1. 1 Overview of Indian Oilseed Sector & Short Term & Long Term Demand-Supply & Import of Edible Oils By: Dr.B.V.Mehta Executive Director The Solvent Extractors’ Association of India 8 th – 9 th Nov 2012 Guangzhou, China

2. 2 Presentation Sequence SEA Profile Incredible India Indian General Economy Agricultural Economy Indian Oilseed Sector Edible Oil Demand & Supply – Short term & Long term projection

3. 3 SEA Profile Formed in 1963 to foster the development & growth of the Solvent Extraction Industry in India Largest and Premier Association in the Vegetable Oil Sector in India First Association in Vegetable Oil & Oilseed sector to receive ISO 9001 Certification in India (2004) Recognised as NGO and TPO by Government of India

4. Over 850 Members S. E. Units Oil Millers Refiners. Vanaspati Mnfrs.. Importers. Exporters. Surveyors. Shipping Agents. Fin. institutes. Foreign Buyers & many more…. India 33 32 87 49 291 10443 9 22 28 50 2 2 8 1 18 29 6 4 SEA Members

5. 5 Indian General Economy

6. 6 Second most populous nation 1.21 Bn people Largest Democracy Multi ethnic country Country with maximum young people Median age is 24 years Amongst the fastest growing economies Fourth largest economy Literacy level – 65% (2012) What People Talk About India

7. 7 India – a fast growing significant economy in spite of global slowdown Strong Macro-economic fundamentals GDP Value: Over US$ 2.0 Trillion (Tn) Purchasing Power Parity (PPP): US$ 5 Tn Forex Reserve: US$ 293 Bn FDI Flow US$ 36.5 Bn (2011-12) Household Savings Rate 31.6% (2011-12) (world’s highest) Indian Macro-economic Overview

8. 8 GDP Growth Rate (%)  The overall GDP growth in last five years is registered at 7.8%  For FY12-13, growth is forecasted at 6.5% India's Overall GDP Growth Source : CMIE

9. 9 Indian Agriculture Scenario

10. 10 Agriculture Sector GDP Growth  Agriculture Sector Growth depends heavily on monsoon performance. Indian Govt. is aiming at 4% Agriculture GDP growth to achieve 10% overall GDP growth  FY12-13, the growth is forecasted at 1.6% due to poor monsoon Agriculture GDP Growth Rate (%) Source : CMIE

11. 11 Area (3.3 Mn Km 2 ) No. 7 Arable Land (161.7 Mn Ha) No. 2 Irrigated land (56.0 Mn Ha) No. 1 Milk ProductionNo. 1 Rice ProductionNo. 2 Wheat ProductionNo. 2 Rapeseed ProductionNo. 2 Fruit ProductionNo. 2 Tea ProductionNo. 2 Sugar ProductionNo. 2 Cotton ProductionNo. 2 Coffee ProductionNo. 5 India’s Ranking in the World

12. 12 India’s Agriculture Production India is well connected with cellular phone having 850 Million users and with the talk time rate cheapest in the world

13. 13 Indian Oilseed Sector Demand - Supply and Import of Vegetable Oils

14. 14 Area Under Oilseed Cultivation 26-27 Mn. Ha. Average yield 1100 Kgs. Output of 9 cultivated Oilseeds30.1 Mn. T. Output of Cottonseed & Copra 11.0 Mn. T. Total41.1 Mn. T. Production of Vegetable Oils 8.12 Mn. T. Demand of Veg. Oils(Edible) 16.7 Mn.T. Import of Veg. Oil 2011-12 (Nov-Oct) (Edible) 9.4 Mn.T. (E) Per capita consumption (2011) 13.5 Kg. Per capita consumption is rising by 3 to 4% per annum. Oilseed Sector 2011-12

15. 15 Oilseed Sector - Share of India Vegetable Oil Sector Turnover US$ 23.0 bn. (Rs.125,000Cr) Import & Export from Oilseed Sector US$ 12.0 bn. (Rs.65,000 Cr.) 2011-12 In World's Oilseed Production 8.0 % In World's Oilmeal Production 6.8 % In World's Oilmeal Export 6.5 % In World's Production of Veg. Oils 5.2 % In World’s Vegetable Oil Import 13.6 % In World's Edible Oil Consumption 10.2 %

16. 16 Year (Nov-Oct) Oilseeds Production Availability of Veg. Oils Edible Non- Edible Total 2011-1230.01(E)7.340.788.12 2010-1131.107.920.608.52 2009-1024.887.260.517.77 2008-0927.727.710.508.21 2007-0829.767.750.498.24 2006-0724.297.330.437.76 2005-0627.987.560.478.03 2004-0524.357.160.437.59 2003-0425.187.210.387.59 2002-0314.844.840.285.12 2001-0220.666.370.356.72 India’s Oilseeds & Veg. Oil Production Qty in Mnt Source : SEA

17. 17 World & India Production of Oils & Fats 2011-12 Qty : Mn T Source: World data from Oilworld 2012 & SEA Data Bank for India WORLD Major Veg.Oils produced in India are Rapeseed Oil, Soybean oil, Cottonseed Oil, Rice Bran Oil & Groundnut Oil

18. 18 Country2011-122010-112009-102008-092007-082006-07 EU-2759.460.361.660.057.456.4 U.S.A.54.752.550.451.354.954.0 Argentina92.177.763.046.435.724.8 China25.124.523.822.921.821.3 India14.814.514.313.912.512.1 Indonesia33.429.725.623.521.919.8 Japan21.521.421.520.822.222.3 Pakistan21.5 21.721.621.521.3 Turkey29.629.028.727.231.331.5 World25.9125.3124.6823.9223.4322.78 Source : Oil World 2012 Per Capita (kg) Disappearance of Oils and Fats in Selected Countries and World  Number shown includes consumption of oils and fats for Bioenergy

19. 19 Item Description WTO Bound Rate Duty on Crude Edible Oils Duty on Refined Edible Oils Tariff Value US$/MT (23 rd Oct 2012) Soybean Oil45%Nil7.5%580 RBD Palmolein300%Nil7.5%893 RBD Palm Oil300%Nil7.5%476 Crude Palm Oil300%Nil7.5%447 Sunflower Oil300%Nil7.5%- Rape/Mustard Oil75%Nil7.5%- India – WTO Bound Rates & Import Duty Sept-2012  Import duty reduced to Nil on crude vegetable oils & 7.5% on refined oils w.e.f. 1.4.2008. Import duty on refined oils is calculated on tariff Value announced by the Govt. fortnightly

20. Import Duty on Crude & Refined Palm Oil 20 PeriodCrude Palm Oil Refined Palm Oil 1994 (April)-65.0 2001 (Apr.)75.092.2 2006 (28, Feb)88.899.4 2008 (20, Mar.)20.6028.33 2012 (10, Oct.)Nil 7.73%

21. Import & Export from Oilseed Sector Import of Edible Oils freely allowed 9.8Mnt(11-12) (PalmOil:7.5mnt,SFO:1.0mnt, SBO:1.0mnt) Oilmeal Export freely allowed 5.5 mnt (11-12) (Soybean Meal 4.0 Mnt, Rapeseed Meal 1.1 mnt) Oilseeds Export freely allowed 0.85Mnt (10-11) (Seaseme Seed 0.4 Mnt, HPS Groundnut 0.42 Mnt) 21

22. Possibility of India adopting the Chinese approach China is one of the large producers of oilseeds in the world. However, the country has been substantially importing the oilseeds rather than the edible oil to feed its population. Heavy import of oilseeds rather than the edible oil by China in comparison to India, logically favours the vegetable oil crushing industries of China and provides meal to meet the booming animal feed demand. Recently Indian Government reduced the duty on Oilcake from 15% to nil to increase the supply of Feed Ingredients and thereby to check the rising prices due to Short Supply 22

23. Government of India’s Fiscal Incentive for Oilseed Cultivation 23 MSP level for food grains were raised more than for oilseeds since the mid-l990s. As a result, increasingly favourable returns from rice and wheat have drawn area away from oilseeds, lowering oilseed production. Since 1998-99, however, the MSP of the major edible oilseeds have been moving upward more decisively, intending to lure the growers towards the oilseed crops.

24. 24 % Change Commodity2001-022005-062008-092012-13In last Twelve Years Grain Wheat62065010801285665 (107%) Paddy5305708501250720 (136%) Maize4855408401175690 (142%) Oilseeds Soybean Yellow8851010139022401355 (153%) Groundnut in shell13401520210037002360 (176%) Rapeseed/Mustard13001715183025001200 (92%) Sunflower seed11851500221537002515 (212%) Sesamum14001550275042002800 (200%) Safflower13001565165025001200 (92%) MinimumSupport Price (MSP) of Agricultural Commodities

25. Consumption 25

26. Consumption of various oils in India in 2011-12 26 OilsDomesticImportTotal% Palm Oil0.077.50 7.5746.0 Soybean Oil1.651.01 2.6616.2 Rapeseed Oil1.740.09 1.8311.1 Sunflower Oil0.221.08 1.307.9 Cottonseed Oil1.19- 7.2 Rice Bran Oil0.85- 5.2 Groundnut Oil0.39- 2.4 Other0.65- 4.0 TOTAL6.759.67 16.42100 Qty: in MnT

27. Major Oil consumed in India - Palm, Soya & Rape Lower & Middle Class Price Sensitive Palm Oil preferred Oil being cheapest Vegetable Oil Demand quite Elastic and switchable Consumption & Characteristics of Indian Consumer 27

28. Consumption Of Edible Oils In India Demand Scenario upto 2020 Due to high growth in income levels, increasing trend in spending & better living standards; India promises to continue high growth in consumption of edible oils and consumption may reach 23 ml T by 2020 @ 3% growth rate. 28

29. Import of Vegetable Oils by India 29

30. 30 Edible, Vanaspati & Non-edible 2006-07 To 2010-11 (Nov – Oct) Vegetable Oils 2010-11 2009-102008-092007-082006-07 Edible Oils8.378.828.185.614.71 Vanaspati (Hydrogenated Fat) -- 0.020.050.25 Non-edible0.290.420.460.650.63 Total8.669.248.666.315.59 Import of Vegetable Oils Source : SEA (Qty in Mn T) Import of Veg Oils is rising from year to year to bridge the demand and supply gap

31. 31 CountriesJan/Dec 2011 Jan/Dec 2010 Jan/Dec 2009 Indonesia501054355255 Malaysia167711891541 Singapore-22 Thailand492128 Others-11 Total674466486827 Import of Palm Oil by India Qty in ‘000 Tonnes Source: Oil World

32. 32 CountriesJan/Dec 2011 Jan/Dec 2010 Jan/Dec 2009 Russia102656 Ukraine817588503 USA-11- Argentina433783 Others111 Total871663643 Import of Sunflower Oil by India Qty in ‘000 Tonnes Source: Oil World

33. 33 CountriesJan/Dec 2011 Jan/Dec 2010 Jan/Dec 2009 USA-161146 Argentina7461284693 Brazil14478202 Paraguay364565 Thailand8-- Others6.8-1 Total94115681107 Import of Soybean Oil by India Qty in ‘000 Tonnes Source: Oil World

34. Figures in Mln.Tn Stagnant Domestic oil production is leading to higher imports YOY to feed the growing Indian demand. India’s Vegetable Oil Production & Imports 34

35. In last 4 years, Import dependence has increased much more due to rising consumption and stagnant domestic production. India's Growing Dependence on Imports 35

36. 36 Low Productivity Small farm sizes Lack of varietal replacement Shifting of acreage from Oilseed to other crops Losses due to pests and diseases Vagaries of nature Major Constrains in Domestic Production of Oilseeds

37. 37 What are the Prospects for Indigenous Supplies of Oils in India ? Oilseed output targeted by 4% per year Vegetable Oil Production increase – 350/400Thousand per year Demand to rise Faster Oil Palm yet to pick up

38. Demand drivers in India Consistent GDP growth rate at or above 8 % in last 5 years (But current year it may be below 7%). The big emerging Indian middle class. Urbanisation Nucleus Family Change in Food Habits The double digit growth of out of home consumption of edible oils. Per capita consumption of Edible oils in India at 14.0 kg (2012) which is still a lot below threshold level of consumption. Even with a moderate population growth the absolute increase in number of people is quiet High. India has a Promising Demand Growth 38

39. Governments Support Scheme like NREGA (National Rural Employment Guarantee Act) and rising labor income is increasing the income level of people who are consuming much below the all India level. Supply of edible oils, mainly palm oil, by the Government at subsidized rates under PDS. Duty Free-Regime: Zero percent duty on crude imports has facilitated lower oil price to consumers and in turn push demand. India has a Promising Demand Growth 39

40. India’s Short Term & Long Term Demand Projection 40

41. 41 Oils 2011-12 2012-13 Projection Nov.’11 to Sep’12 (Actual) Nov.’11 to Oct.’12 (Estimate) RBD Palmoein 1515 16001200 Crude Palm Oil 5225 57006300 Crude Soybean Oil 987 1100 Crude Sunflower Oil 1049 1100 Rape (Canola) Oil 91 100 Others 96 100 Total 896397009900 Import of Edible Oils by India Current year and next year India also Imports about 200,000 tonnes of Non-Edible Oil for Industrial Purpose Qty: ‘000 Tonnes

42. 42 Year Population @1.76% Growth Consumption @ 3% Growth Consumption @ 4% Growth Consumption @ 5% Growth In Bn Per Capita Kgs Mn. T Per Capita Kgs Mn. T Per Capita Kgs Mn. T 20121.2013.916.6813.916.6813.916.68 20131.2214.317.4414.417.5614.517.69 20141.2314.718.0815.018.4515.218.69 20151.2515.219.0015.619.515.919.87 20161.2615.619.6516.220.4116.620.91 20171.2816.020.4816.821.5017.422.27 20181.2916.521.2817.422.4418.223.47 20191.3117.022.2718.023.5819.125.02 20201.3217.523.1018.7224.7120.026.4 India’s Population & Consumption of Edible Oils 2012-2020 Source : SEA

43. 43 Parameter201220152020* Population (in Bn)1.201.25 1.32 Total Demand (MnT) 16.6819.023.10 Domestic Supply (MnT) 7.3 8.0 9.2 Import (Mn T) 9.4 11.0 13.9+ Import as % Share of Demand 56% 57% 61% * Based on 3% Growth Edible Oil Demand and Import Projection Short & Long Term (Excluding Non-edible Oils)

44. 44 India will continue to be large importer of Veg. oil because domestic output growth is unlikely to catch up with demand growth. Strong GDP growth contributed mainly by Manufacturing and Service sectorsand also rising population automatically translates to higher demand for a host of food products including edible oil. How much of this incremental import demand of veg. oil particularly Palm Oil will be able to garner, would of course, depend on relative prices of various oils, tariff structure, landed cost & Domestic Supply. It would be in vegetable oil producers' interest to look at India as a large market that is going to be available for a very long-term – for long years - and do all that is required to sustain and service it. Conclusion

45. 45

46. Dr. B. V. Mehta Executive Director The Solvent Extractors’ Association of India A Premier Association of Vegetable Oil Industry & Trade in India ISO 9001:2008 Organisation 142, Jolly Maker Chambers No. II, 14 th Floor, 225, Nariman Point, Mumbai 400 021 Tel: (+91-22) 2202 1475. 2282 2979, Fax.: (+91-22) 2202 1692 Email: solvent@mtnl.net.in, Website:www.seaofindia.com File :CIOC 2012// Word// Presentations 46