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Impact Assessment of Post-Globalisation Scenario in Mustard Oilseed Sector of Rajasthan

Impact Assessment of Post-Globalisation Scenario in Mustard Oilseed Sector of Rajasthan. December 18-19, 2006, Lucknow Dr. N C Pahariya. Background. Followed import substitution policy till 1994-95.This created some limitations in the sector.

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Impact Assessment of Post-Globalisation Scenario in Mustard Oilseed Sector of Rajasthan

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  1. Impact Assessment of Post-Globalisation Scenario in Mustard Oilseed Sector of Rajasthan December 18-19, 2006, LucknowDr. N C Pahariya

  2. Background • Followed import substitution policy till 1994-95.This created some limitations in the sector. • By 2004-05, all the quantitative restrictions were removed and upper bound level on tariff levels were placed. • Monopoly was removed and imports were allowed under OGL system. • Policy change increased import from 0.10mn tonnes in 1992-93 to 4.30mn tonnes in 2002-03. • Share of bills for the import of edible oils in total agriculture imports increased to 50% in 2004-05.

  3. WTO AoA-Implications on the Oilseeds Sector • India under AoA is permitted to offer ceiling bindings instead of tariffication. • India bound tariff at 300% for edible oils. • Imports of edible oil are made under OGL at 45-85% import duty. • Tariff structure was relatively simple and liberal with the common ad valorem tariff for oils lowered to uniform rate of 16.5% by middle of 1998. • With the surge in import, frequent tariff adjustments were made to decrease import and protect domestic industry.

  4. Oilseeds and Edible Oil Scenario-India • Indian Vegetable oil economy is the fourth largest in the world. • Oilseed sector share 13% of country’s gross cropped area, 3% of GNP and 10% of the value of agriculture product. • India is second in rapeseed production in the world. • Improvement in the productivity and yield rates during 1986-2003. • The area under the oil seed production rose by 25%.

  5. Oilseeds and Edible Oil Scenario-Rajasthan • 3rd largest oilseed producing state( share 15.1%). • Rapeseed-mustard and groundnut are the two principal oilseed crop raised in the state. • 1st in production of rapeseed-mustard. • Out of 21 districts in India predominant in the area and production of rapeseed-mustard, 12 were from Rajasthan. • Ganganagar district hold number 1 position , other are Alwar, Bharatpur, Sawai Madhopur Baran etc.

  6. Field Survey-Findings • Most of the farmers are illiterate, only 34% of the respondents had schooling upto primary level, 30% upto school level and rest 6% were college attendant. • Households are predominantly occupied in agriculture. • Only 27% of the farm family earned annually upto Rs. 50,000 from agriculture.1/3 earning annually between Rs. 50,000-to Rs.1,00,000. • Earning of the marginal farmers are low, with 60% below poverty line.

  7. Field Survey-Findings • Impact of modern machinery like tractors, thrashers etc are visible. • Nearly 45% of the farmers use hybrid seeds • Average consumption of chemical fertiliser has gone up to 32 kg. • 89% of the farmers use plant protection measures. • Storage facility, mostly owned is available to nearly 65% farmers. • 63% of the farmers received credit facility. • More 57% farmers goes to Mandis to sell their produce.

  8. Field Survey-Findings • Almost all farmers are ignorant about WTO AoA. • Most of the rural and urban consumers use the oil as their staple edible oil. • Almost 92% of rural consumers buy edible oil in loose form. • More than 60% urban consumers buy in packed form. • 44% of the rural and urban households go for non branded oil. • 47% rural and almost same % of urban go for foreign brand. • Price play the determining factor for buying oil, followed by quality and other factors.

  9. Challenges Faced by the Sector Low yield rates and high cost per unit area. Mismatch between low raw material production and high processing capacity. Fragmentation of capacities, poor scale economies, large idle capacity, high cost of raw material and low priced imported oils render product oils and meals uncompetitive. Supply side bottlenecks like government policies, tariff and local tax structure.

  10. Recommendations Improvement of yield and increase in the oil and protein content of the seeds. Policy reforms both at the central and state level to promote the production of the oilseeds in the country. The steps needs to be taken at the urgent basis to make the producers competitive and address their livelihood concern. Harmonise and standardise the taxation of oilseeds and their products, at a rate consistent with processing margins, such as replacing the sales tax with an excise duty.

  11. Recommendations Decentralise the financial and management authority of regulated markets, the mandis. Establish the policy framework necessary to promote private investment in market, storage, transport, and port infrastructure. Raise consumers’ awareness about health and quality concerns and oilseed processors appreciation of appropriate technologies and labeling.

  12. Thank You!

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