Prof.J. C. Kane Memorial Lecture
Prof. J. C. Kane Memorial Lecture
Achieving Professor Kane’s Dream
V Kurien
Chairman
National Dairy Development Board
Anand 388 001
February 10, 1987
Chairman Godrej, Members of the Board, Members of the Oil Technologists Association of India, ladies and gentlemen: I am deeply honoured and grateful to you for having conferred upon me the Professor J G Kane Memorial Award. I am pleased to join such distinguished earlier recipients as Dr. M. S. Swaminathan, Dr. A.D. Karve, Professor D V Rege, Dr. S Varadaranjan, Professor MM Chakraborti and Shri T Tomas. The same time, it is important to recognize that if the award honours me, it honours more the hundreds of officers of the national Dairy Development Board, Indian Dairy Corporation, state dairy and oilseed federations. For more it honours the lakhs of farmers who have joined Anand-Pattern cooperatives and demonstrated that given the opportunity and the responsibility, there is little that the Indian farmer cannot achieve.
While I was mot pleased to receive the Professor J g Kane Memorial Award, I note that it carries with it a condition: the recipient must speak to this eminent body of scientists and technologists. That he must do so in a manner that meets the high standards of Professor J G Kane makes the task all the more humbling. Professor Kane was distinguished not only by his scientific achievements, but by his dedication to India’s production and utilisation of oilseeds. As Dr. M S Swaminathan noted when the delivered this lecture some years ago, Professor Kane dreamt of an India where the shortage of edible oils would be a problem of the past. He devoted his life to the realisation of this dream.
Let me begin, then, to speak with you about the prospect of oils and fats in India over the next decade.
The first point, sadly, is that we remain far from Professor Kane’s dream. We are presently importing about 1 million metric tonnes of oil annually, a burden to the national exchequer that has been eased of late only by the low prices of edible oils on the international market. These prices are a cyclical phenomenon and we cannot expect to escape so easily in the future. That future, our experts tell us, portends annual deficits of between 1.5 and 3 million metric tonnes of edible oil should our present trends continue. Even should these deficits be made up by imports, the per capita availability of edible vegetable oils would be short of desirable levels.
I have used the term “edible vegetable oils” quite intentionally for edible vegetable oils are not the alpha and omega of India’s fats and oils situation. Unfortunately we too often look at the picture through such distorting prisms. In doing so, we fail to accurately identify the nature of the problem and, as dangerously, willy nilly pursue haphazard solutions. It may be argued, in fact, that one of the most serious obstacles to solving our oils and fats deficit is our failure to see the full picture and our insistence on dealing with oils and fats in a one dimensional, compartmentalised, departmentalised way in which the time span extends no more than a few years into the future or – more often – is firmly anchored in the past.
When we speak of India’s oils and fats, it is important that we include consideration of both edible and industrial oils on the one hand and oils of animal, marine and vegetable origin on the other. Although edible oil is at the forefront of our concern today, we produce, consume and trade both edible and industrial fate and oils, as well as their by-products. There are important interrelationships between this complex of products which are important to any rational approach to ensuring adequate production.
When we look at human nutrition and the role played by edible fats and oils, it is important that we remember that vegetable oils are but one source of these nutrients. We consume fats and oils in a variety of vegetable, animal and marine products, all of which contribute to satisfying our nutritional requirements. May I mention one amongst these which I have been involved with for some time: milk and milk products.
Milk and milk products are one of our most important sources of nutritional fat. It is also an area where our progress has been significant. In 1969-70, we were producing less than 21 million metric tonnes of milk – only 19 percent more than e produced almost two decades earlier. Per capita milk consumption had dropped to 107 grams per day: in that year the average Indian consumed only 6 to 6.5 grams of milk fat daily, a mere 2.3 kilograms per year.
In 1984-85, our national milk production had increased to 38.7 million metric tonnes, 122 percent higher than the 1951 base year. Our average fellow countryman now consumes more than 8.5 grams of milk-based fats daily, or 3.1 kilograms per annum. So, when we look at consumption of fats and oils, our annual per capita direct consumption is between 9 and 10 kilograms, of which milk fats represent some 30 percent. This, of course, does not account for the fats and oils consumed when we eat vegetable and animal or marine products.
While Operation Flood has not been the sole contributor to our increased national milk supply, I believe we can take some credit and pride in the increase of more than 10 lakh metric tonnes of edible fats attributable to this rise in milk production. I think you will agree that this achievement is even more significant when you realise that the price of milk and milk products has increased only175% since 1970-71, when compared with 250% for fruits and vegetables, 345% for fish, eggs and meats, 370% for pulses, and 260% for all commodities. It is also important to note that the cooperative dairy structure in India returns as much as 70 percent of the consumer’s rupee to the producer, a figure which I challenge others to meet. It is never possible to reduce prices for the consumer while increasing them to the producer; in this instance, we have come as close as is realistic to expect. Price increases for the consumer have been moderate while the producer has received an increasing incentive to improve his or her productivity.
While all this has been happening with milk, we have been paying a mounting foreign exchange bill for edible vegetable oils. We have faced a rapid and distressing decline from being an exporter of edible oils to one of the world’s major importers.
When we speak of vegetable oils, it is important that we are clear what we mean. Technocrats and bureaucrats speak of the five, or seven or nine “major oilseeds”. Determining what is and what is not a major oilseed seems, at times, to approach the inanity of those theologians who debated the number of angels who could sit on the head of a pin. In fact, India is blessed with crops that produce virtually all the major vegetable oil groups: the lauric acid oils are represented by coconut; cocoa in an increasing source of vegetable butter; cottonseed, groundnut, maize, sunflower and safflower are all sources of oleic/linoleic acid oils; euricic acid oils grown include mustard and rapeseed: we produce linseed and soyabean, both linolenic oils. Additionally, we produce substantial quantities of rice bran oil and have the capacity to produce considerably more. Each of these oil types has various advantages and disadvantages for human and industrial uses.
During the last decade we have been importing substantial quantities of vegetable oils at a significant cost to our foreign exchange reserves. This has caused great concern – and rightly so. Unfortunately this concern has given rise to a patch work of programs and institutions and would appear to have had a greater impact on unemployment than on production.
One important question to address is how far are we from self-sufficient oil production.
One million tonnes of vegetable oil is the equivalent of: 3.6 million tonnes of groundnut; 3 million tonnes of mustard: 2.7 million tonnes of sunflower: 3.5 million tonnes of safflower; or about 6.5 million tonnes of cottonseed or soyabean.
Kharif season groundnut is our major oilseed in terms of area and contribution to the national oil supply. In 1975-76, Indian farmers planted 6.8 million hectares of Kharif groundnut, achieved a national average yield of 900 kilograms/hectare, and produced 6.1 million tonnes of groundnut and an estimated 1.4 million tonnes of oil. In 1983-84, area had decreased by close to 5 lakh hectares; yields had declined; and total production was more than 7.5 lakh tonnes less than a decade earlier. If we had managed during that same decade to increase area and yields by 10 percent each, the 1983-84 production would have been 12.6 lakhs more than in 1975-76, reducing our oil imports by at least 3 lakh tonnes.
Approximately two-thirds of the groundnut crushed in India is not solvent extracted. This means that more than 10 lakh tonnes of expeller cake is used as cattle feed, fertilizer, and the like. The recoverable oil in this case is somewhere between 7.5 to 10 percent. The loss is as much as 1 lakh tonnes of oil.
We produce cotton on 75 to 80 lakh hectares annually, producing something between 25 dnd 30 lakh tonnes of cottonseed. We only exploit about 45% to 50% of cottonseed oil potential. If we crush all the cottonseed and solvent extract only after decorticating all cottonseed we would increase edible oil by more than 3 lakh tonnes.
India has the potential to produce more than 7 lakh tonnes of rice bran oil. Against that we are producing around 2 lakh tonnes, of which only 10 percent is in edible form. Five lakh tonnes of oil potential is being lost.
Maize contains good quality oil. We produce more than 80 lakh tonnes of maize per annum, enough to produce well over 1 lakh tonnes of vegetable oil – not to mention ethanol which would relieve the pressure on molasses for industrial alcohol, freeing it for the animal feed industry.
Consider, if you will, the impact of:
| 10 percent increase in Kharif groundnut area and yield | : | 3 Lakh tonnes |
| Solvent extraction of all groundnut cake | : : | 1 Lakh tonnes |
| Full utilization of cottonseed | : : | 3 Lakh tonnes |
| Exploitation of maize potential | : : | 1 lakh tonnes |
I have mentioned the achievements in increasing the availability of milk-based fats. During the last 15 years we have made dramatic strides in production of milk and milk products. Why, it must be asked, has similar progress not been achieved with other edible oils.
The answer, unfortunately, is that we continue to handle the vegetable oil problem in a totally uncoordinated manner by assigning different aspects of the problem to different Ministries. For example, the import of vegetable oil has a tremendous bearing on internal production. Imports are handled by the Ministry of commerce and the State Trading Corporation. The volume of business is of such magnitude that powerful vested interests are created that argue for continued and even expanded imports. Need I mention our friends and colleagues in the vanaspati industry?
The distribution of vegetable oil is handled by the Civil Supplies Ministry which supplies vegetable oil well below the domestic market price. Here again a powerful vested interest is created to support and expand the availability of cheap oil. The irony is that such subsidised distribution is done through what are called “fair price” shops. The Indian farmer calls them “unfair price” shops for every kilogram of subsidised oil sold undercuts the oilseed price for the farmer.
The licensing of oilseed processing units rests with the Ministry of Industry. Hence, for example, we see a queue of Johnny-come-lately’s setting up soyabean processing plants in Madhya Pradesh to take advantage of the pioneering plants in Madhya Pradesh to take advantage of the pioneering efforts of the M.P. Oilseed Growers” Federation. Has anyone in Udyog Bhavan ever suggested that these industrialists set up their plants in new areas and support production by providing grower services? Is it not remarkable that we don’t see soyabean processing plants going up in Punjab? Maize processing plants in Udaipur and Karimnagar? Large integrated paddy processing units in Guntur and eastern Bihar?
It is the production of oilseeds that is left to the poor Ministry of Agriculture. They have to press on with their attempts to increase production while Commerce imports oil for the vanaspati industry and Civil Supplies distributes it to the unfair price shops and Industry approves and the banks finance over capacity in one area while potential producing areas are ignored.
Why have we succeeded with increase in milk production and availability? First, recognition of the importance of markets; second, introductions of modern technology; third, the efforts of dedicated professional; and fourth, creation of structures that produce committed producers. In a country where consumers have low purchasing power and producers are even poorer the structure we advocate – the cooperative structure – transfers to the farmers the margins of procurement, processing and marketing also.
I have often said, “No Bombay – No Anand.” The opposite, however, isn’t necessarily true. You can have a Bombay, but not have an Anand. The grave shortages of food, clothing and housing in our country and other parts of the world offers and evidence of this fact.
People, by themselves, do not constitute a market. They must have the wherewithal to consume. In a country such as our’s, the national prosperity depends on our agricultural producers. Too often in the past, given the choice between a low price for the urban consumer and a reasonable return for the rural producer, we have favoured our consumer. This is the result of a result of a democratic system where there are competing pulls and pressures. At the same time, we must recognize that when the rural producer subsidises the urban consumer. The consumer will pay through higher prices over the long term.
We have markets. What we must ensure is that those markets operate with a fair degree of freedom so as to ensure that there is reliable and remunerative return to our producers.
Market can be distorted in many ways. One is to control consumer prices. If I can only sell milk in Anand for Rs.2.50, and if I have squeezed the last drop of efficiency out of my processing and distribution system, then I can only pay the farmer the difference. If the farmer doesn’t meet costs with that payment, he will invest less. Production will drop. Total supply will decline. And, ultimately, either prices will have to rise very sharply, or government will have to pay a very heavy subsidy to make goods available to the consumer, or be willing to spend crores of rupees in foreign exchange to import the milk.
Governments are not the only ones who distort markets. Is it not curious that vegetable oil prices drop just before that Kharif and Rabi markets __ regardless of anticipated production. Is it not even more curious that they shoot up again a few weeks later, once the farmer has parted with the lion’s share of the produce? Is a market that lowers producer prices in years of short production not a distorted market? Such practices may ensure hefty profits for the trader, but they destroy the farmer—the goose that lays the golden egg for this nation of ours – and they cost the nation crores of hard-earned foreign exchange.
Markets are also distorted by injudicious use of imports. Does it make sense for us to import more than I million tonnes of edible oil and to allocate substantial quantities to vanaspati manufacturers at prices far lower than those in the Indian market. Is it not correct that our imports, allocation and pricing policies should be geared to ensure that our own farmers receive a return commensurate with enhanced investment in oilseeds? We cannot and should not totally end imports in the short run: but we can and must employ and deploy imports so as to encourage our own production and productivity. If we fail to do so, we will reach a stage when none but the wealthy can afford oil. Let us assume for a moment that we are from tomorrow self-sufficient in vegetable oil. At what price will the Civil Supplies Corporations and Departments distribute vegetable oil to consumers through their fair price shops? At improted prices or at the price at which Indian farmers can produce the oil? At what price will the Vanaspati Directorate allot vegetable oil to the Vanaspati Industry? Clearly the answer has to be “at Indian prices”. Obviously self sufficiency can be achieved only if you assume we are self-sufficient and our policies are dictated by that one assumption. It is good to see government policies recently showing a clear shift in this direction. Decisions regarding quantity of vegetable oil to be imported and the price at which it should be issued must in the final analysis be made by the Ministry which is responsible for achieving self-sufficiency – namely the Ministry of Agriculture. It is not fair to allot all the tasks that bestow power, pelf and perks to other Ministries and only the Donkey’s work and responsibility to the Ministry of Agriculture.
Last, but not least, fats and oils can be transformed into a variety of products. Some of these are basic: fluid milk, vegetable oil, protein meals. Some have significant value added: butter, cheese, margarine, chocolates, vanaspati, texturised vegetable protein products. As we seek to ensure that the basics remain available to the broadest segment of our population, and with a view to ensuring that our producers receive a fair return, we must judiciously allocate a portion of our oil and fat to these value added products allowing, if you will, taxation of the affluent to subsidise basic nutrition for the average consumer. I would submit, however, that when luxury products are produced by firms who are not supplying basic needs, we have a serious imbalance. We have opposed, wand will continue to oppose, he licensing of firms to produce luxury products if those same firms are not committed to supply basic products to all strata of society. It makes little sense for the value added from such products to go into the hands of corporate stockholders rather than to reward and encourage producer investment.
Technology
The exploitation of technology has been central to our success in increasing the national milk supply. Dryers to produce powdered milk; cheese and butter production facilities, UHT-Tetra-pak processing; modern vaccines; least cost feeds – all of these and more have contributed to a modern and efficient dairy industry that returns more to the producer.
The exploitation of modern technology is, then, a second critical factor in enhancing the availability of fats and oils. It is modern technology that creates the efficiencies and returns that sustain and build productivity and production.
A simple example is the creation of modern integrated oilseed processing plants which take oilseed and move it through preparation, extraction and refining. Today, when we are appending precious foreign exchange on import of oil, how can we permit the loss of thousands – lakhs – of tonnes of oil by not only allowing – but encouraging – primitive, uneconomical and technically inefficient processing? We talk of Robots in the assembly line to manufacture Maruti small, inefficient units where farmers’ produce are processed to benefit 1000 factory workers by condemning hundreds of thousands of our farmers to accept a lower return f from their labour. Our organised labour has already got into the habit of cutting for themselves a larger and larger slice of the Indian cake, leaving less and less for those who toil in the fields. Soon our farmers will have to ask for overtime, Dearness allowance, paid holidays and Bonus not to mention Leave Travel Concession.
We have created rice bran processing capacity in this country that could solvent extract enough bran to produce 7 lakh tonnes of edible oil. This capacity is utilised at 33 percent and produces primarily industrial oil. Why? Because we continue to follow policies which encourage small, widely dispersed paddy milling which, in turn, ensures that we produce bran in a form that cannot be economically processed into edible oil.
The vegetable fats and oils market is closely linked with the oilseeds extractions market. Today, India is largely dependent on exports of its extractions, rather than domestic sales for animal and human foods. Is it not ironic that a nation said to be protein deficient is exporting tens of thousands of tonnes of protein in the form of oilseeds extractions. And, in doing so, we bind our oilseed and oil prices to an international market over which we have little influence and less control. We announce from the rooftops that we are going to import a million tonnes of vegetable oil. The international oil price spurts up and the oilseed extraction market drops as a consequence. So we buy vegetable oil at higher prices and realise less for our extractions.
When we talk of technology we must also talk of the technology of information. Today we have statistics for groundnut production in 1983-84. This is February of 1987. Is there anyone in this room who will tell me that these and other production statistics are reliable? We here amongst the Oil Technologists of this country can tell me, with confidence, the total expeller capacity and the monthly crush? These are statistics that other countries require by law and which are available in time for planning and decision making – whether by the firm or by the nation concerned. If we want to progress toward the 21st century, we must at least being our information technology into the 20th.
We have made and are making substantial strides in improving the efficiency and economy of technology application with regard to oils and fats. Many of you here have made important contributions to this end. But what has been achieved is far short of what must be achieved. Applied research in oilseed production, processing, transport and packaging technology comprises a research agenda of the greatest importance to the nation.
Dedicated Professionals
You will pardon me it I pay tribute to the professional who have galvanised our dairy and oilseed sector through their promotion, nurturing and management of producer owned cooperatives. These are people who have risked – and regrettably in instances – have given their lives for what they believed. The social and economic changes brought by the Anand Pattern do not come easily. There are vested interests who fight the battle with neither ethics nor character. It has not been a battle for the feeble spirited.
What is, however, more significant are the daily efforts of the thousands of professionals who work for Anand Pattern cooperatives. There is little glamour and less recognition. Yet, there are agriculturists and veterinarians who work from early morning until late at night, summer and winter. There are officers who return home to their families long after midnight when their responsibility demands it. There are young men and women who ask themselves at the end of every day whether they have earned the salary paid to them by their farmer employers.
I have been asked by those who have seen our work whether our professionals are unique in this country? Are they a tiny minority? I think not. Rather, I increasingly believe that our professionals are representative of the majority of young men and women in this country today. They have a belief in their country and desire to serve it. They have a good character. They have ability. What we have been able to offer them is a purpose to serve, a purpose that they can believe in, and an environment where they can work, free of fear or favour.
Committed Producers
Those of us who look at the problems of production often err by concentrating on inputs and outputs. We delude ourselves into believing that if we invest so many crores of this, or tonnes of that, then we will raise production by such and such a factor.
Now we have planners working on the question of vegetable oil production. And we have agricultural scientists. There are processing technologists studying extraction. Economists are calculating input-output ratios. Policy makers are weighing the pros and cons of imports and allocations. Newspaper columnists are sharing their wisdom on the subject. Just about everyone is involved. Everyone, that is, except our farmers.
We have involved the farmers in dairy cooperatives. They own the cooperatives, they provide the leadership. They control the fruits of their labour and, if you will, their own destinies. I believe the evidence speaks for itself. In the last fifteen years since Operation Flood began, total milk based fat availability has increased by more than 10 lakh tonnes a year.
I would submit that it is when the farmer is given control, when he is the end of production rather than treated as the means, and when the farmers’ energies, ability and wisdom is linked with the skills of the dedicated professionals and technologists, it is then that we see dramatic change. The Indian farmer, I firmly believe, is one of the world’s best. He works with very poor resources in a system which, too often, exploits him. Yet he survives and even thrives. When given the opportunity and the tools, he produces miracles.
Those of us who are of our nation’s urban elite often fail to recognise the tremendous resource that is the Indian farmer. He is a resource, linked with the professional, who can turn India back into a surplus producer of oils and fats. It is the Indian farmer, who, alone, can achieve Professor Kane’s dream. But, we must give the farmer his stake in his own organization and we must support him with rational markets, the finest technology, and the elite of our young professionals.
Ladies and gentlemen, I have spent much of my life trying to increase our country’s supply of milk fat. But I agree that what I have said today is but one way of looking at the subject. As you all know, there are few simple answers. Nonetheless, I believe that just as we have surprised the sceptics with our green revolution, and our white revolution, we will surprise them once more by attaining a large measure of self-reliance in fats and oils. It is, however, a largely human question. We must build on the resources represented by our young professionals and more importantly by our nation’s farmers. Without their involvement, we cannot succeed. With their involvement, we cannot fail.
