PORAM Market Talk (PMT) The first series of PORAM Market Talk (PMT) was held at PORAM HQ on 15th July 2013. The PMT on India was presented by Ms. Subashini Nadras, MPOB Regional Manager for India. The presentation generated lots of questions and updates on Indian market. India is a net importer of oils and fats. The country imported a total of 10.41 million tonnes of palm oil in 2012 of which palm oil constitutes about 7.81 million tonnes or 75%. This market continues to be a lucrative market for palm oil because the per capita consumption of oils and fats is still below world average at 15 kg per capita. India has about 1.25 billion population and the per capita consumption has been increasing between 3-4% annually. Secondly, their local production seems to be stagnating at around 9.33 million tonnes in the last three years (2010-2012). Indonesia is still the biggest exporter of palm oil to India dominating about 68% of the total market share. Since 2005, Malaysian palm oil market share has been growing steadily from 19% to reach 32% in 2012. Last year, Malaysia exported a total of 2.63 million tonnes of palm oil mainly crude palm oil (CPO) through duty-free CPO export quota. Since early this year (2013) with the abolishment of Malaysian CPO duty-free export quota and the Indonesian export duty structure, more RBD palm olein are being imported by India. This has not augur well for CPO lobbyists in India including the Solvent Extractors’ Association of India (SEA). The SEA claimed that the edible oil refining industry in India is in deep crisis now. It was reported that the price differential between CPO and RBD palm olein has narrowed down to US$10 per tonne compared to US$80 per tonne which makes it more lucrative to import refined palm products rather than refining them in India. The crisis has become more acute when the Indian Government currently levied an import duty of 2.5% on CPO and thus reduce the duty gap differential between CPO and RBD palm olein to 5% from 7.5%. There are now strong lobby to request the Indian Government to increase the duty differential back to 7.5% or even 10% in order for the vegetable refining industry in India to survive. Malaysia should be eyeing this situation with interest because there is no export tax levied on RBD palm olein compared to Indonesian. India being a price sensitive market would source RBD palm olein from Malaysia provided that the landed cost is competitive enough. The Indian market is also poised for blending between RBD palm olein with indigenous oils such as groundnut and mustard oils which are yet to be tapped fully to cater for the Indian middle classes. Interestingly, only two types of vegetable oil can be blended per blend with a maximum ratio of 80:20 proportion. Currently, palm oil still suffers from a poor image as a cheap oil consumed via the Public Distribution System (PDS). Such perception could be changed together with nutritional collaborative works with reputable Indian research institutes and supported with a consistent long term awareness programme in the country. It was heartening to know that both MPOB and MPOC are pursuing these efforts in India. Another interesting development is the new regulations as announced by the Food Safety and Standards Authority of India (FSSAI) on food products standards and food additives regulations. By early September this year, slip melting point (SMP) condition of 41 degree C has been removed in solid fats products. Secondly, palm stearin is now allowed in hydrogenated fats. Thirdly, for hydrogenated vegetable oils, the processes of chemical and enzymatic processes are allowed. Finally the amount of trans fatty acids (TFA) is limited to not more than 10% by weight edible vegetable oils, fats including hydrogenated vegetable oils, processed and packaged foods. Technically this could be a reversal of fortune in the edible refining industry in India as the co-product RBD palm stearin can now be utilized in the country. There could be a greater justification for the CPO lobbyist to call for the Indian Government to limit the importation of RBD palm olein. The pressure will be back to both Indonesia and Malaysia to cater for the consumers’ demand of CPO in India. During the presentation, MPOB has also outlined several opportunities and strategies to capture palm oil market share in India. PORAM Members who are interested in this market are urged to establish contact and networking with MPOB. Copies of the presentation can be requested from PORAM Secretariat at +603 7492 0006 (Ms. Susila/En. Norwin). PORAM would like to thanks all Members who participated at this PMT. The next PMT series will be informed accordingly.
Posted on: Wed, 17 Jul 2013 05:14:57 +0000
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