1.1 Industry Overview
Background and Size of the Indian Edible Oil Industry
India is world’s third largest edible oil economy, after China and US. India’s annual consumption is around 10 million tones vis-à-vis China’s 14.5 million tones. However, India’s per capita consumption at 10.2 kgs per annum is considerably lower compared to global standards. India is also a leading producer of oilseeds, contributing 7-8% of world oilseed production. India is estimated to account for around 6% of the world’s production of edible oils. Though it has the largest cultivated area under oilseeds in the world, crop yields tantamount to only 50-60% of the world’s average. India is the fifth largest producer of oilseeds in the world, behind US, China, Brazil, and Argentina. Since 1995, Indian share in world production of oilseeds has been around 8-10%. Edible oil processing consists of three operations: crushing and expelling (separating oil from the solids), solvent extraction (to chemically remove residual oil from the oilcake solids), and oil refining. In many countries, these three separate processing operations are conducted by one vertically integrated plant. In India, however, only a small share of oilseed production undergoes solvent extraction and oil refining. Instead, India’s oilseeds processing sector is made up of the three groups viz Ghanis, solvent extractors and oil refiners engaged separately. Edible oils constitute an important component of Indian households’ expenditure on food. A large Population and steady economic growth are important contributors to India’s increasing consumption and imports. The following table shows the import of edible oil made from November 2006 to September 2007.
Qty in M.T.
Refined Soybean Oil
Crude Palm Oil
Types of Oils commonly in use in India
India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard/rapeseed, sesame, safflower, linseed, nigerseed/castor are the major traditionally cultivated oilseeds. Soyabean and sunflower have also assumed importance in recent years. Coconut is most important amongst the plantation crops. Efforts are being made to grow palm oil in Andhra Pradesh, Karnataka, Tamil Nadu in addition to Kerala and Andaman & Nicobar Islands. Among the non-conventional oils, ricebran oil and cottonseed oil are the most important. In addition, oilseeds of tree and forest origin, which grow mostly in tribal inhabited areas, are also a significant source of oils. Figures pertaining to estimated production of major cultivated oilseeds, availability of edible oils from all domestic sources and consumption of edible oils (from Domestic and Import Sources) during the last few years are as under: -
Consumption Pattern of Edible Oils in India
India is a vast country and inhabitants of several of its regions have developed specific preference for certain oils largely depending upon the oils available in the region. For example, people in the South and West prefer groundnut oil while those in the East and North use mustard/rapeseed oil. Likewise several pockets in the South have a preference for coconut and sesame oil. Inhabitants of northern plain are basically hard fat consumers and therefore, prefer Vanaspati, a term used to denote a partially hydrogenated edible oil mixture. Vanaspati has an important role in our edible oil economy. Its production is about 1.2 million tones annually. It has around 10% share of the edible oil market. It has the ability to absorb a heterogeneous variety of oils, which do not generally find direct marketing opportunities because of consumers’ preference for traditional oils such as groundnut oil, mustard oil, sesame oil etc. For example, newer oils like soyabean, sunflower, ricebran and cottonseed and oilsfrom oilseeds of tree and forest origin...
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