Report on GPDP Project in Edible Oil Industry in India

Chapter 1.0: Introduction

1 .0 INTRODUCTION

1.1 EDIBLE OIL SCENARIO IN INDIA

India is the fourth largest oilseed producing country in the world, next only to USA,
China and Brazil, harvesting about 25 million tons of oilseeds against the world
production of 250 million tons per annum. Since 1995, Indian share in world
production of oilseeds has been around 10 percent. Although, India is a major
producer of oilseeds, per capita oil consumption in India is only 10.6 kg/annum which
is low compared to 12.5 kg/annum in China, 20.8 kg/annum in Japan, 21.3 kg/annum
in Brazil and 48.0 kg/annum in USA.

Many varieties of oilseeds along with tree origin oilseeds are cultivated in India.
Among these, the major oilseeds are Soybean, Cottonseed, Groundnut, Sunflower,
Rapeseed, Sesame seed, Copra, Linseed, Castor seed and Palm Kernels. India
occupies the place of pride as the world's largest producer of Groundnuts, Sesame
seeds, Linseeds and Castor seeds. In India, oilseeds are grown in an area of nearly
27 million hectares across the length and breadth of the country. Depending on the
period of cultivation, the oilseeds are classified as 'Kharif Crop' and 'Rabi Crop'. The
Kharif Crop that is dependent on the Monsoon is harvested around October-
November each year. On the other hand, the Rabi Crop is harvested around March-
April each year. The edible oil industry of the country comprises of 50,000 Expellers,
600 Solvent Extraction Plants, 300 Vegetable Oil Refineries, and 175 Hydrogenation
Plants. The edible oil sector occupies a distinct position in Indian economy as it
provides job to millions of people, achieves on an average a domestic turn over of
US $ 10 Billion per annum and earns foreign exchange of US $ 90 Million per
annum.

According to an estimate by National Council of Applied Economic Research

(NCAER), in the year 2000-2001, the demand for edible oil was projected at 10
million tons against the domestic production of 6.7-7.0 million tons. The short fall of
3.0- 3.3 million tons was expected to be met by importing edible oil in India. It is
predicted by NCAER that in the year 2015, the demand for edible oil in India would
be 20 million tons per annum. Considering the present domestic edible oil supply of
7 million tons per annum, a shortfall of 13 million tons per annum is envisaged in the
year 2015. To bridge this gap, a growth rate of 15 % per annum would be required in
edible oil production in the country. Currently, edible oil growth rate in India is only
4%. In the event of failure to achieve the required growth rate, India would continue
to spend huge foreign exchange on import of edible oil.

The annual production figures for domestic oil seed & edible along with the figures of
import of edible oil over last 8 years are illustrated by a bar chart at Figure-1.1.

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Report on GPDP Project in Edible Oil Industry in India

D o m e s tic O ils e e d & E d ib le O il P ro d u c tio n Vis -a -v is

Im p o rt o f E d ib le O ils

300

252.1
243.8
221.1
250

216.2
213.4

213.2
215

185
In Lakh Tonnes

200

150

100
74.2
71.9

72.2
69.3

69.1
67.9

62.7

55
44.5
43.9

52
50

20.8
17.5
14.8
10
3.3

0
4 5 6 7 8 9 0 1
-9 -9 -9 -9 -9 -9 00 00
3 94 95 96 97 98 -2 -2
1 99 19 19 19 19 19 99 00
19 20

O ilse e d s P ro d uctio n P ro d uctio n o f V e g . O il Im p o rt o f E d ib le o il

Figure-1.1: Bar chart showing domestic production of oil seeds and edible oil
vis-a-vis import of edible oil during last 8 years

1.2 SOY OIL SECTOR IN INDIA

India is the fifth largest producer of Soybean in the world. However, India's share in
world production of Soybean is only 3% (Figure-1.2). Soybean is the third largest
oilseed crop in India next only to Groundnut & Mustard. It accounts for 25 per cent of
total oilseeds (25 million tons) produced in the country in a year. It contributes about
0.7 million tons of oil out of about 7 million tons of vegetable oils currently produced
in the country.

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Report on GPDP Project in Edible Oil Industry in India

W o rld S o y b e a n P ro d u c tio n 2 0 0 0 - 2 0 0 1 (F o re c a s t)

EU
1% O th ers
P arag ua y
5%
India 2%
3%

C h in a
9%
U n it ed S ta te s
45%
A rg en tina
1 4%

B ra z il
21 %

Figure-1.2: Share of major soybean producing country in the world

Compared to figures in year 1986-87, soybean sector in India has exhibited

spectacular growth in terms of cultivation area, production and productivity. Increase
in area, production and productivity during this period has been 298%, 518% and
55% respectively. (Refer Table-1.1).

Table -1.1: Area, Production & Productivity of Soybean

Year Area Production Productivity

(in'000 Ha) (in'000 Tones) (in kg. Per Ha)
1986-87 1460 859 588
2000-01 5812 5304 913
% Increase 298 518 55

About 98% of land under Soybean cultivation is located predominantly in three states
in the central India, namely Madhya Pradesh, Maharashtra and Rajasthan (latitude
range of about 160 to 260 N and longitude range of about 730 to 840 E), with the city
of Indore, the epicenter of soybean renaissance, situated at 220 44' N and 750 50' E.
It is generally cultivated as a Kharif Crop under rainfed situation. The state wise area
under soybean farming is illustrated in Figure-1.3, where as the state wise share in
soybean production is given in Figure-1.4.

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Report on GPDP Project in Edible Oil Industry in India

AREA UNDER SOYBEAN PRODUCTION OF SOYBEAN

2000-2001 (ESTIMATES) 2000-2001(ESTIMATES)
Mahar ashtr a
Maharashtra Other States
Other States 19%
18% 1%
2%

Rajasthan
Rajastan
11% Rajasthan
Madhyapradesh Rajastan
Madyaprades
Madhyapradesh Madyapr adesh
9%
h 71%
69%

Figure-1.3: State wise Area under Figure-1.4: State wise share in soybean
Soybean farming production

1.3 ECONOMIC IMPORTANCE OF SOYBEAN SECTOR

Soybean sector plays a vital role in strengthening the national economy as it

provides livelihood to millions of people. The soy meal has the potential to ensure
food and nutrition security in the country, particularly amongst the weaker section of
society. According to the forecast, for the year 1998-99, Soy Oil and soy meal
production in the country was 0.8 million tons and 4 million tons respectively. Indian
share in terms of export of soy oil was only 0.1 percent, however, a high share of 8
percent in soy meal export was recorded. According to an estimate, the export
earning from meals is valued at 18,000 million Indian rupees (US $ 416 million). The
export of soy meal from India since 1992 till 2001 and corresponding earning is
illustrated by bar charts (Figure-1.5 & 1.6)

Looking at the growth pattern, it is estimated that by 2005 AD, the hectarage under
soybean may stabilize to approximately 8 mHa. Assuming adoption of reasearch
emanated production & processing technology the hectarage of 8 million in 2005
would produce 16 mt soybean (@ 2 t/ha). This in turn would result 2.88 million tons
of edible oil i.e. 21.4 % of our projected demand of edible oil (13.44 mt). In addition,
13.12 million tons of soymeal will be available to extract 6.29 million tons of high
quality protein. Thus, the domestic use of soymeal will alleviate pulse-protein
malnutrition to a great extent.

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Report on GPDP Project in Edible Oil Industry in India

IN D IA N S O YB E A N M E A L E X P O R T S
(M I L L I O N T O N S )

3 .5
2 .8 7 5 3 .1 9 8
3
2 .3 9 7 2 .4 5 5
2 .5 2 .1 7 9 2 .1 1 1 2 .2 2 6
MILLION TONS

2 1 .6 1 1
1 .5
0 .9 5 7
1

0 .5

1999-2000

2000-2001
1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99
O C TO B E R -S E P TE M B E R

Q U A N TI TY

Figure-1.5 Indian soybean meal exports (million tons)]

IN D IA N S O Y B EA N M EA L EX P O R T S
(M I L L I O N R U P E E S )
30000
2 8 1 4 7 .4 2
25000 2 2 7 7 1 .1 9
19188
20000 1 8 2 7 3 .3 4
1 4 0 3 6 .4 9
1 5 5 8 4 .4
15000 1 3 4 7 5 .5 5
9 9 2 6 .2 1
10000 8 6 1 5 .2 7

5000

O C T O B E R -S E P T E M B E R

VA LUE

Figure-1.6 Indian soybean meal exports (million rupees)]

Note: Figures for the year 2000 - 2001 are up to January '2001 and does not include
the export to Nepal, Pakistan and Bangladesh.

Source: SOPA Data Bank.

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Report on GPDP Project in Edible Oil Industry in India

1.4 ENVIRONMENTAL IMPACT OF THE SOYBEAN OIL SECTOR

The processing of soy seed to produce soy oil gives rise to generation of substantial
quantity of water pollutants, gaseous emissions and hazardous as well as non-
hazardous solid waste. The pollutant generation is particularly high in solvent
extraction and refinery. It is therefore, soy oil industry sector is generally termed as
one of the highly polluting industries.

Soy oil industries are water & chemical intensive and therefore affect the
environment significantly. Due to bio-degradability of products and by products it also
imposes serious odour nuisance. The soy seed preparation section involves use of
various machines leading to noise pollution. The captive power generating facility
like boiler, DG sets are also the sources of noise pollution. The coal-fired boiler
generates fly ash, suspended particulate matter, smoke, and Carbon dioxide (CO2).
The spillage, leakage and emission of chemicals (hexane, caustic, sulfuric acid,
phosphoric acid, etc.) during storage, loading, unloading and usage give rise to toxic
emission which spread in the work environment which has detrimental impacts on
work force. The process wastewater discharged from the refinery is polluted. The
bio-chemical treatment of the wastewater (in the Effluent Treatment Plant) gives rise
to generation of sludge, a solid waste. Although, it is not considered to be hazardous
waste but its disposal remains a matter of concern. The empty containers
contaminated with hazardous chemicals could be considered as hazardous wastes
generated by the soy oil industries.

The unit operation and process of soy oil plant interact with environment and has
detrimental effects.. The types of pollution and corresponding pollutants generated
by soybean oil industries are given in Table-1.2. The pollutants released from the
soybean oil industries have wide ranging impacts on the environment. The significant
environmental impacts/effects actual or potential associated with soy oil plants are
presented in Table-1.3.

Table-1.2: Major pollutants in soy oil industries

Types of Pollution Pollutants

Air/Gaseous Hexane, SOX , COX , NOX , Acidic Fumes, Dust etc.

Liquid Acids (Sulphuric, Phosphoric, & Fatty), Gum, Soap
Stock, steam Condensate, Cooling water, Process
waste water etc.
Solid Sludge, Slurry, Spent Bleaching Earth, Fly Ash &
Bottom Ash from Coal Fired Boiler etc.
Noise Noise from seed cleaner, cracker, boiler & DG sets
Odor Due to degraded material in drainage, Acid Oil
Recovery Plant and Effluent Treatment Plant etc.

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Report on GPDP Project in Edible Oil Industry in India

Table-1.3 Environmental Impacts/Effects of soybean oil industries

Sources (Activities) Environmental

Impacts/ Effects
Water intensive oil refining operations Depletion of water reserve &
generation of waste water
Combustion of coal in the boiler-emission of -Green House Effect
CO2 & SO2 -Acid rain
Release of hexane from Solvent Extraction Toxicity in the work
Plant environment
Release of sulfuric acid & phosphoric acid
from storage vessel and processes
Seed handling (loading, unloading & cleaning) Dust in the work environment
Handling of fly ash, from the boiler
Emission of suspended particulate matter
(SPM) through boiler stack
Coal crushing for boiler feed
Handling of DOC
Seed mechanical screening Noise nuisance in the work
Seed crushing environment
Coal crushing
Boiler operation
DG set running
Bio degradation of gum & soap stock, spilled Odour nuisance in the work
over oil, DOC , Biological treatment of environment
process wastewater etc
Spillage/leakage of sulfuric acid & phosphoric Contamination of soil/water
acid, soap stock, acid oil, refined oil etc
Unsecured disposal of chemical containers

1.5 NEED FOR GREEN PRODUCTIVITY IN SOY OIL SECTOR IN INDIA

While growth rate of soybean industry (processing as well as cultivation) in India

does not have any parallel, it has been uneven. It is observed that the benefits of the
sector have been inequitable to its different segments. While soybean cultivation has
grown from 0.003 to about 6 million hectares and the processing capacity of the
industry from 3.28 to 15 million tons, the productivity and the efficiency has remained
low compared to other major soybean processing countries. The potential for
utilization of soybean and its products for food and feed have remained unexplored.

Notwithstanding, the remarkable growth exhibited by the soybean sector, it is

passing through crisis for the last 4-5 years. The possible reasons for the present
crisis are low productivity of farm as well as soy oil industries and also lack of of
domestic market for soy meal/DOC and soy products.

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Report on GPDP Project in Edible Oil Industry in India

In India, soybean yield is 0.95 tons per hectare, which is quite low, compared to
other major soybean producing countries. Like wise productivity of soy oil industries
in India is also low compared to other countries. The various influencing factors
(technology, capacity, manpower, machinery, raw material, process and O&M
practices) varies from one industry to other. The consumption of input materials
(hexane, water, steam, electricity etc) per unit output is very high which primarily
leads to low productivity on the one hand and environmental pollution on the other
hand.

Due to low productivity of soybean farm and industries, the cost of the production is
very high. The high cost of production makes Indian soy oil and other soy products
costly in comparison to imported soy oil. In the era of economic liberalization and
globalization of trades such a situation is not conducive for survival and growth of
Indian soy oil industries. Urgent steps are necessary to enhance the productivity of
the Indian Soy Oil Industries. The challenge is not only to enhance the productivity
but also to improve environmental performance of the soy oil industries in order to
ensure its sustainability. How to meet this challenge? The obvious answer is "Green
Productivity (GP)" - a strategy for enhancing productivity and environmental
performance for overall socio-economic development.

In the industrial sector GP brings down the production cost and improves the
environment by way of optimizing input materials and reducing wastage of
resources. Cost-effectiveness, profitability, competitiveness and improved working
environment are central goals of GP. Because GP encourages creativity and
innovation and allows companies to capitalize on market that demand high
environmental specifications, it creates new business opportunities and help
companies to increase their market share. All in all, GP is a multi-dimensional
strategy that improves both performances of business and the overall quality of life.

Keeping in view the problems encountered by soy oil sector in India, GP is most
suitable tool for augmenting its productivity to international level. The application of
GP could ensure sustainability of soy oil sector and thereby bring prosperity to
country.

1.6 PROFILE OF THE GP DEMONSTRATION UNIT: M/S RAMA PHOSPHATE

LIMITED (OIL DIVISION)

M/s. Rama Phosphates Limited (Oil Division), Indore, processes Soybean Seed
to produce Refined Edible Oil. Established in the year 1993, the annual turnover of
the unit is about US $ 20 million. The unit operates 24 hours a day in three shifts. It
consists of Seed Unloading & Preparatory Section, Solvent Extraction Section,
Refining Section and Oil & DOC Packing Section. In addition, the unit is equipped
with Acid Oil Recover Plant, and Effluent Treatment Plan. The unit also has two
numbers of Coal Fired Boilers and one Thermic Fluid Heater. The energy
requirement of the Unit is partially met from the adjacent Captive Power Plant of
Fertilizer Division of M/s Rama Phosphates Ltd. and partially form Madhya Pradesh
Electricity Board. A brief profile of the DU is presented here below:

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Report on GPDP Project in Edible Oil Industry in India

Name & Address of the Organization

Office:
M/s Rama Phosphate Ltd. (Oil Division)
"Rama House", 4 Saket Nagar,
Indore-452 001, Madhya Pradesh,
India.

Tel: 91-731-560951/563356/563352
Fax: 91-731-560639

Factory:
M/s Rama Phosphate Ltd. (Oil Division)
20/6 K.M. Stone
Indore-Ujjain Road, Dharampuri
Indore-452 001, Madhya Pradesh,
India.

Tel: 91-7321-26402/26327
Fax: 91-7321-26402

Registered Office:
812, Raheja Chamber
Nariman Point, Mumbai- 400 021. India.
Tel.: 2834123, 2834182, Telex: 011-3669/2132

General Information
• Established in
• Covered Area
• Product
• Turn Over
• Employee
- Year 1993
- 60 Acres
- Refined Soybean Oil
- US $ 20 million per year
- 150

Production units
• Seed Preparatory - 450-500 T/day
• Solvent Extraction Plant (SEP) - 400-500 T/day
• Oil Refinery - 100 T/day
• DOC Packing - 400 T/day
• Refined Oil Packing - 100 T/day

Utilities Section
• Acid Oil Recovery Plant - 12 T/batch
• Effluent Treatment Plant (ETP) - 150 m3/day
• Boiler (Coal Fired)I - 3 TPH
• Boiler (Coal Fired)II - 6 TPH

*****

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