India looks abroad for land to grow oilseeds

New Straits Times | 3 September 2008

NEW DELHI: Some of India's top vegetable oil firms plan to lease or buy land in Paraguay, Uruguay and Myanmar to grow oilseeds and lentils as farmland shrinks in the South Asian nation, a top trade official said yesterday.

Despite being the world's second-biggest grower of rice and wheat and the leading importer of vegetable oils after China, India has recently been pinched by rising global food prices.

Policy makers fear climate change could squeeze the amount of land available to farmers even further.

"We have formed a consortium of 14 vegetable oil companies which is in talks with the governments of Paraguay, Uruguay, and Myanmar for buying large tracts of land for cultivating soyabean, sunflower and pulses," Ashok Sethia, president of the Solvent Extractors' Association of India, said.

India banned exports and cut import taxes on a clutch of farm products to ensure supplies for its more than one billion people when food prices soared globally last year and early in 2008.

Analysts say factories and property developers are buying up farmland, while farm output is also restricted by the poor development of irrigation facilities across much of the country.

In a sign of its vulnerability when things go wrong, hot weather in 2006 cut wheat output and forced India to import more than seven million tonnes of the grain over two years at high prices.

Conservationists and scientists have expressed concern the diversion of vegetable oils for biofuel is speeding up deforestation in southeast Asia and South America, as farmers cut down trees to expand oil palm plantations and soya fields.

India consumes 18 million tonnes of lentils and imports from Myanmar, Tanzania, Australia, Canada and Ukraine to bridge a shortfall of about four million tonnes of the protein-rich food. It also imports almost half of the 11 million tonnes or so of edible oil it consumes, and buys palm oil from Malaysia and Indonesia and soyaoil from Brazil and Argentina.

Sethia said some importers were buying oil palm plantations in Indonesia, the world's top palm oil producer.

"Growing rice and wheat overseas does not seem feasible. Growing oilseeds and lentils is. Do not be surprised to see more of this in the days to come," he said.

"We have formed a special purpose vehicle and earmarked an initial two billion rupees (100 rupees = RM8.09) to begin the project," Sethia said.

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