Impact Assessment of PostGlobalisation Scenario in Mustard
Oilseed Sector of Rajasthan
December 18-19, 2006, Lucknow
Dr. N C Pahariya
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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.
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WTO AoA-Implications on the Oilseeds Sector
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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.
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Oilseeds and Edible Oil Scenario-India
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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%.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Thank You!
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