1,046 2,036 2,106
Olive Oil 443 385 306 509 476 565 508 542
Castor Oil 188 302 264 235 250 237 277 256
Sesame Oil 23 22 22 23 23 23 26 25
Linseed Oil 122 188 138 130 128 148 126 112
Total
Vegetable Oils 23,552 25,180 24,189 29,344 28,937 30,596 32,192 34,405
Butter 628 573 554 645 588 603 703 674
Tallow 2,254 2,553 2,154 2,008 2,347 2,343 2,242 2,115
Fish Oil 823 895 770 745 429 716 832 718
Lard 179 172 139 134 161 212 200 156
Total Animal
Oils/Fats 3,884 4,193 3,617 3,532 3,525 3,874 3,977 3,663
GRAND
TOTAL 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 1994 1995 1996 1997 1998 1999 2000 2001

Palm Oil 2,910 2,247 2,879 3,111 3,246 2,851 3,789 4,049
Palm Kernel
Oil 272 192 211 242 264 263 257 438
Soya bean Oil 2,211 2,059 2,743 2,837 2,553 2,623 2,948 3,251
Cottonseed Oil 323 359 410 405 436 385 378 378
Groundnut Oil 350 372 492 521 493 494 449 461
Sunflower Oil 989 1,098 1,183 1,384 1,228 1,162 1,366 1,583
Rapeseed Oil 719 983 1,277 1,198 1,292 1,280 1,415 1,436
Corn Oil 133 123 185 160 150 159 190 227
Coconut Oil 417 427 461 399 483 580 374 478
Olive Oil 829 684 555 621 1,005 1,138 1,162 1,030
Castor Oil 68 72 84 90 71 66 65 65
Sesame Oil 45 46 48 45 45 46 48 47
Linseed Oil 75 83 92 96 87 103 112 110
Total
Vegetable Oils 9,341 8,745 10,620 11,109 11,353 11,150 12,553 13,553
Butter 819 693 676 660 613 624 635 616
Tallow 542 555 613 498 578 632 641 735
Fish Oil 261 403 294 309 222 162 278 260
Lard 327 391 453 442 465 464 434 443
Total Animal
Oils/Fats 1,949 2,042 2,036 1,909 1,878 1,882 1,988 2,054
GRAND
TOTAL 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 1994 1995 1996 1997 1998 1999 2000 2001

Palm Oil 2,247 2,879 3,111 3,246 2,851 3,789 4,049 3,749
Palm Kernel
Oil 192 211 242 264 263 257 438 578
Soya bean Oil 2,059 2,743 2,837 2,553 2,623 2,948 3,251 3,626
Cottonseed Oil 359 410 405 436 385 378 378 370
Groundnut Oil 372 492 521 493 494 449 461 480
Sunflower Oil 1,098 1,183 1,384 1,228 1,162 1,366 1,583 1,108
Rapeseed Oil 983 1,277 1,198 1,292 1,280 1,415 1,436 1,127
Corn Oil 123 185 160 150 159 190 227 170
Coconut Oil 427 461 399 483 580 374 478 568
Olive Oil 684 555 621 1,005 1,138 1,162 1,030 969
Castor Oil 72 84 90 71 66 65 65 86
Sesame Oil 46 48 45 45 46 48 47 47
Linseed Oil 83 92 96 87 103 112 110 83
Total
Vegetable Oils 8,745 10,620 11,109 11,353 11,150 12,553 13,553 12,961
Butter 693 676 660 613 624 635 616 620
Tallow 555 613 498 578 632 641 735 674
Fish Oil 403 294 309 222 162 278 260 160
Lard 391 453 442 465 464 434 443 442
Total Animal
Oils/Fats 2,042 2,036 1,909 1,878 1,882 1,988 2,054 1,896
GRAND
TOTAL 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.