Indonesia blacklists 30 edible oil firms

Indonesia’s edible oil associations, including GAPKI, have blacklisted 30 Indian companies for defaults and have suggested that public-sector firms such as MMTC, PEC and STC should not encourage these companies to import edible oil on their behalf.

The Solvent Extractors’ Association (SEA) is however reluctant to interfere.  In response to GAPKI’s letter, the SEA has suggested that the matter should be sorted out by the two trade parties independently.

“As the issue is between two trade parties, SEA does not have the power to take any legal action against them. So, we persuaded them to sort out the differences,” B V Mehta, executive director, SEA said. The commerce ministry is yet to comment.

“About 25 of the firms are not even heard of; probably, they are very small companies. They are not our members and we have no control over them,” Mehta added.

Without naming the company, Mehta said that one of the blacklisted companies would have to meet the commitment worth Rs 10 crore. However, the company’s assets are not worth that much. They would go bankrupt if they honour the commitments, he said.

This trade bitterness with Indonesia, who provide for 65 per cent of India’s crude palm oil demand, is unlikely to affect the overall supply of palm oil in the country, feels Siraj Choudhary, CEO (Refined Oils) of Cargill India. The number of defaulters in imports could be limited to a few dozens while in domestic trade, it could be hundreds, he added.

The country has over 15,000 oil mills, 600 solvent extraction units, 230 vanaspati plants and over 500 refineries, employing over a million people in all.

India is one of the largest producers of oilseeds in the world, it’s share in the world production being as high as 27 per cent for groundnut, 23 per cent for sesame and 16 per cent for rapeseed. However, the productivity of the country is woefully low, around 50 per cent of the world average and even less in the case of soybeans, which stands at 37 per cent.

The comparatively lower yields are mainly due to poor seed quality and cultivation in non-irrigated areas with less than 25 per cent of the cropped area under irrigation. Other reasons include pest damage, vulnerability to drought, poor dry-farming practices, low access to inputs and poor soils apart from small farm holding throughout the country.

In case of consolidation, the origin country (Indonesia in this case) becomes weak while the destination country (India) gets strong.