Vegetable oil consumption likely to hit record high

The vegetable oil industry in India is likely to set two records this year. First, the consumption is estimated to hit a record high, at 15.7 million tonnes during oil year 2010-11 (November-October); it was 14.8 mt in the previous year. Two, soymeal exports to hit a high of 3.4 mt, against the earlier record of 3.2 mt in the pre-economic crisis year of 2007-08.

With an estimated rise in per capita consumption to 12.75 kg in 2010-11 as against 12.2 kg this year, total consumption of vegetable oil is forecast to increase 4.4 per cent this year as against four per cent in the previous year. “Consumption will be supported by changing food behaviour, with more and more people opting to eat outside, especially in a hotel, motel and small eateries, where oil is abundantly used. Since average income is rising due to overall growth, the change in behaviour looks sustainable and therefore, we can safely estimate India’s vegetable oil consumption will meet the targeted consumption of 15.7 mt next year,” said Dorab Mistry, director of Godrej International.

According to a forecast by GG Patel & Nikhil Research Company, availability from domestic seed crushing is also likely to increase this year by 600,000 tonnes, as a bumper kharif crop will raise seed output, resulting in higher crushing. Total oilseed output is forecast to rise to 14.08 mt during the 2010-11 kharif season as against 12.3 mt in the previous year. Favourable climatic condition will help output this year, said Patel.

And, bumper soybean production this year will result in higher availability of bean for crushing. As a consequence, soymeal exports which slipped to 2.38 mt last year will see a record rise this year, he added.

Mistry hoped India’s vegetable oil imports will surpass nine mt this year on rising retail consumption. They rose 64 per cent to 10,65,641 tonnes in August as compared to 650,603 tonnes in the corresponding month of the previous year. In the first 10 months of the oil year (November 2009 on), however, vegetable oil imports recorded only a marginal rise of five per cent, to 74,47,955 tonnes as compared to 70,70,491 tonnes in the corresponding period of the previous year.

Oilseeds’ minimum support price (MSP) is too low. That for soybean translates to a price of $8.40 per bushel, about 25 per cent below the current world price. The central government raised the MSP of yellow soybean to Rs 1,440 a quintal for the 2010-11 season, from Rs 1,390 a quintal fixed last year.