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

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Presentation transcript:

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

2 Background  Followed import substitution policy till This created some limitations in the sector.  By , 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 to 4.30mn tonnes in  Share of bills for the import of edible oils in total agriculture imports increased to 50% in

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  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  The area under the oil seed production rose by 25%.

5 Oilseeds and Edible Oil Scenario-Rajasthan  3 rd largest oilseed producing state( share 15.1%).  Rapeseed-mustard and groundnut are the two principal oilseed crop raised in the state.  1 st 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!