Oilseed extractors run at low capacity

Solvent extraction plants across India are seeing a decline in returns on their investments. Data available with the Solvent Extractors' Association of India showed that out of 600 plants, fewer than 400 are operational. And those operational are running at 30-40 per cent capacity because of insufficient raw material.

Since government agencies lack storage space for processed rice, the availability of paddy for CMR (custom milled rice) is limited. (Paddy is procured by government agencies and given to mills piecemeal for processing. Paddy can be stored in open plinths, but rice cannot be kept out in the open, so the government agencies have large stocks of paddy with them). This bottleneck is responsible for under-utilisation of capacity by solvent extraction plants.

To be viable, a solvent extraction plant needs to have a capacity of not less than 300 tonnes, as smaller units have higher economic costs. The Executive Director of the Solvent Extractors' Association of India, B V Mehta, told Business Standard that the industry had suggested to Finance Minister P Chidambaram that an oilseed development fund be created to provide an impetus to the production of oilseeds in the country. But the suggestion was ignored.

Mehta added that a higher duty on imported oil can encourage the consumption of locally produced oil. The industry, he said, had sought an increase in the duty on imported edible oil from 7.5 per cent to 20 per cent, but this request, too, was ignored.