Kaithal cluster prospers as cottonseed oil demand rises

The relatively less known cottonseed oil producers' cluster at Kaithal in Haryana is in an upbeat mood. Reason: Greater acceptance of cottonseed oil among households as a healthy and affordable cooking medium has given a fillip to SMEs. As a result, the cluster, which was processing around 40-50 tonnes of oil per day five years ago, is now processing 90-100 tonnes per day.

Many of these producers supply to big companies, which further process the oil and convert it into edible oil. The big players blend it with other fats and oils for edible purposes.

According to analysts, cottonseed oil is cheaper than most other edible oils, and is gaining in popularity in the Indian market, promising better returns to those in the trade and at the same time benefitting consumers.

Madan Mangla, owner of Mangla Oil mills told Business Standard, "There has been a significant jump in the demand in the last five years. So, not only have existing processors expanded capacity, but many new players have also been attracted. Five years ago there were around 10-12 players processing around 40-50 tonnes per day. Now, there are over 30 players processing about 100 tonnes per day."

Sachin Bansal, director of Bansal Oil & Cotton Mills, said, "Consumers are now accepting cottonseed oil and many of the big brands are selling refined cottonseed oil under their own brand names. As a result, it is now the second-most preferred oil after groundnut, especially in Gujarat. Other states have also reported good sales."

Traders added that with their love for snacks and fried food, the people of Gujarat are the largest consumers of cooking oil in India, especially cottonseed oil. This popularity has opened the perfect business opportunity for companies and cottonseed oil producers. According to traders, groundnut oil costs 30-40 per cent more than cottonseed oil.

Cottonseed oil is recommended for cooking, salad dressings and mayonnaise applications. High-quality cottonseed cooking oil meets the requirements of almost any food application imaginable. Blended with other fats and oils, cottonseed oil will improve their quality and functionality. Since cottonseed cooking oil is naturally stable, hydrogenation is not necessary for most uses.

In India, all the cottonseed oil produced is utilised for edible purposes, mostly for vanaspati and refined cooking oil, and only a small quantity (5-10 per cent) is used for manufacturing soap.

However, though upbeat, SMEs also fear that the launch of cottonseed futures contracts by NCDEX recently may increase the cost of cottonseed - the key input.

Dhruv Shorewala, managing director, SS Oil & General Mills, said, "We apprehend that the launch of futures contracts will increase the prices of seeds. So, there should be some mechanism to keep in mind the interests of processors, especially SMEs."