India's nationwide lockdown, a measure to check Covid-19 spread, has now hit the mustard oil industry. The production of the commodity has suffered 50 per cent as compared to the same period last year. The prices have also risen by 10 per cent.
“Though government has announced several measures but they still have to percolate down in real terms,” said Vivek Puri, MD, Puri Oil Mills.
Mustard oil manufacturing units fall under the SME category and its processing in India is largely an unorganised endeavour. There are around 7,000-9,000 mustard oil extracting units, out of which 25-30 per cent are registered in the organised sector. The industry has an installed capacity for processing 7.5 million tonne of mustard seeds annually.
Mustard oil consumption is increasing at the rate of around 20 per cent every year as consumers are gaining a better understanding of the health benefits. Demand for the commodity comes from both rural and urban areas and is consistent owing to its varied applications. Apart from being used as cooking oil, it is also used in the preparation of pickles, and for skincare, hair care and in various home remedies.
Last month, the manufacturing of mustard oil came to a standstill and supplies were severely disrupted after the sudden announcement of a nationwide lockdown. “There was a sigh of relief for the industry as mustard oil was placed in the essential items category; however, various practical problems cropped up – the basic one being the lack of inflow of raw material that is oilseed from mustard producing states because of confusion in inter-state transportation. One such issue is that mustard oil cake (a by-product) is used as cattle feed but there is ambiguity about whether this is an essential item or not. Because of these two reasons, the optimum capacities of the facilities were not fully utilised,” he added.
“Labour availability still remains a major concern in spite of all the support from both the Central and state governments. This problem persisted despite having the necessary passes and permissions, because in some cases, the family members were worried and did not allow workers to step out of their homes,” pointed out Puri.
Migrant labour and transportation still remains in short supply. The company's manufacturing plants, especially in Himachal Pradesh, are facing issues. Units in Punjab and Haryana are also running at sub-optimal capacity.
Another issue pertains to the fact that initially, during the lockdown, the packaging industry was not kept under essential items category. This led to an erratic supply chain. However, of late the packaging industry has been exempt from the lockdown. Still the practical problems persist and obtaining ready-to-use caps, pet jars, bottles, tin, pouches, labels and corrugated boxes are a major challenge. The back-end raw material sourcing and labour problems exist even for the manufacturers and suppliers of packaging material. Hence this process will take some more time to streamline.
Another concern is at the distributors and retailers end. The lack of labour and transportation makes it challenging for distributors to unload consignments and dispatch goods to the retailers, according to Puri.
“We anticipate the entire process will take three to four weeks to streamline even though the government is trying very hard to alleviate the hurdles across the entire process .The new mustard crop which is generally harvested during this time every year is expected to be very good. Due to the arrival of the new crop at this time, ideally the prices of mustard seed should have fallen leading to drop in mustard oil prices. However, on the contrary the prices have risen due to these disruptions affecting adversely, cost-sensitive industry and the consumers alike,” noted Puri.