1

CIOC - 2012

Overview of Indian Oilseed Sector & Short Term & Long Term Demand-Supply

& Import of Edible OilsBy:

Dr.B.V.Mehta

Executive Director

The Solvent Extractors’ Association of India

8th – 9th Nov 2012

Guangzhou, China

2

Presentation Sequence

• SEA Profile

• Incredible India

• Indian General Economy

• Agricultural Economy

• Indian Oilseed Sector

• Edible Oil Demand & Supply – Short term & Long term projection

3

SEA Profile

• Formed in 1963 to foster the development & growth of the Solvent Extraction Industry in India

• Largest and Premier Association in the Vegetable Oil Sector in India

• First Association in Vegetable Oil & Oilseed sector to receive ISO 9001 Certification in India (2004)

• Recognised as NGO and TPO by Government of India

Over 850 Members

• S. E. Units• Oil Millers • Refiners

. Vanaspati Mnfrs.

. Importers

. Exporters

. Surveyors

. Shipping Agents

. Fin. institutes

. Foreign Buyers & many more….

India

33

32

87

49

291

104 43

9

22

28

50

2

2

8

1

18

29 6

4

SEA Members

5

Indian General Economy

6

• Second most populous nation

• 1.21 Bn people

• Largest Democracy

• Multi ethnic country

• Country with maximum young people

• Median age is 24 years

• Amongst the fastest growing economies

• Fourth largest economy

• Literacy level – 65% (2012)

What People Talk About India

7

• India – a fast growing significant economy in spite of global slowdown

• Strong Macro-economic fundamentals

• GDP Value: Over US$ 2.0 Trillion (Tn)

• Purchasing Power Parity (PPP): US$ 5 Tn

• Forex Reserve: US$ 293 Bn

• FDI Flow US$ 36.5 Bn (2011-12)

• Household Savings Rate 31.6% (2011-12) (world’s highest)

Indian Macro-economic Overview

8

GD

P G

row

th R

ate

(%

)

4.8

6.5 6.1

4.4

5.8

3.8

8.57.5

9.5 9.6 9.3

6.7

8.4 8.4

6.5 6.5

The overall GDP growth in last five years is registered at 7.8%

For FY12-13, growth is forecasted at 6.5%

India's Overall GDP Growth

Source : CMIE

9

Indian Agriculture Scenario

10

96-9

797

-9898

-9999

-0000

-0101

-0202

-0303

-04

04-0

5

05-0

606

-0707

-0808

-0909

-1010

-1111

-12

12-1

3(F)

9.6

-2.4

6.2

0.30.2

6.3

-7.2

10

0.0

5.14.2

5.8

0.11

7

2.81.6

Agriculture Sector GDP Growth

Agriculture Sector Growth depends heavily on monsoon performance. Indian Govt. is aiming at 4% Agriculture GDP growth to achieve 10% overall GDP growth

FY12-13, the growth is forecasted at 1.6% due to poor monsoon

Ag

ricu

ltu

re G

DP

Gro

wth

Rate

(%

)

Source : CMIE

11

• Area (3.3 Mn Km2) No. 7

• Arable Land (161.7 Mn Ha) No. 2

• Irrigated land (56.0 Mn Ha) No. 1

• Milk Production No. 1

• Rice Production No. 2

• Wheat Production No. 2

• Rapeseed Production No. 2

• Fruit Production No. 2

• Tea Production No. 2

• Sugar Production No. 2

• Cotton Production No. 2

• Coffee Production No. 5

India’s Ranking in the World

12

India’s Agriculture Production

India is well connected with cellular phone having 850 Million users and with the talk time rate cheapest in the world

13

Indian Oilseed Sector

Demand - Supply

and

Import of Vegetable Oils

14

• Area Under Oilseed Cultivation 26-27 Mn. Ha.• Average yield 1100 Kgs.• Output of 9 cultivated Oilseeds 30.1 Mn. T.• Output of Cottonseed & Copra 11.0 Mn. T.

Total 41.1 Mn. T.

• Production of Vegetable Oils 8.12 Mn. T.• Demand of Veg. Oils (Edible) 16 .7 Mn.T.

• Import of Veg. Oil 2011-12 (Nov-Oct) (Edible) 9.4 Mn.T.(E)

• Per capita consumption (2011) 13.5 Kg.

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

Oilseed Sector 2011-12

15

Oilseed Sector - Share of India

• Vegetable Oil Sector Turnover US$ 23.0 bn.

(Rs.125,000Cr)

• Import & Export from Oilseed Sector US$ 12.0 bn.

(Rs.65,000 Cr.) 2011-12

• In World's Oilseed Production 8.0 %

• In World's Oilmeal Production 6.8 %

• In World's Oilmeal Export 6.5 %

• In World's Production of Veg. Oils 5.2 %

• In World’s Vegetable Oil Import 13.6 %

• In World's Edible Oil Consumption 10.2 %

16

Year(Nov-Oct)

OilseedsProduction

Availability of Veg. Oils

Edible Non-Edible

Total

2011-12 30.01(E) 7.34 0.78 8.122010-11 31.10 7.92 0.60 8.522009-10 24.88 7.26 0.51 7.772008-09 27.72 7.71 0.50 8.212007-08 29.76 7.75 0.49 8.242006-07 24.29 7.33 0.43 7.762005-06 27.98 7.56 0.47 8.032004-05 24.35 7.16 0.43 7.592003-04 25.18 7.21 0.38 7.592002-03 14.84 4.84 0.28 5.122001-02 20.66 6.37 0.35 6.72

India’s Oilseeds & Veg. Oil ProductionQty in Mnt

Source : SEA

17

Palm Oil

Soya Oil

Sunflower Oil

CottonseedGroundnut

Other Oil & Fats

Rapeseed Oil

World & India Production of Oils & Fats 2011-12

Oil & Fats World India

Palm Oil 51.49 0.07

Soya Oil 41.72 1.61

Rape Oil 23.64 1.92

Sun Oil 14.63 0.22

Cottonseed Oil 5.13 1.17

Groundnut Oil 4.03 0.46

Other Oils & Fats 42.26 2.67

TOTAL 182.90 8.12

Qty : Mn T

Source: World data from Oilworld 2012 & SEA Data Bank for India

WORLD

Major Veg.Oils produced in India are Rapeseed Oil, Soybean oil, Cottonseed Oil, Rice Bran Oil & Groundnut Oil

18

Country 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07

EU-27 59.4 60.3 61.6 60.0 57.4 56.4

U.S.A. 54.7 52.5 50.4 51.3 54.9 54.0

Argentina 92.1 77.7 63.0 46.4 35.7 24.8

China 25.1 24.5 23.8 22.9 21.8 21.3

India 14.8 14.5 14.3 13.9 12.5 12.1

Indonesia 33.4 29.7 25.6 23.5 21.9 19.8

Japan 21.5 21.4 21.5 20.8 22.2 22.3

Pakistan 21.5 21.5 21.7 21.6 21.5 21.3

Turkey 29.6 29.0 28.7 27.2 31.3 31.5

World 25.91 25.31 24.68 23.92 23.43 22.78

Source : Oil World 2012

Per Capita (kg) Disappearance of Oils and Fats in Selected Countries and World

Number shown includes consumption of oils and fats for Bioenergy

19

Item DescriptionWTO

Bound Rate

Duty on Crude Edible Oils

Duty on Refined Edible

Oils

Tariff Value

US$/MT(23rd Oct 2012)

Soybean Oil 45% Nil 7.5% 580

RBD Palmolein 300% Nil 7.5% 893

RBD Palm Oil 300% Nil 7.5% 476

Crude Palm Oil 300% Nil 7.5% 447

Sunflower Oil 300% Nil 7.5% -

Rape/Mustard Oil 75% Nil 7.5% -

India – WTO Bound Rates & Import DutySept-2012

Import duty reduced to Nil on crude vegetable oils & 7.5% on refined oils w.e.f. 1.4.2008. Import duty on refined oils is calculated on tariff Value announced by the Govt. fortnightly

Import Duty on Crude & Refined Palm Oil

20

Period Crude Palm Oil

Refined Palm Oil

1994 (April) - 65.0

2001 (Apr.) 75.0 92.2

2006 (28, Feb) 88.8 99.4

2008 (20, Mar.) 20.60 28.33

2012 (10, Oct.) Nil 7.73%

Import & Export from Oilseed Sector

• Import of Edible Oils freely allowed 9.8Mnt(11-12) (PalmOil:7.5mnt,SFO:1.0mnt, SBO:1.0mnt)

• Oilmeal Export freely allowed

5.5 mnt (11-12) (Soybean Meal 4.0 Mnt, Rapeseed Meal 1.1 mnt)

• Oilseeds Export freely allowed

0.85Mnt (10-11)

(Seaseme Seed 0.4 Mnt, HPS Groundnut 0.42 Mnt)

21

Possibility of India adopting the Chinese approach

• China is one of the large producers of oilseeds in the world. However, the country has been substantially importing the oilseeds rather than the edible oil to feed its population.

• Heavy import of oilseeds rather than the edible oil by China in comparison to India, logically favours the vegetable oil crushing industries of China and provides meal to meet the booming animal feed demand.

• Recently Indian Government reduced the duty on Oilcake from 15% to nil to increase the supply of Feed Ingredients and thereby to check the rising prices due to Short Supply

22

Government of India’s Fiscal Incentive for Oilseed Cultivation

23

MSP level for food grains were raised more than for oilseeds since the mid-l990s. As a result, increasingly favourable returns from rice and wheat have drawn area away from oilseeds, lowering oilseed production.

Since 1998-99, however, the MSP of the major edible oilseeds have been moving upward more decisively, intending to lure the growers towards the oilseed crops.

24

          % Change

Commodity 2001-02 2005-06 2008-09 2012-13 In last Twelve Years

    Grain      Wheat 620 650 1080 1285 665 (107%)

Paddy 530 570 850 1250 720 (136%)

Maize 485 540 840 1175 690 (142%)

    Oilseeds      

Soybean Yellow 885 1010 1390 2240 1355 (153%)

Groundnut in shell 1340 1520 2100 3700 2360 (176%)

Rapeseed/Mustard 1300 1715 1830 2500 1200 (92%)

Sunflower seed 1185 1500 2215 3700 2515 (212%)

Sesamum 1400 1550 2750 4200 2800 (200%)

Safflower 1300 1565 1650 2500 1200 (92%)

MinimumSupport Price (MSP) of Agricultural Commodities

Consumption

25

Consumption of various oils in India in 2011-12

26

 Oils Domestic Import Total %

Palm Oil 0.07 7.50          7.57  46.0

Soybean Oil 1.65 1.01          2.66  16.2

Rapeseed Oil 1.74 0.09          1.83  11.1

Sunflower Oil 0.22 1.08          1.30  7.9

Cottonseed Oil 1.19 -          1.19  7.2

Rice Bran Oil 0.85 -           0.85 5.2

Groundnut Oil 0.39 -          0.39  2.4

Other 0.65 -          0.65  4.0

TOTAL 6.75 9.67        16.42  100

Qty: in MnT

• Major Oil consumed in India - Palm, Soya & Rape

• Lower & Middle Class Price Sensitive

• Palm Oil preferred Oil being cheapest

• Vegetable Oil Demand quite Elastic and switchable

Consumption & Characteristics of Indian Consumer

27

Consumption Of Edible Oils In India

Demand Scenario upto 2020 Due to high growth in income levels, increasing trend in spending & better

living standards; India promises to continue high growth in consumption of edible oils and consumption may reach 23 ml T by 2020 @ 3% growth rate.

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

2017-18

2018-19

2019-20

15.716.8 17.44 18.08

19 19.65 20.48 21.2822.27 23.1

Consumption in Mnt

28

Import of Vegetable Oils by India

29

30

Edible, Vanaspati & Non-edible 2006-07 To 2010-11 (Nov – Oct)

Vegetable Oils 2010-11 2009-10 2008-09 2007-08 2006-07

Edible Oils 8.37 8.82 8.18 5.61 4.71

Vanaspati(Hydrogenated Fat)

-- -- 0.02 0.05 0.25

Non-edible 0.29 0.42 0.46 0.65 0.63

Total 8.66 9.24 8.66 6.31 5.59

Import of Vegetable Oils

Source : SEA

(Qty in Mn T)

Import of Veg Oils is rising from year to year to bridge the demand and supply gap

31

Countries Jan/Dec 2011

Jan/Dec 2010

Jan/Dec 2009

Indonesia 5010 5435 5255

Malaysia 1677 1189 1541

Singapore - 2 2

Thailand 49 21 28

Others - 1 1

Total 6744 6648 6827

Import of Palm Oil by India

Qty in ‘000 Tonnes

Source: Oil World

32

Countries Jan/Dec 2011

Jan/Dec 2010

Jan/Dec 2009

Russia 10 26 56

Ukraine 817 588 503

USA - 11 -

Argentina 43 37 83

Others 1 1 1

Total 871 663 643

Import of Sunflower Oil by India

Qty in ‘000 Tonnes

Source: Oil World

33

Countries Jan/Dec 2011

Jan/Dec 2010

Jan/Dec 2009

USA - 161 146

Argentina 746 1284 693

Brazil 144 78 202

Paraguay 36 45 65

Thailand 8 - -

Others 6.8 - 1

Total 941 1568 1107

Import of Soybean Oil by India

Qty in ‘000 Tonnes

Source: Oil World

Figures in Mln.Tn

Stagnant Domestic oil production is leading to higher imports YOY to feed the growing Indian demand.

India’s Vegetable Oil Production & Imports

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

5.756.72

5.12

7.59 7.598.03 7.76 8.24 8.21 7.77

8.52 8.12

5.094.76

5.394.63

5.45 5.13 5.346.26

8.64 9.24 8.66 9.6

Import

Domestic Production

34

In last 4 years, Import dependence has increased much more due to rising consumption and stagnant domestic production.

India's Growing Dependence on Imports

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

53%59%

49%

62%58% 61% 59% 57%

49%46%

50%57%

35

36

• Low Productivity

• Small farm sizes

• Lack of varietal replacement

• Shifting of acreage from Oilseed to other crops

• Losses due to pests and diseases

• Vagaries of nature

Major Constrains in Domestic Production of Oilseeds

37

What are the Prospects for Indigenous Supplies of Oils in India ?

• Oilseed output targeted by 4% per year

• Vegetable Oil Production increase – 350/400Thousand per year

• Demand to rise Faster

• Oil Palm yet to pick up

Demand drivers in India

• Consistent GDP growth rate at or above 8 % in last 5 years (But

current year it may be below 7%).

• The big emerging Indian middle class.

• Urbanisation

• Nucleus Family

• Change in Food Habits

• The double digit growth of out of home consumption of edible oils.

• Per capita consumption of Edible oils in India at 14.0 kg (2012) which

is still a lot below threshold level of consumption.

• Even with a moderate population growth the absolute increase in

number of people is quiet High.

India has a Promising Demand Growth

38

Governments Support

• Scheme like NREGA (National Rural Employment Guarantee Act) and rising labor income is increasing the income level of people who are consuming much below the all India level.

• Supply of edible oils , mainly palm oil, by the Government at subsidized rates under PDS .

• Duty Free-Regime: Zero percent duty on crude imports has facilitated lower oil price to consumers and in turn push demand.

India has a Promising Demand Growth

39

India’s

Short Term & Long Term

Demand Projection

40

41

Oils 2011-122012-13

ProjectionNov.’11 to Sep’12(Actual)

Nov.’11 to Oct.’12

(Estimate)

RBD Palmoein 1515 1600 1200

Crude Palm Oil 5225 5700 6300

Crude Soybean Oil 987 1100 1100

Crude Sunflower Oil 1049 1100 1100

Rape (Canola) Oil 91 100 100

Others 96 100 100

Total 8963 9700 9900

Import of Edible Oils by India Current year and next year

India also Imports about 200,000 tonnes of Non-Edible Oil for Industrial Purpose

Qty: ‘000 Tonnes

42

Year

Population@1.76% Growth

Consumption @ 3% Growth

Consumption @ 4% Growth

Consumption @ 5% Growth

In BnPer

Capita Kgs

Mn. TPer

Capita Kgs

Mn. TPer

Capita Kgs

Mn. T

2012 1.20 13.9 16.68 13.9 16.68 13.9 16.68

2013 1.22 14.3 17.44 14.4 17.56 14.5 17.69

2014 1.23 14.7 18.08 15.0 18.45 15.2 18.69

2015 1.25 15.2 19.00 15.6 19.5 15.9 19.87

2016 1.26 15.6 19.65 16.2 20.41 16.6 20.91

2017 1.28 16.0 20.48 16.8 21.50 17.4 22.27

2018 1.29 16.5 21.28 17.4 22.44 18.2 23.47

2019 1.31 17.0 22.27 18.0 23.58 19.1 25.02

2020 1.32 17.5 23.10 18.72 24.71 20.0 26.4

India’s Population & Consumption of Edible Oils2012-2020

Source : SEA

43

Parameter 2012 2015 2020*

Population (in Bn) 1.20 1.25 1.32

Total Demand (MnT) 16.68 19.0 23.10

Domestic Supply (MnT) 7.3 8.0 9.2

Import (Mn T) 9.4 11.0 13.9+

Import as % Share of Demand

56% 57% 61%

* Based on 3% Growth

Edible Oil Demand and Import ProjectionShort & Long Term

(Excluding Non-edible Oils)

44

India will continue to be large importer of Veg. oil because domestic output growth is unlikely to catch up with demand growth.

Strong GDP growth contributed mainly by Manufacturing and Service sectorsand also rising population automatically translates to higher demand for a host of food products including edible oil.

How much of this incremental import demand of veg. oil particularly Palm Oil will be able to garner, would of course, depend on relative prices of various oils, tariff structure, landed cost & Domestic Supply. It would be in vegetable oil producers' interest to look at India as a large market that is going to be available for a very long-term – for long years - and do all that is required to sustain and service it.

Conclusion

4545

Dr. B. V. Mehta Executive Director

The Solvent Extractors’ Association of IndiaA Premier Association of Vegetable Oil Industry & Trade in

IndiaISO 9001:2008 Organisation

142, Jolly Maker Chambers No. II, 14th Floor, 225, Nariman Point, Mumbai 400 021

Tel: (+91-22) 2202 1475. 2282 2979, Fax.: (+91-22) 2202 1692

Email: solvent@mtnl.net.in , Website:www.seaofindia.com

File :CIOC 2012// Word// Presentations

46