Marketing of Oilseeds and Oils in India: Present and Future

The gap between demand and supply of edible oils in India has been widening over the years and have resulted in rising prices of edible oils. This paper illustrates the working of intermediaries in the terms of quantities handled, costs, margins, and working capital in various stages. It also looks at the role of marketing in the intensive development of non-traditional sources of oilseeds in the coming years. Working capital tied up in the production comes to Rs. 766.50 crores which accounts to Rs. 1.35/kg. of seed and Rs. 4.83/kg. of oil. The break-up of crop loan to farmers for groundnut production is not available in the Basic Statistical Returns published by the Reserve Bank of India. But based on our discussions with the knowledgeable persons, we could find that the percentage of bank finance (crop loan) available to farmers compared to their total requirement is not substantial. Coming to trade in seed, processing of seed for oil and cake, and marketing of oil, we find that Rs. 84.06 crores is tied-up. If one looks at the average production and quantity handled by for the years 1978-79 to 1980-81, working capital tied-up comes to 17 paise in terms of per kg. of seed, and 66 paise in terms of oil. The total bank finance for groundnut seed and oil accounts to about 17.01 percent of the money used by the trade after the seed has been disposed by the farmers. This clearly indicates that very liberal finance to farmers must be made available to facilitate higher yields and production of groundnut. It is here that the non-availability of bank finance makes a major difference in terms of net margins. At the same time if the farmer has sufficient financial support, he can sell the produce directly to the millers or cooperative societies. Moreover, similar facilities and mode of financing should be made available to the farmers engaged in cultivating other oilseeds. If steps are not taken by the trade to ensure remunerative prices to farmers, more and more government intervention may follow. It may take various forms such as direct controls (price and non-price), further curtailment of credit facilities to private trade and processing, and encouragement to cooperative oilseed marketing federations.