Good monsoon set to boost production of vegetable oils
Domestic vegetable oil production is set to surge by 10-15% in 2024, driven by higher prices and a robust crop, notably rapeseed. Import projections reveal a dip to 16.2 MMT, with palm oil imports declining to 8.65 MMT. Meanwhile, soybean and sunflower oil imports are on the rise. Amidst global calls for fossil fuel alternatives, India eyes biofuels to meet COP 28 targets, leveraging its status as the third-largest ethanol producer.
The domestic production of vegetable oils is projected to increase by 10-15% in 2024. This increase is largely attributed to higher prices, good monsoon season and a robust domestic crop, with rapeseed significantly contributing to the rise. Meanwhile, there is the likelihood that import duties on vegetable oils would remain unchanged until the conclusion of the general elections.
Import projections: Total imports for oil year 2023-24 is estimated to be about 16.2 MMT vs 17 MMT in the previous year. Palm oil imports are expected to decline in 2024 (oil year) as it loses market share due to a narrow price difference with soft oils. Meanwhile, the country’s palm oil imports could register a decline from 10.1 million metric tons (MMT) in 2023 to 8.65 MMT in 2024.
For soft oils, soybean oil imports are likely to increase from 3.87 MMT in 2023 to 4.2 MMT in 2024 and sunflower oil imports could to increase from three MMT in 2023 to 3.25 MMT in 2024. Amid these fluctuations, imports of other oils are likely to remain unchanged at 0.1 MMT in 2024.
Governments worldwide are urging businesses to transition away from fossil fuels. Biofuels are anticipated to play a crucial role in meeting COP 28 targets. India has also committed to reducing emissions by 45% by 2030 and achieving net-zero emissions by 2070. Accelerating biofuel adoption is essential for meeting these emission targets, with replacing coal with biomass presenting a swift solution. As the third-largest ethanol producer, India is well-positioned to expand rapidly.
However, the limited availability and rising costs of feedstock are significant constraints to biofuel production. Non-edible sources face barriers such as unavailability, proper cultivation, regulation, high polyunsaturated fatty acids, and low unsaturated fatty acids content, but technological advancements could help overcome these challenges.
Utilising used cooking oil (UCO) as a major feedstock could alleviate some limitations. Additionally, utilising by-products from biodiesel production efficiently can help offset the price of biodiesel, while also making it economically more viable.
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