India's rapeseed output could jump 17 percent: Emami Agrotech CEO

By Rajendra Jadhav and Emily Chow

MUMBAI (Reuters) - India's rapeseed mustard production in 2018/19 could jump nearly 17 percent from a year ago to 7 million tonnes as higher prices are likely to prompt farmers to expand areas under planting, a leading Indian edible oil importer said.

"Mustard crop can grow to 7 million tonnes," said Sudhakar Desai, chief executive officer of Emami Agrotech, up from 6 million tonnes in the same period a year earlier.

"The government is supporting farmers by buying the seeds at mandated price, by raising import taxes on edible oils," said Desai, speaking on the sidelines of the Globoil India conference.

Rapeseed mustard is the main winter-sown oilseed in India. Higher rapeseed production could help the world's biggest buyer of edible oil in limiting the overseas purchases: India imports about two-thirds of its edible oil demand.

Rapeseed prices have jumped by more than a tenth in a year as India raised the import tax on edible oil to the highest level in over a decade in an effort to support domestic farmers.

India primarily imports palm oil from Indonesia and Malaysia and soyoil from Argentina and Brazil. It also imports sunflower oil from Ukraine and canola oil from Canada.

Emami Agrotech, which mainly caters for customers in eastern India, is planning to set up two refineries on the west coast in an attempt to supply more of the country's states, CEO Desai said. He said the company aims to add refining capacity of 5,000 tonnes per day on top of existing capacity of 6,500 tonnes in next two years.

In 2017/18 the company's edible oil imports would be around 1.4 million tonnes, including 1.1 million tonnes of palm oil.

Palm oil prices are trading near their lowest level in three years, making them attractive over other edible oils, Desai said. In the next marketing year, starting Nov. 1, Desai said Emami Agrotech plans to raise imports of palm oil to 1.3 million tonnes, lifting total edible oil imports to 1.7 million tonnes.

The recent duty hike has been prompting some Indian traders to source imports of palm oil and other cooking oils from neighbouring countries, designating the supplies as duty-free under a regional free trade pact, the South Asian Free Trade Agreement (SAFTA).

As well as India, Bangladesh and Sri Lanka are among the SAFTA signatories.

In the current marketing year, around 100,000 tonnes of edible oil will land in India from SAFTA countries and such duty-free imports will rise further unless the government intervenes, Desai said.

(Reporting by Rajendra Jadhav and Emily Chow; Editing by Kenneth Maxwell)