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Industry Comment Edible/Vegetable Oils

www.imacs.in 1

ICRA Management Consulting Services Limited

IndustryComment

IMaCSResearch&

Analytics

THE INDIAN EDIBLE OILS INDUSTRY

January 2012

www.imacs.in
http://www.imacs.in/http://www.imacs.in/http://www.imacs.in/

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Contacts:

Vineet Nigam Programme Leader (Research & Analytics)

+91 120 4515831

Disclaimer

All information contained in this document has been obtained by IMaCS from sources believed

by it to be accurate and reliable. Although reasonable care has been taken to ensure that the

information herein is true, such information is provided as is without any warranty of any kind,

and IMaCS in particular, makes no representation or warranty, express or implied, as to the

accuracy, timeliness or completeness of any such information. All information contained herein

must be construed solely as statements of opinion, and IMaCS shall not be liable for any losses

incurred by users from any use of this document or its contents in any manner. Opinions

expressed in this document are not the opinions of our holding company, ICRA Limited (ICRA),

and should not be construed as any indication of credit rating or grading of ICRA for any

instruments that have been issued or are to be issued by any entity.

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TABLE OF CONTENTS

ENVIRONMENT ANALYSIS: PORTERS MODEL..........................................................................4

INTRODUCTION .....................................................................................................................5

SCOPE ............................................................................................................................................ 5PROCESSING .................................................................................................................................... 6

KEY ISSUES FACING THE PLAYERS ...........................................................................................8

DECLINE OF TRADITIONAL GHANI PROCESSING ...................................................................................... 8LOW GROWTH IN OILSEEDS PRODUCTION ............................................................................................ 9RESERVATION FOR SMALL-SCALE INDUSTRY ........................................................................................ 10LOW CAPACITY UTILISATION IN PROCESSING....................................................................................... 10

SUPPLY CHARACTERISTICS .................................................................................................... 11

OILSEEDS PRODUCTION ................................................................................................................... 11EDIBLE OIL PRODUCTION ................................................................................................................. 38

DEMAND CHARACTERISTICS ................................................................................................. 42

OVERVIEW .................................................................................................................................... 42PATTERN OF CONSUMPTION ............................................................................................................ 45

MONTHLY CONSUMPTION PATTERNS ................................................................................................ 47DEMAND-SUPPLY POSITION AND IMPORTS .......................................................................... 51

LONG-TERM INCREASE IN IMPORTS ................................................................................................... 51CUSTOMS DUTIES AND TARIFFS ........................................................................................................ 56EXPECTED DEMAND-SUPPLY GAP ..................................................................................................... 57

WORLD DEMAND-SUPPLY TRENDS AND PROSPECTS ............................................................. 58

OILSEEDS PRODUCTION TRENDS ....................................................................................................... 58OILSEEDS PRODUCTION PROSPECTS FOR 2011-12 .............................................................................. 64VEGETABLE OILS ............................................................................................................................ 73

PRICE TRENDS AND PROSPECTS ............................................................................................ 84

TRENDS ........................................................................................................................................ 84PROSPECTS ................................................................................................................................... 94

REVIEW OF FINANCIAL PERFORMANCE ................................................................................. 95MARGINS ..................................................................................................................................... 95RETURNS ...................................................................................................................................... 96RECENT FINANCIAL PERFORMANCE ................................................................................................... 98

CONCLUSION ....................................................................................................................... 99

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ENVIRONMENT ANALYSIS : PORTERS MODEL

Threat of Substitutes

Low

Edible oils are an important product

category in the Indian food basket.Therefore, at the industry level, the

threat of substitutes is low.

However, there is a threat of

switching between various edible

oils, and between branded oil and

oil sold loose.

Inter Firm RivalryHigh

Continued growth in edible oil

demand is attracting new

players/capacity addition in the

sector. Refining capacity is being

added near ports to refine imported

crude oil. Trader-importers are also

making efforts to build brands to

differentiate the product, secure

higher realisation and build sales

resiliency.

Barriers to EntryLow

Select States still offer fiscal

incentives to set up new

capacity. As approximately 60%

of edible oil is sold loose, brand

identity may not pose as a

barrier.

Bargaining Power of

SuppliersLow

As oilseeds production is widely

dispersed, supplier power per se

is weak.

Bargaining Power of

BuyersLow to

Medium

As edible oil is a consumer

product, buyers are widely

dispersed because of which

bargaining power of an

average consumer is low.

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INTRODUCTION

Scope

Oils and fats are produced from vegetable and animal sources, with the former group declining in

market share though not in production tonnage. Tallow, lard and butter still occupy the fifth,sixth and seventh positions after the four dominant vegetable oils (palm, soyabean, rapeseed and

sunflower seed). During the last century, the contribution of animal fats to total oils and fats

production has declined from 50% to 16% in 2010, indicating that vegetable fats have become

increasingly dominant in world edible oils and fats production and consumption.

Most vegetable oils are obtained from beans or seeds, which generally furnish two valuable

commoditiesa fatty oil and a protein-rich meal. Seed extraction is achieved by pressing and/or

by extraction with hexane. On the other hand, oils such as palm and olive, on the other hand, are

pressed out of the soft fruit (endosperm). Seeds give oils in differing proportions, with world

average oil yields for 2010-11 as follows: soyabean (19%), coconut (63%), rapeseed (39%),

sunflower (41%), groundnut/peanut (32%), cottonseed (15%), and palm kernel (43%). Some oils,such as virgin olive oil, are used without further treatment other than filtering, but most are

refined in some measure before use. The refining processes remove undesirable materials

(phospholipids, monoacylglycerols, diacylglycerols, free acids, colour and pigments, oxidised

materials, flavour components, trace metals, sulphur compounds and pollutants), but may also

remove valuable minor components, including antioxidants and vitamins such as carotenes and

tocopherols. The refining processes must therefore be designed to maximise the removal of

undesirable components and minimise the removal of the valuable minor components. Some of

the latter are recovered from side streams of the refining process to give commercial products

such as phospholipids, free acids, tocopherols, carotenes, sterols and squalene.

The scope of this report shall be primarily nine vegetable oils. These vegetable oils can be

classified in several ways. One categorisation recognises four major oils (palm, soyabean,

rapeseed and sunflower), two lauric oils (coconut and palmkernel), and remaining oils

(cottonseed, groundnut and olive). The vegetable oils can also be distinguished as those obtained

from tree crops (coconut, palm and olive) and the remaining from annual seed/bean crops. Trees

have to be planted and mature, usually for many years, before they produce an economic crop.

Although tree crops will continue for many years (2535 years for palm, around 100 years for

olive), yields are influenced by climatic changes from season to season and by inputs such as

fertiliser, pesticides, herbicides and irrigation, Annual crops (soyabean, rapeseed, sunflower,

groundnut, etc.), on the other hand, depend on planting decisions that farmers make each year

based on agricultural and economic factors, and weather conditions. For vegetable oils that are

by-products, decisions on annual production depend on factors other than oil production. For

example, cotton is grown according to the demand for fibre and not for cottonseed oil. Corn is

not grown primarily for its oil and peanuts are grown as much for consumption as nuts as for oil

production. It is also important to note that crushing soybeans produces two components

soyabean oil (18%) and soyabean meal (79%)both of which are valuable commercial products.

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Annual crops are produced at harvest time, which comes late in the calendar year in the northern

hemisphere and early in the calendar year in the southern hemisphere. However, equatorial tree

crops such as palm and coconut are harvested throughout the year, though there is some

seasonal variation in quantity. Production data are often reported in harvest years such as 2008-

09. These relate to 2008 harvests in the northern hemisphere and 2009 harvests in the southern

hemisphere.

World Vegetable Oil Production and Share

Mt

(average)

Share

Oil 1981-

90

1991-

2000

2001-

10

2008-

12

1981-

90

1991-

2000

2001-

10

2008-

12

Coconut 2,735 3,148 3,400 3,605 6.1% 4.6% 3.0% 2.6%

Cottonseed 3,265 3,651 4,513 4,993 7.3% 5.3% 4.0% 3.5%

Palm Kernel 943 2,000 4,155 5,383 2.1% 2.9% 3.7% 3.8%

Peanut 2,906 3,931 4,853 4,971 6.5% 5.7% 4.3% 3.5%

Rapeseed 5,919 10,443 16,437 21,582 13.2% 15.1% 14.5% 15.3%

Soyabean 13,905 19,976 33,301 39,263 30.9% 28.9% 29.3% 27.9%

Sunflowerseed 6,230 8,348 9,760 12,040 13.9% 12.1% 8.6% 8.6%Olive 1,658 2,017 2,791 2,928 3.7% 2.9% 2.5% 2.1%

Palm 7,385 15,585 34,490 45,887 16.4% 22.6% 30.3% 32.6%

Total 44,946 69,097 113,699 140,652 100% 100% 100% 100%

Source: US Department of Agriculture (USDA), IMaCS Analysis

Process ing

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, oilseeds processing sector is made up of the threegroups separately engaged:

Ghanis and small-scale expellersare oilseed crushers (around 150,000). Ghanis are

very small traditional crushers, usually located in villages and have an average output of

around 50-60 kilograms per day. Small-scale expellers have relatively modern facilities with a

daily production of up to the 10 tonnes per day.

Solvent extractorsfall outside of the capacity ceiling for small-scale industry (SSI) and

crush and process hard oilseeds with low oil content such as soyabean and cottonseed as

well as chemically extract residual oil from the oilcake processed by SSI crushers. The

segment has around 800 plants and represents a growing share of the domestic supply of

edible oils and is becoming more concentrated. The ghanis and small scale expellers are not

able to remove all of the oil from a material. In most small scale rural situations this is of littleor no importance as the cake, that remains after the oil has been removed, finds uses in local

dishes, in the manufacture of secondary products or for animal feed. Some raw materials

however do not release oil by simple expelling; the most notable being rice bran. In order to

remove oil from commodities that do not respond to expelling or to extract the final traces of

oil after expelling, it is necessary to use solvent extraction. Solvent extraction is a high

technology process that has to be carried out at comparatively large scale. The process is one

of continuous countercurrent extraction with the raw material flowing in one direction

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against a solvent; usually hexane. After oil extraction the solvent passes to a recovery plant

where the solvent is stripped off under vacuum. The crude oil then passes on for refining.

Due to the large scale involved it would seem unlikely that solvent extraction would find

much application in minor oil product processing.

Oil Refiners (around 943) refine solvent-extracted oil, which must be refined before

consumption, but oil refiners are usually not integrated with solvent extraction and expeller

plants. Refining is the last stage in processing of an oil which includes some or all of thefollowing treatmentsfiltering, neutralisation, winterising, bleaching, deodorisation and

degumming and filtering. Refined oil is usually bland and pale, and has negligible flavour and

aroma. In many cases refining is not a necessary stage in traditional processing systems as

local palates are accustomed to the flavour of unrefined oils and in many parts of world these

flavours are in fact preferred to the blandness of a fully refined oil. However, the strong

flavours of unrefined oils can dominate whatever dish is made with them. Many crude oils

contain free fatty acids (FFA) which impart unpleasant odours and flavours. The FFAs are

neutralised by treating the oil with a carefully controlled quantity of caustic soda solution. In

larger oil refineries the caustic soda washes are sold on for soap manufacture and are known

as soap stock. Winterising involves allowing the oil to stand at low temperatures, during

which time higher melting glycerides crystallise and are separated by filtration. Some oils aredark in colour and are bleached by the addition of a small amount of bleaching earth or

activated carbon prior to filtration. Many commercial plants in fact bleach crude oil as routine

and then add a controlled amount of colour in order to produce a standard final product. De-

odourising involves sparging steam through the oil, usually under vacuum. The steam

removes volatile odours, for example the coconut smell of coconut oil. In some cases it is also

necessary to treat oils with small amounts of water in order to remove gums and mucilages

that are released along with oil as the plant cells rupture during extraction. These gums

mainly consist of phospholipids. The above treatment, with heat, causes the gums to

flocculate after which they may be removed by centrifugation or settling.

The capacity utilisation generally ranges from an average of 10% for the ghanis to around 35-40%in case of the expellers in the organised sector.

Indias Edible Oil Industry

As of August 2011

Type No. of units Annual Installed Capacity

(million tonnes)

Capacity

Utilisation

Oilseed crushing units 150,000

(estimated)

42.5 (in terms of seeds) 10-30%

Solvent extraction

units

795 41.9 (in terms of oil bearing

material)

34%

Refineries attached withvanaspati units 127 5.1 (in terms of oil) 45%

Refineries attached with

solvent extraction units

226 3.7 (in terms of oil) 29%

Independent Refineries 590 3.5 (in terms of oil) 36%

Refineries 943 12.3 (in terms of oil) 37%

Vanaspati Units 268 5.8 (in terms of Vanaspati,

Bakery Shortening & Margarine)

19%

Source: Directorate of Vanaspati, Vegetable Oils & Fats

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KEY ISSUES FACING THE PLAYERS

Dec l ine o f T radi t ional Ghani P rocess ing

In ghani processing, juices were extracted from vegetable materials as early as 1500 BC using

either a mortar and pestle or a grinding stone working on a flat stone. It is from these two

crushing systems that presses for both oilseeds and sugar cane developed in the form of a

mortar-and-pestle arrangement powered by animals. This system is commonly called the ghani,

or the kolhu or chekku. Ghanis are powered by animals or motors (power-ghanis) although

sometimes human power is also used. The mortar is firmly fixed in the ground and as the pestle

rotates, oil is released by friction and pressure and runs out of a small aperture at the base of the

mortar. A typical one bullock ghani can process 40 kg of material per day. In the case of power-

ghanis either the pestle or mortar is fixed, the other rotating. Power ghanis usually are operated

in pairs and have a typical capacity of 100 kg per day.

An oil-rich seed such as sesame seed or groundnut yields about 5% less oil in a ghani than in a

modern expeller, mainly because of insufficient pressure. Ghani oilcake carries about 15%

residual fat, about twice that of screw-press oilcake. In fact, in modern commercial Indian

practice, oilcake produced by crushing rape and mustard seeds in the ghani is put through screw-

presses to obtain about 2% oil; this is added to the pungent ghani oil already obtained, to raise

total yield.

At the beginning of the 20th century, there were an estimated 500,000 ghanis in India which

crushed around 97% of all oilseeds. The remaining 3%mostly rapeseeds/mustard, coconut and

groundnutswere processed in rotary units which were mechanised ghanis installed in factories.

However, the number of ghanis declined as power-driven screw-presses, hydraulic presses andsolvent-extraction units came into operation. A further switch to rotaries for rape- and mustard

seeds and coconut, and to expellers for groundnuts and castor beans, rapidly brought down ghani

usage for all oilseeds to 40% in the 1930s, and 28% in the 1940s. At present, just 4% of all

oilseeds are pressed in ghanis. The proportions of individual oilseeds crushed in ghanis have been

estimated as follows: safflower (40%), sesame (24%), rapeseed/mustard (6%), groundnuts (2.5%),

and copra (1%). The major drawback is the low production capacity of ghanis. Even modern ghani

units can press a maximum of around 100 kg of oilseeds per day.

When ghani crushing was widespread, fresh oil was in greater demand than at present. Flavour,

which was traditionally an important attribute of all oils, was best in oils produced from mild

ghani crushing. However, consumer preference has now shifted away towards refined packagedoils.

The ghani has disadvantages which are mainly economic in nature. Traditional ghanis have a

maximum capacity of about 50 kg per day, and modern powered units only about 100 kg per day.

As a result, running costs are high. If animals are used, they need to be trained, and fed. Artisan

training is also essential. Ghani oilcake as prised out of the unit after crushing is extremely hard

and is not accepted by the trade for further solvent extraction, as are expeller oilcakes.

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Use of ghani crushing in India has probably stabilised at the current level of 3-4%. In the future,

power-driven devices are certain to displace traditional ghanis worked by animal traction. There

may still be room for powered ghanis in India and perhaps even in other developing countries

with limited local supplies of raw materials for oilseed extraction, and there may be a place for

batteries of power ghanis to multiply oil output from a common shaft in factory operations.

Low Growth in O i lseeds Produc t ion

Oilseeds are sown in two seasons in India: rabi which lasts from November to April and kharif

which lasts from June to October. Thus, annual oilseed and edible oil aggregates are generally

compared for the November-October period, which is referred to as oil year.

The production of edible oils in India is dependent on the production and availability of oilseeds.

Because of stagnant acreage, unremunerative prices, and low growth in demand, Indias oilseeds

production had stagnated at around 9-12 million tonnes (mt) per annum during the 1970s and

early-1980s. At the same time, consumption growth of edible oil accelerated from the mid-1980s,

following rise in per capita income, and the availability of inexpensive palm oil 1from East Asian

countries. Because of the consequent increase in imports, the Government of India (GoI) felt the

need for special measures to enhance the productivity of Indian oilseeds complex. As a result, a

Technology Mission on Oilseeds and Pulses (TMOP) was established in 1986, with the launch of

special initiatives on several critical fronts like the improvement of oilseeds production and

processing technology, additional support to oilseed farmers and processors along with enhanced

customs duty of 65% on the import of edible oils. Consequently, oilseeds area, production, and

yields increased significantly till the late-1990s. During 1981-82 to 1993-94, oilseed crops

registered the fastest annual growth rate (5.8%) of all major crops in India, contributing to 22% of

all India growth during the same period. This contrasted with the stagnation (growth of 1% per

annum) during the initial post-green revolution period (1968-1981). This rapid growth in oilseedsproduction gave rise to more balanced agricultural growth across states, particularly favourable

to the rain fed area. Considering that only 28% of oilseeds acreage is presently under irrigation,

this implies that oilseeds are raised prominently in rain fed areas. The adoption of new

technology during the mid-1980s also played a crucial role in increasing oilseeds output. In the

initial period between 1979-80 and 1986-87, new oilseeds crop technologies were introduced

and its uptake by early adopters yield improvements outpaced area expansion in explaining

overall increase in oilseeds output. However, during the following period from 1986-87 until

1993-94, the situation reversed when improvements in yields played a more modest role in

explaining total output growth of oilseeds. The area expansion was more rapid as new technology

spread much faster in new areas.

1Palm oil is produced from the fruits of the oil palm. These fruits contain a kernel which is also processed into an oil

and a protein-rich meal.

.

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Trends in Area and Production of Nine Major Oilseeds

OY

Reservat ion for Smal l -Scale Indus t ry

The SSI reservation policy since 1977 confined processing of traditional oilseeds, such as

groundnut, rapeseed-mustard, sesame and safflower (but not soyabean and sunflower) to small

scale units with a capacity of less than 10 tonnes per day, thus allocating a large share of edible

oil production to relatively inefficient processors. By comparison, in developed countries, high oil

content bearing seeds such as groundnut, rapeseed/mustard and sunflower are typically crushed

in medium to large scale factories with an expeller and then for the expeller cake to undergo

through the solvent extraction plant, integrated in the same factory. As cost reduction in the

oilseed crushing/processing industry depends largely on the scale of operations, confining

production to small mills leads to inefficiencies. In addition, even processors not covered by SSI

policies such as soyabean processors and solvent extractors are small by international standards.

Low Capac i ty Ut i l i sa t ion in Process ing

India's oilseed processing industry is one of the largest and most complex in the world, reflecting

the special conditions in India, including the large geographical spread, seasonality and diversity

of oilseeds, consumer preference for unrefined oils, and the price relationships between oilcakes

and vegetable oils. A variety of technologies are being used by the industrymechanical

crushing/expelling and solvent extraction. The crushing of groundnut and mustard seed is

reserved for small-scale industries sector. This has led to widespread inefficiency in the industry

with low rates of capacity utilisation, low oil recoveries, and high unit costs. There is lack of

integration between expelling and solvent extraction industries. As a result, only 30% of the

oilcakes recovered in the expelling units are subjected to solvent extraction for further recovery

of oil, resulting in an expected annual production loss of around 0.5 mt.

5

10

15

20

25

30

35

12

14

16

18

20

22

24

26

28

30

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Area (million hectares)-LS

Production (mt)-RS

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Processors not covered under SSI Reservation policy such as soyabean processors and solvent

extraction plants are small by international standards. Capacity utilisation in the edible oil

industry is also very low. According to official estimates, ghanis operate at 30% capacity

utilisation and solvent extractors at 31%.

According to estimates by the World Bank, low capacity utilisation has resulted in soyabean

processing costs in India that are 40% higher than in China, and 90% higher than in the US. Lowcapacity utilisation is primarily caused by difficulty in obtaining regular supplies of raw materials

throughout the season due to low yields and significant yield variability. Poor roads and limited

freight options also result in higher procurement costs. In addition, poor storage facilities, and

high interest costs, also contribute to supply difficulties. Stagnant oilseeds production and

restrictive tariff and phytosanitary import barriers prevent the use of oilseed imports to stabilise

supplies for processors. Excess oilseed processing capacity is also related to tax and other

incentives that have resulted in overinvestment in many rural areas.

Indias solvent extraction plants are about one-sixth the size of those in the US and the EU and

use significantly more power, steam, and hexane solvent per unit of oilseeds processed. The

efficiency of the Indian crushing/processing sector is further reduced by the under-utilisation of

capacity. For example, although some Indian soyabean crushers/processors have a capacity of

about 1,500 tonnes per day, most plants have a capacity of just 125-150 tonnes per day. Low

capacity utilisation is also due to difficulty in obtaining regular supplies of raw materials

throughout the year or season due to low yields and significant variations in yields. In addition,

poor storage facilities, high interest costs, and lack of risk/supply management tools such as

future markets or contract farming also contribute to problems in obtaining supplies. Excess

capacity is also related to tax and other incentives that stimulated over investment in many rural

areas. The continued expansion of the processing industry has in part been supported by

incentives from State Governments for the establishment of units in industrially backward areas.

State governments typically offer incentives to new units exempting them from State sales tax fora block of say 5 years, which renders manufacturing by old units (which have outlived the period

of exemption) and competing units in other States (that may not offer such exemption) unviable.

SUPPLY CHARACTERISTICS

Oi lseeds Produc t ion

The production of edible oils in India is dependent on the production and availability of oilseeds,

either domestic or imported. The extraction or recovery rate of oil and meals from oilseeds varies

from 11% for cottonseed to 65% for copra/coconut.

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Conversion Ratios between Raw Material and Processed Products

percent

Kernels/Seeds to

Oil

Kernels/Seeds to

Cake

Groundnut 40 60

Sesamum 45 55

Rapeseed/Mustard 33 67

Linseed 43 57

Castorseed 42 58

Cottonseed 11 89

Copra 65 35

Nigerseed 30 70

Soyabean 18 73

Edible oilseeds grown in India can be classified in two main ways. The first classification divides

them into traditional and non-traditional types. Traditional oilseeds include groundnut, rapeseed

mustard, sesame, safflower, linseed, and castor. The non-traditional and recent adoptions

include soyabean, sunflower, and oil palm. The second classification refers to the edibility of

resultant oils from oilseeds. All the above oilseeds produce common edible oil except three:linseed (also called flaxseed oil), sesamum, and niger. Cottonseed is another rich source of edible

oil, which has remained relatively unexploited so far. Cottonseed oil is extracted from the seeds

of cotton plant of various species. Because of its flavour stability, cottonseed oil is used for salad

oil, mayonnaise, salad dressing, and similar products. Linseed oil is commonly sold as a nutritional

supplement than as edible oil, because of its strong flavour and odour. Sesame (or til) oil is used

primarily as a flavour enhancer in Southern India, but also for religious worship. Niger seeds are

also primarily used in Southern India to make dry chutney.

IndiaShare of Production of Nine Oilseeds

Crop/OY 2009 2010 2011 2012 1971-

80

1981-

90

1991-

2000

2001-

10Groundnut 25.9% 21.8% 25.4% 22.7% 62.6% 51.8% 36.0% 28.2%

Castorseed 4.2% 4.1% 4.2% 7.7% 2.0% 2.7% 3.5% 3.6%

Sesamum 0.4% 0.4% 0.3% 0.3% 5.0% 4.4% 2.9% 2.2%

Nigerseed 2.3% 2.4% 2.7% 2.5% 1.4% 1.3% 0.8% 0.9%

Rapeseed & Mustard 26.0% 26.6% 25.2% 24.6% 19.1% 23.5% 26.1% 26.1%

Linseed 0.6% 0.6% 0.5% 0.5% 5.3% 3.1% 1.4% 0.7%

Safflower 0.7% 0.7% 0.5% 0.3% 2.1% 3.3% 1.5% 0.8%

Sunflower 4.2% 3.4% 2.0% 1.8% 1.4% 2.8% 5.1% 4.4%

Soyabean 35.7% 40.0% 39.2% 39.6% 1.2% 7.1% 22.6% 33.0%

Total 100% 100% 100% 100% 100% 100% 100% 100%

Over the last decade, soyabean accounted for an average of 33% of Indias oilseeds production2,

followed by groundnut (28%), rapeseed/mustard (26%), and sunflower (4%). Over the last three

decades, soyabean has gained importance even as the share of groundnut has declined, mainly

because of a decline in acreage and production. Soyabean has 18-20% oil content, and 40-46%

2Oilseeds are sown in two seasons in India: rabiwhich lasts from November to April and kharif which lasts from June to

October. Thus, annual oilseed and edible oil aggregates are generally compared for the November-October period,

which is referred to as oil year.

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protein content. Thus, 1 tonne (t) of soyabean is equal to 0.6 t of groundnut for oil purposes, plus

2 t of ordinary pulses in terms of protein. Soyabean is also valuable as a protein crop for humans

and for livestock, than as an oilseed. Soyabean is the dominant oilseed produced in the world,

because of its favourable agronomic characteristics, its high-quality protein, and its valuable

edible oil. During OY2008-12, it contributed about 57% of all oilseeds produced worldwide, 28%

of world vegetable oil production, and 31% of world food oil consumption. Soymeal accounts for

over 60% of world output of vegetable and animal meals (primarily for poultry, swine, and cattle)

and occupies a prominent position among protein feedstuffs used in the production of feed

concentrates. For human consumption, soyabean oil is the single most important vegetable oil,

accounting for 28% of global vegetable oil production and 31% of human vegetable oil

consumption. Its dominance over other vegetable oils has diminished somewhat following the

advent of palm oil, which now accounts for at 33% of world vegetable oil production, and 31% of

human consumption. The widespread use of soyabean oil in particular as edible oil is mainly due

to its plentiful and dependable supplies, competitive price, and its neutral flavour and its stability

in both unhydrogenated and partially hydrogenated form.

India produces a broad range of oilseeds, and ranks amongst the worlds largest producers of

rapeseed, soyabean, cottonseed, peanut, and a number of minor oilseeds. India is the fifth

largest producer of oilseeds in the world; behind US, Brazil, China, and Argentina. During 2008-

12, Indiasshare in world production of oilseeds has been 8% (compared with 7.6% during 2003-

07), with its share of world production for OY2011 as high as 26.4% for cottonseed, 15.1% for

groundnut, 12.5% for coconut, and 11.6% for rapeseed. However, India accounts for only 3.7% of

world soyabean seed production, 1.9% for sunflower seed, and only 0.01% of world palm oil

production. Indias consumption patterns indicate a gradual increase in share of palm oil and

soyabean. India produces only a small quantity of palm oil estimated at 106 kilotonnes (kt) in

FY2011. Indias soyabean oil production also satisfies only 50-60% of Indias soyabean oil

consumption.

Major Producers of Oilseeds

mt

OY Average Share

OY 2008 2009 2010 2011 2012 1988-

97

1998-

2007

2008-

12

United

States 82.45 89.20 98.90 100.38 91.22 28.3% 25.9% 21.6%

Brazil 64.25 60.31 71.42 79.28 75.80 10.2% 14.0% 16.4%

China 52.75 58.12 57.84 57.69 57.83 15.7% 15.2% 13.3%

Argentina 51.89 35.51 57.94 53.85 52.68 7.0% 10.9% 11.8%

India 33.95 33.40 32.37 34.67 36.23 9.6% 7.7% 8.0%

EU-27 24.45 27.22 29.65 29.07 28.96 0.0% 5.0% 6.5%

Canada 12.42 16.09 16.51 17.23 18.53 2.8% 3.0% 3.8%

Ukraine 5.97 10.69 10.52 11.55 13.20 1.1% 1.1% 2.4%

Russia 6.93 8.85 8.03 7.24 12.43 1.7% 1.5% 2.0%

Indonesia 8.23 9.13 9.44 9.75 10.18 2.0% 1.9% 2.2%

Other 47.93 48.04 51.34 54.03 55.44 21.6% 13.7% 12.0%

Total 391.22 396.54 443.96 454.74 452.48 100% 100% 100%

Source: USDA

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A large number of oilseed crops are grown in different regions under different agro-climatic

conditions. Oilseeds are produced practically in all the States of India. Madhya Pradesh (MP) has

the largest area under oilseeds: 26.1% of the national total of 26 mha in OY2010, followed by

Rajasthan (15.9%), Maharashtra (15%), and Gujarat. MP leads the states in terms of oilseeds

output (30.7% of national output in OY2010), followed by Rajasthan, Gujarat, Maharashtra, and

Andhra Pradesh (AP). These five states cumulatively accounted for around 78% of Indias oilseed

production during OY2010-11.

Area, Production and Yields of Nine Major Oilseeds

OY2010

Area

(mha)

Production

(mt)

Yield

Kg/ha

Share of

Area

Share of

Production

Madhya Pradesh (MP) 6.77 7.64 1,129 26.1% 30.7%

Rajasthan 3.88 2.81 725 15.0% 11.3%

Gujarat 2.79 3.10 1,109 10.8% 12.4%

Andhra Pradesh (AP) 2.07 1.50 724 8.0% 6.0%

Maharashtra 4.13 4.41 1,066 15.9% 17.7%

Karnataka 2.00 1.01 502 7.7% 4.0%

Tamil Nadu (TN) 0.50 0.94 1,898 1.9% 3.8%West Bengal (WB) 0.68 0.73 1,065 2.6% 2.9%

Uttar Pradesh (UP) 1.08 0.82 753 4.2% 3.3%

Others 2.05 1.94 947 7.9% 7.8%

All India 25.96 24.88 959 100% 100%

In India, consequent to the setting of TMOP in 1986; area, production, and yields of oilseeds

increased significantly till the late-1990s. While oilseeds production increased from 10.83 mt in

OY1986 to 24.75 mt in OY1999, yields per hectare (ha) increased from 570 kg to 944 kg. However,

during OY1999 to OY2003, oilseed output in India stagnated and declined to 14.84 mt in OY2003,

primarily because of a decline in acreage and yields. While acreage declined from 26.2 mha in

OY1999 to 21.5 mha in OY2003, yields declined from 944 kg/ha to 691 kg/ha. Drought conditions

in the major oilseeds producing states such as Chattisgarh, Madhya Pradesh (MP), and Rajasthan

during the period adversely affected oilseeds production and yields.

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Season-wise Yield of Oilseeds in Major States

Yield: kg/ha

Yield

(kg/ha)

Growth

OY 2006 2007 2008 2009 2010 2011 2010 2011 2007-

11

Kharif 965 836 1,154 961 875 1,146 -8.9% 30.9% 3.5%MP 1,020 962 1,037 1,096 1,150 1,159 4.9% 0.7% 2.6%

Maharashtra 981 1,031 1,368 878 730 1,496 -16.9% 105.0% 8.8%

Gujarat 1,543 779 1,610 1,351 1,049 1,334 -22.4% 27.2% -2.9%

AP 570 397 1,204 705 425 698 -39.7% 64.2% 4.1%

Rajasthan 972 1,050 1,224 925 798 1,235 -13.7% 54.7% 4.9%

Karnataka 569 439 682 548 469 730 -14.5% 55.7% 5.1%

TN 1,340 1,251 1,263 1,454 1,482 1,548 1.9% 4.5% 2.9%

WB 837 922 908 661 821 837 24.2% 2.0% 0.0%

Chhattisgarh 521 623 615 572 710 824 24.2% 16.0% 9.6%

UP 555 349 284 321 240 410 -25.4% 71.2% -5.9%

Haryana 804 844 1,079 762 648 727 -14.9% 12.2% -2.0%

Rabi 1,068 1,055 1,034 1,097 1,146 1,188 4.5% 3.7% 2.1%

MP 955 912 833 936 990 1,031 5.8% 4.1% 1.6%Maharashtra 677 662 739 691 683 789 -1.1% 15.4% 3.1%

Gujarat 1,552 1,544 1,662 1,314 1,617 1,654 23.1% 2.3% 1.3%

AP 1,193 1,235 1,508 1,286 1,517 1,468 17.9% -3.2% 4.2%

Rajasthan 1,205 1,185 946 1,234 1,277 1,188 3.5% -7.0% -0.3%

Karnataka 655 543 677 571 565 731 -1.0% 29.4% 2.2%

TN 2,073 3,466 2,835 2,539 2,993 3,218 17.9% 7.5% 9.2%

WB 988 916 1,035 899 1,161 1,194 29.1% 2.8% 3.8%

Chhattisgarh 284 319 350 326 371 345 13.8% -7.1% 3.9%

UP 1,105 1,024 1,064 1,076 1,090 1,153 1.3% 5.8% 0.9%

Haryana 1,128 1,351 1,216 1,735 1,655 1,868 -4.6% 12.8% 10.6%

Total 1,004 916 1,115 1,006 959 1,159 -4.7% 21.0% 2.9%

MP 1,009 955 1,015 1,075 1,129 1,143 5.0% 1.3% 2.5%

Maharashtra 925 963 1,274 857 725 1,417 -15.5% 95.6% 8.9%Gujarat 1,544 908 1,618 1,345 1,109 1,371 -17.6% 23.7% -2.3%

AP 698 609 1,276 842 724 858 -14.0% 18.5% 4.2%

Rajasthan 1,134 1,146 1,051 1,114 1,066 1,205 -4.3% 13.0% 1.2%

Karnataka 600 478 681 556 502 730 -9.7% 45.4% 4.0%

TN 1,624 1,829 1,739 1,782 1,898 2,109 6.5% 11.1% 5.4%

WB 952 918 997 828 1,065 1,092 28.6% 2.5% 2.8%

Chhattisgarh 419 503 532 507 607 686 19.7% 13.0% 10.4%

UP 993 837 856 865 753 849 -13.0% 12.8% -3.1%

Haryana 1,124 1,344 1,214 1,723 1,645 1,856 -4.5% 12.8% 10.5%

Source: Ministry of Agriculture

The downward trend in oilseeds production was reversed during OY2004-08, with oilseeds

production increasing from 14.84 mt in OY2003 to 29.76 mt in OY2008, primarily because of

increased acreage, and higher yields. However, production has declined during OY2009-10 to

24.93 mt in OY2010 because of lower acreage, deficient monsoons, and lower yields.

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Oilseeds Acreage, Production and Yields Major States

Values CAGR

OY 2006 2007 2008 2009 2010 1991-

2000

2001-

10

Area (mha) 27.86 26.51 26.69 27.56 25.96 0.6% 0.7%

MP 5.67 6.09 6.26 6.49 6.77 5.0% 1.3%

Maharashtra 3.65 3.86 3.83 3.98 3.88 0.3% 3.6%Gujarat 3.03 2.83 2.92 2.98 2.79 -0.1% 0.0%

AP 2.92 2.24 2.66 2.60 2.07 -1.3% -2.1%

Rajasthan 5.26 4.51 4.00 4.65 4.13 3.7% 1.3%

Karnataka 2.86 2.35 2.28 2.18 2.00 -1.3% 0.1%

TN 0.71 0.59 0.66 0.59 0.50 -2.4% -6.8%

WB 0.64 0.70 0.71 0.70 0.68 0.3% 3.1%

UP 1.07 1.23 1.34 1.35 1.08 -1.7% -3.1%

Others 1.75 1.79 1.69 2.04 2.05 -3.9% 2.1%

Production (mt) 27.98 24.29 29.76 27.72 24.88 2.0% 1.8%

MP 5.72 5.81 6.35 6.98 7.64 9.4% 2.8%

Maharashtra 3.37 3.72 4.87 3.41 2.81 3.8% 0.5%

Gujarat 4.68 2.57 4.73 4.02 3.10 -3.5% 6.0%

AP 2.04 1.36 3.39 2.19 1.50 -4.9% 0.9%Rajasthan 5.96 5.17 4.20 5.18 4.41 6.3% 2.6%

Karnataka 1.72 1.13 1.55 1.21 1.01 -1.6% -1.7%

TN 1.15 1.08 1.15 1.04 0.94 1.3% -4.5%

WB 0.61 0.65 0.71 0.58 0.73 -0.3% 6.0%

UP 1.07 1.03 1.15 1.16 0.82 1.2% -4.5%

Others 1.52 1.61 1.48 1.95 1.94 -3.1% 3.7%

Yield (kg/ha) 1,004 916 1,115 1,006 959 1.4% 1.2%

MP 1,009 955 1,015 1,075 1,129 4.2% 1.4%

Maharashtra 925 963 1,274 857 725 3.5% -2.9%

Gujarat 1,544 908 1,618 1,345 1,109 -3.5% 6.0%

AP 698 609 1,276 842 724 -3.7% 3.1%

Rajasthan 1,134 1,146 1,051 1,114 1,066 2.5% 1.3%

Karnataka 600 478 681 556 502 -0.3% -1.8%TN 1,624 1,829 1,739 1,782 1,898 3.7% 2.5%

WB 952 918 997 828 1,065 -0.6% 2.8%

UP 993 837 856 865 753 3.0% -1.4%

Others 870 900 872 953 947 0.9% 1.5%


During OY2008, acreage under oilseeds during the Kharif season was 17.95 mha, representing an

increase of 7% over the corresponding previous. There was some shift in acreage to cotton over

the previous two years, but higher prices during the OY2008 season (due to lesser production in

OY2007), caused an increase in acreage during Kharif 2007-08. The sowing of kharif crops also

improved on account of satisfactory rainfall during the South-West monsoon and remunerative

market prices. Kharif oilseeds production increased 48% in OY2008 to 20.71 mt, compared with adecline of 16.4% in OY2007. Amongst the major crops, an increase in overall acreage coupled

with good weather conditions favoured production and yields of groundnut and soyabean. By

comparison, area sown under rabi oilseeds crops declined during OY2008. Rabi sowing was lower

in case of rapeseed/mustard and sunflower. As a result, rapeseed production declined for a

second consecutive year. Rabi crops in general were adversely affected by inadequate soil

moisture in major parts of northern India. Rapeseed is primarily grown in the rabi season in

Rajasthan, UP, MP, and Haryana. For OY2008, the Ministry of Agriculture had set oilseeds

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production target of 30 mt, comprising kharif production of 18.5 mt, and rabi production of 11.5

mt. However, oilseeds production increased 22.5% in OY2008 to 29.76 mt. While kharif

production was higher than targets, rabi production declined 12% in OY2008 (and below targets)

because of decline in production of rapeseed.

Area, Production,and Yields of Oilseeds

Area: mha; Production: mt; Yield: kg/ha

Value Growth

OY 2006 2007 2008 2009 2010 2011 2009 2010 2011

Area 27.86 26.51 26.69 27.56 25.96 26.82 3.3% -5.8% 3.3%

Production 27.98 24.29 29.76 27.72 24.88 32.48 -6.9% -10.2% 30.5%

Yield 1,004 916 1,115 1,006 959 1,211 -9.8% -4.7% 26.3%


For OY2009, the Ministry of Agriculture had set oilseeds production target of 31.75 mt,

comprising kharif production of 19.95 mt, and rabi production of 11.8 mt. During Kharif 2008-09,

acreage under kharif oilseeds increased 3.2% to 18.53 mha. The increase in acreage was primarily

because of a 7.1% increase in soyabean acreage. Soyabean acreage increased significantly in the

major producing states of MP, Maharashtra, and Rajasthan. However, acreage under groundnuts

declined 2% because of declines in AP and Karnataka. Early planted groundnuts in Gujarat also

became vulnerable due to lack of supporting rains in the early part of the season. Overall kharif

oilseeds production declined 14% in OY2009 to 17.81 mt, mainly because of a sharp decline in

production of groundnuts. During Rabi 2008-09, acreage under rabi oilseeds increased 3.3% to

9.03 mha. The increase in acreage was primarily because of an 8.1% increase in rapeseed

acreage. Rapeseed acreage increased significantly in the major producing statesRajasthan, MP,

and UP.

Season-wise Oilseeds Production

mt GrowthOY 2006 2007 2008 2009 2010 2011 2012 2010 2011 2012

Kharif 16.77 14.01 20.71 17.81 15.73 21.92 20.80 -11.7% 39.4% -5.1%

Rabi 11.21 10.28 9.04 9.91 9.15 10.56 9.73 -7.6% 15.3% -7.8%

Total 27.98 24.29 29.76 27.72 24.88 32.48 30.53 -10.2% 30.5% -6.0%


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Season-wise Oilseeds Production

Season Mt Average

OY 2007 2008 2009 2010 2011 2012 2001-

05

2006-

12

Groundnut Kharif 3.29 7.36 5.62 3.85 6.64 5.35 5.15 5.49

Rabi 1.57 1.82 1.55 1.58 1.62 1.59 1.34 1.63

Total 4.86 9.18 7.17 5.43 8.27 6.94 6.49 7.12

Castorseed Kharif 0.76 1.05 1.17 1.01 1.35 2.34 0.71 1.24

Sesamum Kharif 0.62 0.76 0.64 0.59 0.89 0.77 0.11 0.70

Nigerseed Kharif 0.12 0.11 0.12 0.10 0.11 0.09 0.62 0.11

Rapeseed Rabi 7.44 5.83 7.20 6.61 8.18 7.50 5.41 7.27

Linseed Rabi 0.17 0.16 0.17 0.15 0.15 0.15 0.19 0.16

Safflower Rabi 0.24 0.23 0.19 0.18 0.15 0.10 0.18 0.19

Sunflower Kharif 0.37 0.46 0.36 0.21 0.19 0.17 0.28 0.32

Rabi 0.86 1.00 0.80 0.64 0.46 0.39 0.58 0.73

Total 1.23 1.46 1.16 0.85 0.65 0.56 0.86 1.05

Soyabean Kharif 8.85 10.97 9.91 9.97 12.74 12.08 6.12 10.40

Total Kharif 14.01 20.71 17.81 15.73 21.92 20.80 12.99 18.25

Rabi 10.28 9.04 9.91 9.15 10.56 9.73 7.70 9.98

Total 24.29 29.76 27.72 24.88 32.48 30.53 20.70 28.23

For OY2010, oilseeds production target was set at 31.6 mt, comprising kharif production of 19.4

mt, and rabi production of 12.2 mt. During Kharif 2009-10, acreage under Kharif oilseeds declined

3% to 18 mha. The decline was primarily because of drought conditions. Some rains had arrived

by late June 2009 and early July 2009 and allowed sowing to begin for soyabean, which are

mainly grown in MP and Maharashtra. In August 2009, rainfall for the region was again well

below normal, although a revival of rains during September 2009 stabilised crop conditions.

While acreage under soyabean increased 2.4%, acreage under groundnut declined 12.6% to 4.62

mha due to sharply lower acreages in AP and Gujarat. Lower acreage and yields caused

groundnut output to decline from the second successive year in OY2010. The Government had

extended crop insurance deadlines from August 31 to September 15 in some southern districts,which increased planted area slightly.

Kharif Oilseeds Production

mt Growth

OY 2007 2008 2009 2010 2011 2012 2010 2011 2012

Groundnut 3.29 7.36 5.62 3.85 6.64 5.35 -31.4% 72.5% -19.4%

Castorseed 0.76 1.05 1.17 1.01 1.35 2.34 -13.8% 33.8% 73.3%

Sesamum 0.62 0.76 0.12 0.10 0.11 0.09 -14.5% 8.0% -14.8%

Nigerseed 0.12 0.11 0.64 0.59 0.89 0.77 -8.1% 51.9% -13.9%

Sunflower 0.37 0.46 0.36 0.21 0.19 0.17 -40.1% -10.3% -12.0%

Soyabean 8.85 10.97 9.91 9.97 12.74 12.08 0.6% 27.8% -5.2%

Total 14.01 20.71 17.81 15.73 21.92 20.80 -11.7% 39.4% -5.1%

For Rabi 2009-10, acreage under rabi oilseeds declined 11.6% to 7.99 mha with rapeseed acreage

declining 11.3% to 5.59 mha. Poor soil moisture conditions and higher temperatures led to

declines in area planted to rapeseed-mustard in Rajasthan, Gujarat and Haryana, while higher

planting in Madhya Pradesh and Gujarat moderately compensated for the loss. Acreage under

sunflower also declined 21.1% in OY2010 to 0.91 mha mainly because of shift in acreage to

winter grown cereals, pulses and other remunerative crops. As a result, rabi oilseeds output

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declined 7.6% to 9.15 mt. Overall oilseeds output declined 10.2% in OY2010 to 24.88 mt,

representing the second consecutive year of decline.

Rabi Oilseeds Production

mt Growth

OY 2007 2008 2009 2010 2011 2012 2010 2011 2012

Groundnut 1.57 1.82 1.55 1.58 1.62 1.59 1.6% 2.9% -2.2%Rapeseed &

Mustard 7.44 5.83 7.20 6.61 8.18 7.50 -8.2% 23.8% -8.3%

Linseed 0.17 0.16 0.17 0.15 0.15 0.15 -8.9% -4.5% 2.0%

Safflower 0.24 0.22 0.19 0.18 0.15 0.10 -5.3% -16.2% -34.0%

Sunflower 0.86 1.00 0.80 0.64 0.46 0.39 -20.6% -27.8% -14.2%

Total 10.28 9.04 9.91 9.15 10.56 9.73 -7.6% 15.3% -7.8%

For OY2011, oilseeds production target was set at 33.2 mt, comprising kharif production of 20.7

mt, and rabi production of 12.5 mt. During 2010, cumulative rainfall received for the country as a

whole during the South-West Monsoon season (June-September 2010) was 2% above the long-

period average (LPA). Acreage planted to kharif oilseeds increased 1.2% to 18.19 mha. Area

under groundnut increased 7.6% to 4.97 mha primarily because of excess rainfall received in all

the three major producing regionsAP, Gujarat, and Rajasthan. Early monsoon rains in Southern

India helped increase groundnut acreage; especially in AP, where acreage more than doubled

during kharif 2010-11. However, Gujarat reported only marginal increases in groundnut acreage.

Higher acreage caused kharif groundnut output to increase 72.5% during OY2011 to 6.64 mt,

reversing two successive years of declines. However, soyabean acreage declined 1.9% to 9.55

mha primarily because of deficit rainfall in large areas of MP. Although normal to excess rainfall

in Maharashtra augured well for overall sowing area, good monsoon rains in Maharashtra

prompted farmers to shift soyabean acreage to more profitable crops such as pulses, cotton and

sugarcane. However, a late revival of monsoon rains in MP marginally raised the area sown to

soyabean. Increased plantings and excellent crop conditions were also reported in Maharashtra

and Karnataka. Overall kharif oilseeds production increased 39.4% in OY2011 to record levels of

21.92 mt, mainly because of a 31% increase in yields. Prospects for rabi 2010-11 crop remained

promising on account of delayed withdrawal of South-West monsoon, and the various

Government policies supporting rural sector. Overall acreage under rabi oilseeds increased 8% to

8.63 mha primarily because of 16.4% growth in rapeseed acreage. Sowing of rabi oilseeds had

earlier lagged because of reduced coverage in MP and Uttar Pradesh (UP), where rains were

deficient. Rabi oilseeds output increased 15.3% to 10.56 mt. Overall oilseeds output increased

30.5% in OY2011 to record levels of 32.48 mt. In absolute terms, output increased by 7.8 mt with

higher output contributions from all three major oilseedsgroundnut (2.84 mt), rapeseed (1.57

mt), and soyabean (2.77 mt).

For OY2012, oilseeds production target has been set at 33.6 mt, comprising kharif production of

22.1 mt, and rabi production of 11.5 mt. During Kharif 2011-12, for the country as a whole, the

rainfall for the season (June-September) was 101% of LPA. Seasonal rainfall was 107%, 110%,

100% and 86% of their respective LPA over North-West India, Central India, South Peninsula and

North-East (NE) India. The two major kharif crops are groundnut and soyabean. For Kharif 2011-

12, kharif area under groundnut is estimated to have declined 15.6% (yoy) to 4.19 mha primarily

because of lower acreage in Gujarat (14% decline to 1.43 mha). High cotton prices have caused a

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switch in acreage from groundnut to cotton. Acreage has also declined because of delayed

rainfall in the main growing states of Gujarat, Karnataka and AP. However, acreage under

soyabean increased 4.1% to 9.95 mha because of higher plantings in MP. Favourable planting

conditions helped extend the window for planting, contributing to higher kharif season soyabean

acreage in MP, Maharashtra and Rajasthan. Lower acreage for groundnut is likely to be

accompanied by lower yields resulting in kharif groundnut production declining 19.4% to 5.35 mt

in 2011-12. Lower acreage and yields is also expected to result in a 5.2% decline in soyabean

output. Lower outputs are also expected for sesamum and nigerseed, with output expected to be

higher only for castorseed. As a result, Indias kharif oilseeds output is expected to decline 5.1%

during 2011-12 to 20.80 mt.

Rabi 2011-12 oilseeds acreage is also expected to decline primarily because of deficient rainfall

conditions. In the Post-Monsoon season, cumulative rainfall received for the country as a whole

during the period October 1, 2011 to December 31, 2011 was 65.7 mm which was 48% less than

the LPA. Out of 36 sub-divisions, only 7 sub-divisions received excess/normal rainfall; 28 received

deficient/scanty and one sub-division received no rainfall. Lower rainfall has resulted in acreage

declines for rapeseed and sunflower. As of January 27, 2012, rapeseed acreage declined 10.5% to

6.54 mha primarily because of declines in Rajasthan. Acreage in Rajasthanthe largest rapeseed

producing statedeclined because of dry weather conditions that prevailed during the start of

the planting season in October. Lower acreage and yields could result in Indias rapeseed output

declining 8.3% during 2011-12 to 7.5 mt. Since rapeseed accounts for 75-80% of rabi oilseeds

output, overall rabi oilseeds output could decline 7.8% to 9.73 mt in 2011-12. As per second

advance estimates released by the Ministry of Agriculture on February 3, 2012; lower output

during both kharif and rabi seasons could result in Indias oilseeds output declining 6% in OY2012

to 30.53 mt. Except for a 1 mt increase in castorseed output, output for all other crops is

expected to decline, with declines of 1.33 mt for groundnut, 0.68 mt for rapeseed, and 0.66 mt

for soyabean.

Area Sown under Rabi Oilseed Crops

Up to January 27

Acreage

(thousand hectares)

Change

Rabi Normal Area 2010-11 2011-12

Groundnut 910 660 700 6.1%

Rapeseed 6,356 7,306 6,542 -10.5%

Safflower 329 238 191 -19.7%

Sunflower 1,187 503 412 -18.1%

Sesamum 252 60 69 15.0%

Linseed 418 486 418 -14.0%

Others 0 60 103 71.7%

Total 9,452 9,313 8,435 -9.4%

Soyabean

Soyabean is the dominant oilseed produced in the world, because of its favourable agronomic

characteristics, its high-quality protein, and its valuable edible oil. It contributed about 56% of all

oilseeds produced worldwide in OY2012. The US ranks first in soyabean production (83.2 mt in

OY2012), followed by Brazil, Argentina, China, and India. The production of soyabean and

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soyabean oil is driven by the need for soy protein meal, which is used extensively in commercial

feeds for poultry, swine, and cattle.

Mature soyabeans are oval shaped and their sizes are variety dependent. The seed consists of

three major parts: seed coat or hull, cotyledon, and germ or hypocotyls.

Chemical Composition of Soyabean and its components

dry weight basis

Components Yield Protein Oil Ash Carbohydrate

Whole seed 100.0 40.3 21.0 4.9 33.9

Cotyledon 90.3 42.8 22.8 5.0 29.4

Hull 7.3 8.8 1.0 4.3 85.9

Hypocotyl 2.4 40.8 11.4 4.4 43.4

Crude oil recovered by solvent extraction or mechanical pressing contains various classes of

lipids. It consists primarily of neutral lipids, which include tri-, di-, and mono-acylglycerols, free

fatty acids, and polar lipids such as phospholipids. It also contains a minor amount of

unsaponifiable matter that includes phytosterols, tocopherols, and hydrocarbons such assqualene. Trace metals are found in soybean oil in parts per million (ppm) concentration. When

the oil is refined, concentrations of minor constituents are reduced.

Average composition for Crude and Refined soyabean oil

Components Crude Refined

Triacylglycerols (%) 9597 >99

Phospholipids (%) 1.52.5 0.0030.045

Unsaponifiable matter (%) 1.6 0.3

Phytosterols 0.33 0.13

Tocopherols 0.150.21 0.110.18

Hydrocarbons 0.014 0.01

Free fatty acids (%) 0.30.7

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Long Term Trends in Indias Soyabean Oilseed Production

OY

Soyabean production increased sharply from the mid-1980s in MP because of the development

of irrigation facilities, higher cash return from soyabean agriculture, concurrent establishment of

soyabean oil extraction plants in Central India and the availability of fallow land during the rainy

season. Since the 1990s, soyabean acreage and production also increased substantially in

Maharashtra replacing rainy season sorghum and pearl millet.

Recovery of oil from seed is about 18% and that of soya meal is about 82%. There has been a

rapid growth in soyabean cultivation over the last two decades, attributed to the concurrent

development of the soya-oil/meal industry, which provided remunerative market to the growers.

Since the domestic consumption of soya meal is limited most of it is exported in the form ofdeoiled cake.

0%

10%

20%

30%

40%

50%

60%

70%

0

2

4

6

8

10

12

14

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Production-mt (LS)

Share of Kharif (RS)

Share of Total (RS)

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State-wise Area, Production, and Yield of Soyabean

Area: thousand ha; Production: thousand tonnes; Yield: kg/ha

OY Growth

2006 2007 2008 2009 2010 2010 2006-10

Area 7,708 8,329 8,882 9,511 9,735 2.4% 5.2%

AP 98 103 88 142 156 9.9% 15.2%

Karnataka 133 131 113 134 184 37.3% 3.0%

MP 4,255 4,757 5,024 5,124 5,350 4.4% 3.6%

Maharashtra 2,347 2,521 2,664 3,063 3,019 -1.4% 7.5%

Rajasthan 744 641 798 830 778 -6.2% 4.6%

UP 4 8 5 0

Others 126 168 190 218 248 13.5% 15.7%

Production 8,274 8,851 10,968 9,905 9,965 0.6% 7.7%

AP 191 156 173 194 129 -33.5% 1.4%

Karnataka 71 94 97 91 82 -9.9% -3.1%

MP 4,501 4,785 5,481 5,850 6,406 9.5% 11.3%

Maharashtra 2,527 2,892 3,976 2,757 2,197 -20.3% 3.0%

Rajasthan 856 771 1,071 806 915 13.5% 0.6%

UP 3 7 3

Others 124 146 167 208 236 13.2% 12.4%

Yield 1,073 1,063 1,235 1,041 1,024 -1.7% 2.4%

AP 1,949 1,515 1,966 1,366 827 -39.5% -12.0%

Karnataka 534 718 858 679 446 -34.4% -5.9%

MP 1,058 1,006 1,091 1,142 1,198 4.9% 7.5%

Maharashtra 1,077 1,147 1,492 900 728 -19.1% -4.2%

Rajasthan 1,150 1,203 1,343 971 1,175 21.0% -3.8%

UP 769 875 667

Others 988 867 881 954 951 -0.3% -2.9%

Rapeseed/Mustard

In the past three decades, production of rapeseed oil has become third only to palm and

soyabean as a source of vegetable oil. Rapeseed and canola oil is now held by some to be the

best nutritional edible oil available. Early rapeseed cultivars had high levels of erucic acid in the

oil and high levels of glucosinolates in the meal. The presence of these components was

considered to be a health concern. The high levels of erucic acid were blamed for producing fatty

deposits in the heart, skeletal muscles, and adrenals of rodents as well as impairing growth.

Plant-breeding programmes were initiated in Canada, and in 1959 a rapeseed line (Liho)

containing low levels of erucic acid was identified. The name `canola was registered by the

Western Canadian Oilseed Crushers in 1978 and subsequently transferred to the Canola Council

of Canada in 1980. The name included cultivars containing less than 5% erucic acid in the oil and

less than 3 mg/g aliphatic glucosinolates in the meal.

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Average composition for Rapeseed and Canola Oil

Components Rapeseed Canola

Triacylglycerols (%) 91.899.0 94.499.1

Phospholipids (%)

Crude oil Upto 3.5 Upto 2.5

Water degummed Upto 0.8 Upto 0.6

Acid degummed Upto 0.1

Free fatty acids (%) 0.51.8 0.41.2Unsaponifiables (%) 0.51.2 0.51.2

Tocopherols (ppm) 7001,000 7001,200

Chlorophylls (ppm) 555 550

Sulphur (ppm) 535 325

India is the third largest rapeseed/mustard seed producer in the world, accounting for around

11.3% of world production during OY2008-12. Due to their similar genetic make-up, rapeseed and

mustard seed share the same growing areas throughout India. It accounts for around 66% of

Indias rabi oilseed acreage, and 69% of rabi oilseed crop. Rapeseed/mustard oil content typically

varies between 36 and 42%; of this oil recovery is approximately 34 to 35%. Once the oil is

extracted, the remaining part of the seed is used to produce rapeseed/mustard meal, an

important source of cattle and poultry feed. This represents a significant source of oil meal in the

country.

Long Term Trends in Indias Rapeseed Oilseed Production

OY

Rapeseed grown in the rabi season is primarily in Rajasthan, UP, MP, and Haryana. Yieldimprovements have taken place in all the major states although Haryana shows the maximum

growth in yields in the last two decades. However, variability in yields is also higher for this state.

Indias rapeseed acreage, production, and yield experienced significant growth from 1986 to the

mid-1990s, primarily because of the increase in irrigated land and the availability of high yielding

seeds in the country. However, this trend was partly reversed till 2003-04 due to intermittent

famine conditions in some of the major production states, such as Rajasthan.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2

3

4

5

6

7

8

9

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Production-mt (LS)

Share of Rabi (RS)

Share of Total (RS)

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State-wise Area, Production, and Yield of Rapeseed


OY Growth

2006 2007 2008 2009 2010 2010 2006-10

Area 7,277 6,790 5,826 6,298 5,588 -11.3% -5.2%

Assam 213 238 235 226 245 8.2% 0.0%Gujarat 338 361 337 294 216 -26.5% -5.8%

Haryana 709 597 499 515 513 -0.4% -6.1%

MP 809 694 579 713 791 10.9% 3.0%

Rajasthan 3,665 3,212 2,496 2,838 2,310 -18.6% -8.9%

UP 790 827 862 884 613 -30.6% -5.6%

WB 422 422 408 413 410 -0.5% -2.1%

Others 331 439 410 416 490 17.8% 2.2%

Production 8,131 7,438 5,834 7,201 6,608 -8.2% -2.7%

Assam 97 116 123 123 129 4.6% -0.1%

Gujarat 456 504 551 334 341 2.1% -3.4%

Haryana 792 802 598 895 849 -5.1% 0.6%

MP 848 693 537 737 849 15.2% 4.7%

Rajasthan 4,417 3,806 2,362 3,503 2,948 -15.8% -5.8%UP 908 874 997 992 682 -31.2% -3.2%

WB 383 339 362 315 443 40.5% 0.7%

Others 231 304 304 303 367 21.5% 0.4%

Yield 1,117 1,095 1,001 1,143 1,183 3.4% 2.6%

Assam 456 487 523 543 525 -3.3% -0.1%

Gujarat 1,349 1,396 1,635 1,136 1,579 39.0% 2.6%

Haryana 1,117 1,343 1,198 1,738 1,655 -4.8% 7.1%

MP 1,047 999 927 1,034 1,074 3.9% 1.7%

Rajasthan 1,205 1,185 946 1,234 1,276 3.4% 3.4%

UP 1,149 1,057 1,157 1,123 1,113 -0.9% 2.6%

WB 909 803 887 764 1,080 41.3% 2.9%

Others 699 692 741 726 749 3.1% -1.8%

Groundnut/Peanut

Groundnut oil is expressed from the seed of Arachis hypogaea L., commonly known as

groundnut, peanut, or earth nut because the seeds develop underground. Groundnuts are

produced on a significant basis in more than 30 countries, with worldwide production figures

estimated to be around 35.4 mt during 2010-11. The plant itself is a legume native to South

America and was probably cultivated as early as 20003000 BC.

World production of groundnuts is about 8% of the world production of oilseeds during OY2008-

12. However, because of the limited extraction of groundnuts, the annual production of

groundnut oil is only about 3.5% of the world vegetable oil total. Uses in various countries differgreatly, but overall more than 50% of all groundnuts produced are crushed for oil. While around

80-82% of the groundnut crop in India is crushed for oil due to high demand (followed by 12% as

seed and 6% for feed), the proportion is only 10-12% in the US. This low percentage is indicative

of the economic importance of the nuts themselves as a food crop in the US. Due to the high

content of digestible protein and unsaturated oil and the exceptional roasted nutty flavour,

groundnuts have substantial value as a nutritious and flavourful food commodity. More than one

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third of the groundnuts produced are used as food in the form of intact nuts on a worldwide

basis.

Throughout the world, frying and cooking constitute by far the greatest use of peanut oil. It is

especially suitable for deep-fat frying due to its high smoke point of 229C. This high temperature

allows food to cook quickly with a crisp coating and little oil absorption. Off flavour and odour

development are very limited during frying with groundnut oil. However, degradation of

triacylglycerols occurring during frying results in an increase of free fatty acids (FFA) and a

decrease in smoke point. Crude groundnut oil has a nut-like odour but after refining the oil

becomes odourless. This makes it useful in the preparation of shortenings, margarines, and

mayonnaise. Groundnut oil is the main ingredient in vanaspati, a hydrogenated product make in

India that resembles natural butter and ghee in appearance. It is used as a vegetable ghee

substitute.

Although a range of 3656% has been reported for oil content, groundnuts commonly contain

4050% oil. Oil content is commonly considered to be about 4850% and is generally

independent of market type or growth habit. The triacylglycerol content of the oil is generally

95%, with some differences among varieties. Maturation of the seed results in increases in total

oil, triacylglycerol, and ratio of oleic acid to linoleic acid (O/L), while free fatty acids, polar lipids,

monoacylglycerols, and diacylglycerols decrease.

Composition of Groundnut Oil

Maturity Stage

Oil

(dry weight)

Triacylglycerol FFA Diacyl-

glycerol

Polarlipids

5 25.3 85.3 4.5 4.7 2.0

6 30.8 89.3 3.1 3.5 1.4

7 34.4 88.3 2.5 3.6 1.9

8 42.8 90.8 1.8 3.0 1.6

9 45.6 92.6 1.3 2.2 1.310 46.7 94.3 0.9 2.0 1.0

11 48.4 94.8 0.7 1.9 0.7

12 48.2 95.8 0.7 1.7 0.6

In India, around 85% of groundnut in the country is cultivated during the kharif season. The

production levels in India appear to have been influenced by the fluctuations in the yield level

rather than in area. Groundnut cultivation is highly concentrated in a few districts of the country.

Although the cultivation of the crop is spread across 273 districts in India, around 13 districts

contribute up to 50% of the total area. Another 43 districts contribute 35% of the area under the

crop.

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Long Term Trends in Indias Groundnut Oilseed Production

OY

In India, about 75% of the groundnut acreage lies in a low to moderate rainfall zone (parts of

peninsular region and western and central regions) with a short period of distribution (90-120

days). Groundnut is primarily grown in the three southern states of AP, TN, and Karnataka; and

the western state of Gujarat. About 75% of the crop during OY2006-10 was kharif (planted during

May-July and harvested in September-mid December). In the rabi (winter) season, planting is

during mid-September to November and harvesting takes place during March and April. Crop

failures occur periodically due to inadequate or excessive rain or unfavourable rainfall

distribution. Indias groundnut production has declined primarily because of a shift in acreage to

other non-oilseed crops in AP and Gujarat. Although India is a world leader in groundnut acreage,

productivity has remained low and declined. As groundnut is grown mainly as rainfed crop there

is high a level of fluctuation in the production depending on the rainfall. The productivity is

restrained by soil moisture deficit or drought stress, the use of low levels of inputs by

smallholders and marginal farmers in dryland areas, high incidence of foliar fungal diseases, and

attack by insect pests Groundnut has high oil recovery (40%). Around 40-50% of the output is

used in oil production with the rest being used as seed and feed.

0%

10%

20%

30%

40%

50%

60%

70%

80%

1

2

3

4

5

6

7

8

9

10

11

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Production-mt (LS) Share of Kharif (RS)

Share of Rabi (RS) Share of Total (RS)

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State-wise Area, Production, and Yield of Groundnut


OY Growth

2006 2007 2008 2009 2010 2010 2006-10

Area 6,736 5,615 6,290 6,165 5,478 -11.2% -3.8%

AP 1,876 1,334 1,800 1,766 1,301 -26.3% -6.7%

Gujarat 1,954 1,773 1,860 1,907 1,822 -4.5% -1.9%

Karnataka 1,040 763 910 850 818 -3.8% -3.3%

MP 208 204 200 200 188 -5.8% -2.1%

Maharashtra 428 449 400 318 321 0.9% -6.4%

Rajasthan 317 302 280 322 326 1.4% 2.5%

TN 619 508 540 490 413 -15.8% -7.7%

Others 294 282 300 312 289 -7.6% 1.4%

Production 7,993 4,864 9,180 7,168 5,429 -24.3% -4.3%

AP 1,366 743 2,600 1,554 1,006 -35.3% -9.3%

Gujarat 3,389 1,435 3,300 2,661 1,757 -34.0% -1.4%

Karnataka 671 379 730 501 512 2.2% -7.2%

MP 234 193 190 228 218 -4.3% -2.1%

Maharashtra 410 399 470 355 359 1.1% -6.5%

Rajasthan 491 396 480 537 355 -34.0% -4.5%

TN 1,098 1,007 1,050 975 890 -8.7% -2.4%

Others 334 312 360 358 332 -7.2% 1.4%

Yield 1,187 866 1,459 1,163 991 -14.8% -0.6%

AP 728 557 1,444 880 773 -12.1% -2.8%

Gujarat 1,734 809 1,774 1,395 964 -30.9% 0.4%

Karnataka 645 497 802 589 626 6.2% -4.0%

MP 1,126 948 950 1,140 1,158 1.6% 0.0%

Maharashtra 958 889 1,175 1,116 1,118 0.2% -0.1%

Rajasthan 1,549 1,310 1,714 1,670 1,087 -34.9% -6.9%

TN 1,775 1,981 1,944 1,989 2,156 8.4% 5.7%

Others 1,135 1,106 1,200 1,147 1,151 0.4% 0.0%

The value of output from oilseeds was estimated at Rs. 640 billion in FY2010, accounting for 7.5%of aggregate value of agricultural output. The share of oilseeds increased substantially from the

mid-1980s to a 13% in FY1991. It thereafter declined marginally to around 11% during the mid-

1990s. Since then, the share of oilseeds has declined to around 7.5% during FY2010. The decline

has been primarily because of low growth in oilseeds production during the period from FY2006

to FY2010.

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Long Term Trends in Indias Oilseed Production

FY, Rs. Billion

The value of output from oilseeds had remained in a narrow range till FY2003 before increasing

significantly. Output declined in FY20009-10 primarily because of lower production accompanied

by higher level of prices.

Value of Output from Oilseeds

Rs. Billion

(current prices)

Growth

FY 2006 2007 2008 2009 2010 2001-05 2006-10

Linseed2.99 3.32 3.69 4.07 3.40 -2.8% 2.1%

Sesamum 17.18 18.55 26.23 26.58 38.36 14.7% 15.8%

Groundnut132.11 132.41 213.70 174.53 137.56 10.8% 4.3%

Rapeseed/Mustard131.84 130.74 136.26 163.22 140.16 11.9% 3.1%

Castor13.83 16.74 25.12 26.95 23.86 0.9% 12.6%

Coconut68.83 65.39 63.60 74.69 63.81 6.8% -2.3%

Nigerseed1.88 1.98 2.80 2.70 1.72 -1.5% -2.9%

Safflower3.08 3.47 4.77 3.71 3.40 -0.3% 5.1%

Sunflower 22.63 21.95 34.15 24.99 18.51 17.1% -0.5%

Soyabean111.77 119.31 181.48 191.15 211.04 10.1% 17.1%

Others1.35 1.82 1.78 2.06 1.91 19.0% -5.2%

Total 507.47 515.68 693.58 694.65 643.74 10.0% 6.9%

Share of

Agriculture Output 9.7% 8.8% 10.2% 9.1% 7.5%

Source: National Accounts

0%

2%

4%

6%

8%

10%

12%

14%

0

100

200

300

400

500

600

700

800

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Value (Rs. Billion, current prices)-LS

Share of Agriculture Output (current prices)-RS

Share of Agriculture Output (constant prices)-RS

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Quarterly (Yoy) Growth in Prices for Major O ilseeds

Oilseed crops account for 15-16% of the gross cropped area in India. Their area, production and

productivity (yield) in India had registered steady increases since the inception of TMOP in April

1986 and reached a peak in FY1999, before declining sharply till FY2003, with sharp increase

thereafter. Nevertheless, area, production and yield of oilseeds in India have fluctuated because

of several biotic and abiotic stresses affecting the crops. Another important factor contributing to

insufficient domestic production/productivity of oilseeds has been the small proportion of area

under irrigation, which has declined from 26.3% in FY1997 to 24.5% in FY20043, but increased to

27% in FY2009.

3The correlation coefficient between rainfall and production for major crops is estimated at: rice (0.26), wheat (0.27),

coarse cereals (0.37), pulses (0.61), oilseeds (0.34), sugarcane (0.21), and cotton (0.16).

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Q1FY06 Q4FY06 Q3FY07 Q2FY08 Q1FY09 Q4FY09 Q3FY10 Q2FY11 Q1FY12

All Oilseeds Groundnut Seed

Rape & Mustard Seed Soyabean

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Trends in Indias Oilseeds Acreage under Irrigation

OY

Rain fed agriculture is practiced on 80% of the worlds agricultural land area, and generates about

70% of the worlds staple foods, including most of the food in poor communities in developing

and least-favoured areas. India ranks first among the countries that practice rain fed agriculture

both in terms of extent (86 mha) and value of production. In India, rain fed agriculture is

practiced under a variety of soil type, agro-climatic and rainfall conditions ranging from 400 mm

to 1,600 mm per annum. Rainfall is a random input and its variation and intensity are high in

areas of low rainfall. Estimates indicate that a decrease of one standard deviation from the mean

annual rainfall often leads to a complete loss of the crop. Dry spells (or monsoonal breaks), which

generally involve 24 weeks of no rainfall during critical crop growth stages, causing partial or

complete crop failures, often occur every cropping season. At present, an estimated 60% of the

142.2 mha net cultivated area is rain fed, which contributes to 44% of total food grain

production. Most of Indias coarse cereals (91%), pulses (91%), oilseeds (80%) and cotton (65%)

are produced in rain fed areas. Small areas of almost all rain fed crops are scattered in most of

the districts, except for a few crops such as soyabean and linseed that have specific agro-climatic

requirements. Recent detailed district and agro-ecoregional level studies comprising the 604

districts of India indicate that rain fed rapeseed is cultivated in 265 districts, compared with 316

for groundnut, 202 for soyabean, and 224 for sunflower. Supplementary irrigation techniques can

result in potential gains in rain fed crop yields. Production enhancement in the drought season in

case of soyabean and groundnut crop is especially high due to concentration of crop-growing

area in high rainfall zones.

Indias oilseed sector is also plagued by a number of structural and policy issues, which are

discussed below:

Favourable Support Prices for Competing Crops

Indias domestic price support programme, which has often favoured production of crops that

compete for area with oilseeds, had led to stagnation and even decline in the area sown under

0%

10%

20%

30%

40%

50%

60%

70%

80%

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

All Oilseeds

Groundnut

Rapeseed

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oilseeds. Minimum Support Prices (MSP) levels for grains had been raised more for other crops

than for oilseeds since the mid-1990s. This differential has been corrected with sharp increases in

MSP for oilseeds during FY2009. However, MSP for paddy has also increased at a high (albeit

lower) rate during FY2009. For 2009-10, while MSP for oilseeds has remained unchanged, MSP

for paddy was increased by 11.8%. Because of the substantial decline in domestic oilseeds

production during OY2010, MSP for all oilseeds for OY2011 were increased in the range of 3.6%

(soyabean yellow) to 9.5% (groundnut). MSP for paddy has also been increased by 5.3% for the

2010-11 season. During 2011-12, although MSPs for oilseeds were increased in the range of

17.4% (groundnut and soyabean-yellow) to 35.1% (rapeseed), oilseeds production is expected to

decline. By comparison, MSP for paddy and wheat were increased 8% and 14.7%, respectively.

Increase in MSP for Select Crops

2000-01=100

Compiled by IMaCS

Price intervention in agriculture in the form of MSP and Central Issue Prices (CIP) under the Public

Distribution System (PDS) has been made with the objective of providing remunerative prices to

producers and food security to the poor. Restrictions on movement of various agricultural

commodities under the Essential Commodities Act (ECA), 1955, have indirectly controlled the

prices of these commodities, forcing the farmers to depend on the procurement mechanism for

market clearance. These controls on agriculture seem to have biased the cropping patterns in

favour of certain crops like rice, wheat, and cotton.

0

50

100

150

200

250

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Paddy Common Wheat

Groundnut(in shell) Soyabean Black

RapeSeed / Mustard

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Growth in Acreage

Percent per annum

Compiled by IMaCS

The MSP mechanism has helped to maintain the prices of rice and wheat at a high level making

the cultivation of these two crops more remunerative than pulses, coarse cereals, and oilseeds.

MSPs announced for rice and wheat have been generally higher than the market prices and the

cost of cultivation. Between 1990-91 and 2003-04, real MSPs of paddy, wheat, coarse cereals,

pulses, oilseeds and cotton have on average increased by about 19, 28, 25, 27, 7 and 19 percent

respectively. Thus, barring oilseeds, all other crops have witnessed significant increases in their

real MSPs. It is noteworthy to compare this increase of real MSP with the increase during the

1990s (1990-91 to 1999-2000), the corresponding escalations were 26, 34, 21, 18, 1 and 27

percent. Thus, the price policy in the recent years has resulted into more harmonious increase inreal prices. Although the government had regularly supported wheat and rice MSPs mainly in

several important cereal-producing states, price support operations for oilseeds have usually not

been funded. As a result, increasingly favourable returns to wheat and rice had drawn area away

from oilseeds, lowering oilseed production from an average of 26 mt annually in 1994-95 to

1996-97 to 23.3 mt in the late-1990s.

In order to induce the farmers to change their cropping pattern in favour of oilseeds and pulses,

the MSP for oilseeds had been substantially increased in FY2004 and FY2005 season. Although

the increase in oilseeds prices was substantial, nevertheless the market prices ruled above the

MSP. The positive market scenario enabled the farmers to receive better prices, inspite of

bumper production. However, lower increase in MSP for oilseeds for FY2006-08 seasons hasresulted in stagnation in oilseeds acreage, with acreage increasing 1.2% in OY2006, declining

4.8% in OY2007, and increasing 0.1% in OY2008. As a result, MSP for oilseeds were increased

substantially for OY2009 season. The percentage increases announced were 1.7% for rapeseed,

32.4% for soyabean (yellow), 35.5% for groundnut (in shell), 46.7% for sunflower seed, 74.1% for

sesamum, and 94% for nigerseed. These compare with increase of 30-32% for paddy, 8% for

wheat, 39-48% for cotton, and 0% for sugarcane. This resulted in a 4.3% increase in acreage for

OY2009 season. However, as noted above, the MSP for oilseeds was not changed for the OY2010

3.8%

0.6%

1.7%

2.5%

-0.4%

-2%

-1%

0%

1%

2%

3%

4%

5%

1985-90 1990-2000 2001-11 2000-05 2006-11

Rice Wheat

Oilseeds Cotton

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season. For OY2011-12, MSPs for oilseeds were increased substantially primarily because of

deficient monsoons during the 2009 season, and low carryover stocks. However, MSP for pulses

have increased at a higher rate. Output of Pulses had declined 1.3% in 2008-09, and increased by

0.6% in 2009-10. Although output increased 24.4% in 2010-11, output is forecast to decline 5.3%

during 2011-12.

MSP for Some Oilseeds

Rs. Per quintal (100 kg)

Compiled by IMaCS

Low Yields

Oilseed yields in India are well below the world average. For major oilseeds, Indias yields are

around 40-60% of the world average.

IndiaComparison of Yields

Kg/ha

OY 2011 2012 1988-97 1998-2007 2008-12

Rapeseed (World) 1,813 1,819 1,352 1,578 1,832

EU 2,964 2,830 2,935 2,993

Canada 1,965 1,896 1,278 1,508 1,877

China 1,777 1,831 1,261 1,584 1,837

India 1,000 1,000 884 868 994

Soyabean (World) 2,571 2,434 1,978 2,320 2,441

US 2,922 2,791 2,332 2,638 2,832

Brazil 3,120 2,880 2,011 2,583 2,898Argentina 2,678 2,581 2,160 2,672 2,614

China 1,772 1,765 1,525 1,727 1,677

India 1,054 1,071 857 895 1,032

Groundnut (World) 1,659 1,713 1,219 1,453 1,639

China 3,453 3,447 2,294 2,937 3,388

India 975 1,017 970 887 989

US 3,711 3,714 2,657 3,141 3,712

Compiled by IMaCS

400

900

1,400

1,900

2,400

2,900

3,400

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Groundnut (in shell) Soyabean (average)

Sunflower Seed Rapeseed

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Long-Term Trends in Oilseed Yields

kg/ha

Compiled by IMaCS

In soyabean cultivation, the adoption of genetically modified (GM)/biotech (Bt.) soyabean has

resulted in a sharp increase in yields in some early adopters, especially Argentina. In Argentina,

soyabean yields increased from 1,806 kg/ha in OY1997 to an average of 2,630 kg/ha in 1999-2003

and 2,614 kg/ha in 2008-12. Argentina commercialised GM soyabean in 1996, the first year of

global commercialisation. Biotech herbicid

edo.pdf

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