Increase in Freight Rate Will Make the Castor De-oiled Cake Production Unviable?

In India, the ministry under Mamata Banerjee has re-classified de-oiled cakes and oil meals from Class 110 to Class 120, effective December 27,2010 which will entail a freight rate increase between 11 and 13 per cent. Since oil cake and meals are used effectively as high nutrient bird and animal feeds, the rise in raw material prices will be passed on to consumers.

Solvent Extractors Association (SEA), in a memorandum to the railways minister and chairman of the Railway Board as well as secretary, Ministry of Agriculture, Commerce, Animal Husbandry and Finance, highlighted that de-oiled cakes were locally produced, traded and occasionally exported on wafer-thin margins. This increase in freight rate would make the production of de-oiled cakes unviable thereby forcing many processing plants to decrease their production and thereafter leading to
shutdown.
De-oiled cakes end-use is in manufacture of compound feeds for cattle, poultry and aqua and also as natural fertilisers and hence such a large increase in freight would place great constraint on the viability of dairy and food industry as well as on the farmers. Also, exports of de-oiled cakes, which face stiff international competition from giants in the US and South America, will be adversely affected. In fact, to compete in the international market, the government has granted a 2 per cent incentive under the Focus Product Scheme for exports of some de-oiled cakes and 5 per cent under Vishesh Krishi Gram Upaj Yojana for castor de-oiled cake. The hike in freight will totally nullify the benefit granted to the exporters of de-oiled cakes and would place them at a great disadvantage.