National

"The Customer Will Suffer"

As the man who revolutionised the Indian edible oil sector, Verghese Kurien, chairman, NDDB, is deeply worried today about the possible long-term repercussions of the dropsy scare. Repercussions which may take the country several steps back from its

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"The Customer Will Suffer"
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What is NDDB's share in the mustard oil sector and how important is it to NDDB?

In India most oil is sold loose and unbranded. Dhara oils sold about 83,000 tonnes last year and we expect to sell about one lakh tonnes this year. That makes Dhara the largest single branded oil, but still, it's only a little over one per cent of the total oil consumed.

What will be the impact of the mustard oil ban on the farmers and millers?

You assume that the consumer won't be affected. But in the end it is he, and certainly not the millers and traders, who will suffer. Farmers won't switch out of mustard on a wholesale basis. When the rabi crop is planted, they'll go back to cropping mustard between wheat as was the practice before oil prices stabilised in the late eighties. But during harvest, traders will knock down the price of the seed, citing the ban as an excuse. By then everyone but the trader will have forgotten about argemone oil or dropsy. The trade will sell at whatever price the market will bear, probably a very handsome one. But farmers will continue to reduce the area under mustard, which is the most promising oilseed crop and generates over Rs 9,000 crore (the farmer's share will be one-third at best). We will import more and more oil and put pressure on the world prices. In the '70s and '80s, we imported 2 million tonnes a year at $700-800 million, now it'll be 3 million at $1 billion.

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Do you feel if market intervention operations (MIO), with NDDB in the lead, had continued, such things couldn't have happened?

The MIO was part of the Integrated Policy on Oilseeds and Edible Oil with self-reliance as its focus, given the soaring cost of oil imports. Dhara was born out of that strategy to provide quality at competitive prices. It was also hoped that Dhara would encourage consumers away from loose oils and preferences for specific oils. That said, there's little doubt in my mind that stopping the MIO has contributed to the present situation. First, we had managed to cut imports to under 2 lakh tonnes annually, but it has again gone through the roof. Second, despite imports—or perhaps because of it—we find an increasing scarcity of oilseeds and oil with soaring prices, benefiting the trader and encouraging adulteration. A buyer's market—which occurs when you achieve self-reliance—places an emphasis on quality. A seller's market does not.

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I fear that we're again headed toward increasing imports—often subsidised by exporting nations—that undercut our prices and force producers to move to other crops.

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