By Shvetal Vakil

It is once again my proud privilege to address this august gathering of illustrious personalities in the Castor Industry. On behalf of ICOA, I also welcome the new entrants to the industry, as well as ICOA. We look forward to their contributions over time to come, to make this body stronger and more effective in meeting the needs of the Castor consuming industry.

Between the time we last met at Goa and today, there have been a series of events, which have had severe impact not only on the Castor industry and trade but the world at large. Before most of us present at the last meeting could initiate their journey back, natural calamity hit Gujarat, one of the most important Castor cultivating areas. An earthquake of a very severe intensity caused damage leaving several thousands  dead and homeless without shelter. Not only government resources were deployed on an emergency basis to aid the earthquake victims, but the international community descended onto Gujarat to lend their support. I am pleased to announce, ICOA, in true tradition, as well as some of the members contributed their bit to this cause. I wish to personally extend my gratitude for this kind gesture. 

Weather Gods, for the 12^th successive year showered their blessings to the Indian subcontinent, bringing in  favourable agro climatic conditions. However, this was not good for Castor, as depressed prices and favourable conditions motivated Indian farmers to go in for cultivation of more lucrative cash crops. This brought about a sharp fall in Castor cultivation. I shall deal with this in greater detail in the latter part of my speech.

There were signs on distant horizons, of economic slowdown in the early part of 2001 and this was further intensified by an unprecedented terrorists’ attack, now widely referred to as 9/11. This barbaric attack has left deep scars on humanity as well as  global economy and will take years to overcome. Trade and industry in general, have been deeply impacted by this and some of the prosperous economies and enterprises across the world have been passing through a very difficult stage. Chemicals industry, an important industry for castor, is no exception and too is in the midst of crisis.

According to the World Economic Outlook (April 2002) of IMF, there are signs that the global slowdown has bottomed out, most clearly in the US and to a lesser extent in Europe and some countries in Asia. With confidence stabilizing, uncertainties easing and emerging market-financing conditions improving more quickly than was anticipated the risks to the outlook have been more balanced, although the recent volatility in crude oil market is a serious concern. The US economy is expected to grow around 2.0 % in 2002, but available figures suggest a whopping 5.8 % growth in the first quarter of this year. Japan's industrial production rate rose by 0.5 % in March 2002, and Britain's GDP rose by a feeble 0.3 % at an annual rate in the first quarter. Industrial production in the Euro area edged up by 0.2 % in February,2002 and inflation fell to 2.2 % in April, only a shade above the 2 % ceiling set by the European Central Bank.  Industrial output is also picking up in emerging Asian economies and in India, GDP rose by 6.3 % in March Quarter of 2002.

A high rate of economic growth is sustainable in the long run only if it is broad based and creates, inter alia, through various linkages, a virtuous demand led growth cycle. Many developing countries have unfortunately equated economic development with industrial development and neglected the agricultural sector, the growth of which has a strong multiplier effect across the economy.

Agri-business is the sum total of all operations involved in the manufacture and distribution of farm supplies, production activities on the farm, and the storage, processing and distribution of farm commodities made from them.  Indian agriculture is the backbone of the Indian economy, accounting for 25 % of real GDP, 18 % of the total annual exports and providing employment to over 61 % of the country's population.

Important items in India's agricultural exports are oilseeds, cashew nuts, coffee, tea and horticulture & floriculture products. For over four decades, industry received protection and agriculture has served as a source of cheap raw materials (cotton, sugarcane, oilseeds, etc.) for domestic industry. This reduced agriculture exports and investment in agriculture.

However, the liberalization programme initiated in 1991 has attempted to correct this imbalance and agricultural has now begun to see some gains through competitive exports. The Government has provided for indicative sector-wise strategies in the recently declared Policy (2002-2007), based on the detailed strategy paper prepared by the Export Promotion Councils/Commodity Boards and detailed discussion with exporters. The main strategies for the export sector include inter alia, the establishing of Agricultural Export Zones, pursuing with the US for higher Tariff Rate Quota (TRQ) allocations and promoting exports to Europe, Japan, China, etc. The Government of India also announced that it would try and maintain the Real Effective Exchange Rate of the Rupee at a level appropriate for ensuring price competitiveness of exports.

2001-02 was a good year for agriculture facilitated by a favorable monsoon. The output of foodgrains touched 195 mln tons. According to The Centre for Monitoring the Indian Economy (CMIE), the third quarter of 2001-02 witnessed a growth of 7.1 % in agriculture real GDP as against a decline of 0.8 % in the corresponding quarter of 2000-01. CMIE has projected a growth rate of 6.5 % in agriculture real GDP during 2001-02 as against a decline of 0.2 % in 2000-01.

Output  of 9 major oilseeds showed an impressive growth of 17%, an increase from 17.37 mln tons in 2000-01 to 20.24 mln tons this year. However, this growth was partly at the cost of Castorseeds, resulting in a decline in output from 850,000 tons in 2000-01 to 640,000 tons this year, a sharp decline of 25%. This has been a major setback particularly, if viewed in the light of the fact that in the last decade, castorseeds output more than doubled from 400,000 tons.

Economic slowdown across the world has impacted, both prices as well demand, for castor oil. While this is not reflected from the figures of exports out of  India, which has remained more or less stagnant at around 230,000 tons in 2000 and 2001, its impact is now being reflected in this year’s exports.

 I have maintained a greater focus on India, not because I am an Indian but India is occupying a dominant position in Castor and is likely to retain the position in the immediate future. Events in India have a key role to play in Global castor scenario and it is appropriate at this stage to show trade and industry’s concerns. Indiscreet speculative activities in Indian futures markets is a major deterrent for growth in consumption. But   no visible attempts are made to contain  this.  Trade and industry operates on short term objectives with little focus on building strategies for a sustainable growth.  Unlike other Oilseeds and Oils trade and Industry, there is no forum for Castor whose platform can be used to build a long term strategy for promotion of trade and industry.  I urge the captains of Indian castor industry to give due consideration to this and contribute their bit to the mission of ICOA and accelerate growth in consumption of castor, a versatile renewable resource.

 Thank you.