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The oilseed crushing industry is going through a rough patch, with 20-25 per cent of the units having shut down in the past two years, say observers. Those who continue are operating much below capacity.
"Many crushers have shut on a permanent basis due to low-to-nil margins in the business. Also, low availability of soybean for crushing," said Sandeep Bajoria, past president of the Solvent Extractors' Association of India (SEA).
Two years earlier, India's crushing capacity was 33 million tonnes a year. It is now estimated at 25 mt, with about 40 per cent of the capacity in use. Quite a few crushers are looking for avenues to exit the business. Others have switched to import of edible oils.
"It is not a profitable business any more. Also, adulteration has had an adverse impact on serious players," said Rajesh Agarwal, coordinator at the Soybean Processors' Association.
There is also rising imports. Refiners prefer to import crude palm oil from Malaysia and Indonesia (the two countries' combined produce is 85 per cent of global production), finding this cheaper than local crushing.
Production is also rising in both these countries, leading to a glut at times. Malaysia's January-June output this year was about eight per cent more than last year, at about 9.1 mt. Indonesia's estimate is 6.3 per cent more, to about 29.5 mt for the entire year.
"Crushers have shut down over the years due to the low margins and financial losses. Many are even looking to get acquired," said B V Mehta, secretary general of SEA.
