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Demand For Oils, Fats Shoot Up

Devendra Vyas  |  BSCAL 

Demand for oil and fats in the country has witnessed considerable growth recently. During the past two seasons the demand has surged by 0.5-0.6 million tonnes per annum and the growth rate will be maintained, observed the Oil World.

It stated that, India has shown the relatively sharpest growth rate world-wide in oil and fats consumption, thanks to a favourable economic growth of seven per cent per annum and, most importantly the falling real prices for vegetable oils. In recent years, the government has been committed to free trade and the liberalisation of vegetable oil imports.

Thomas Mielke, editor of the Oil World, said that although the government raised the import duty on vegetable oils by three per cent last week, taking it up to a total of 25 per cent, it is unlikely to curb the growth in imports of oils and fats next season, particularly as long as domestic prices are still above those prevailing on the world market. Indian imports of vegetable oils increased sharply to 1.75 million tonnes in 1996-97 (October/September), continuing upwards from 2,00,000 tonnes in the 1992-93 season.

It is also estimated that a further increase of 0.1-0.2 million tonnes in oil imports is likely in 1997-98. Timely rainfall during August and early September has improved soybean and groundnut crop prospects in most producing areas, thus preventing the ill effects, feared to occur as a result of the El Nino phenomenon, prevailing since April. Attractive sunflower oil prices at the end of 1996 and early 1997 stimulated record Indian buyings at the expense of palm oil.

Total Indian sunflower oil imports have reached around 3,50,000 tonnes in 1996-97. Imports of soyaoil also increased to almost 1,10,000 tonnes, whereas palm oil imports practically stagnated at around 1.25 million tonnes.

Palm oil : World palm oil production is likely to fall short of expectations. It is estimated to reach only around 17.9 million tonnes in 1998.

According to Oil World projections, there is normally a three or four year production cycle. After a sizeable increase in Malaysian and Indonesian yields during the past three years, the yield cycle will turn dip and the growth rates in production are also expected to decline in 1998 and 1999.

The major reasons for the considerable slowdown in world palm oil production are that the rate of growth in the worlds mature area has been slowing gradually since 1988.

After peaking at 10.7 per cent in 1987 and 9.2 per cent in the four years ending 1987, the expansion of the mature area slowed to an average 8.4 per cent in the next four years and 6 per cent in the three years ending 1994.

It is expected to be around 5.8 per cent by 1998.

The journal added that the area expansion in the current cycle is the highest in Indonesia at 12.5 per cent annually, followed by 4.6 per cent in Malaysia and about 2.3 per cent in other countries.

First Published: Mon, September 29 1997. 00:00 IST