In today's Finshots, we talk about China, castor seeds, and conspiracy theories.
The Story
Castor oil is beautiful. Not in the traditional sense. But because of its many applications. You can use it in cosmetics. You can use it in adhesives. You can use it as a lubricant. You could even use it as a laxative, believe it or not. It’s really quite something. But that’s not it. India has a special connection with castor oil because we have a virtual monopoly in the segment.
In fact, the country exports roughly ₹6,000 crores worth of castor oil and castor-oil related products annually. That’s 85–90% of the total global supply. And we have this kind of influence because we are the only country that grows the key raw material — castor seeds, in such large numbers.
And we are always on the lookout for countries that might want to disrupt this beautiful equation. So when the Solvent Extractors Association of India wrote to the government alleging that China has been attempting to buy large quantities of castor seeds in the last few months, it did ruffle a few feathers. Because you see, China has only really been interested in the end product — castor oil. In fact, they are one of our biggest buyers. But this sudden interest in the raw material i.e. the castor seed is a bit unexpected.
China will tell you it's simply stockpiling its reserves. In fact, there have been reports of China buying a wide assortment of commodities over the past few months. The reason, some suspect, is that China feels they are getting a bargain right now. After all, prices have been depressed since the lockdown and all. So they’re on a buying spree and maybe they’ll use the supplies to meet their castor oil needs internally.
On the flipside, castor seed production in India has been on the up. Part of it has to do with increased cultivation. The rest, you could attribute to increased productivity. But the combined effect has pushed supplies higher and prices have turned competitive in the recent past. But with China buying in bulk, it disrupted the equation a bit. On most occasions, castor seed farmers would sell to Indian oil producers. But with the Chinese entering the fray, there’s an added incentive to sell elsewhere. And since the government allows the free export of castor seeds without imposing additional duties (taxes), it’s actually not that hard for countries to import the raw material directly.
So the oil extractors now want the government to intervene. They want to make it hard for the Chinese to keep buying this key raw material. They want to make sure that they reap the full benefit of low prices instead of China. They want the government to tax castor seed exports. But… The story doesn’t end here. There is also a conspiracy theory surrounding this weird move.
According to a report in Taiwan Times, China might be buying castor oil seeds because…
Wait for it…
“They’re preparing for chemical warfare!!!”
So here’s the thing. Castor beans contain trace amounts of ricin — a toxin, when purified can be deadly. As the report notes —
Ricin intake (as little as a pinhead’s worth will kill) in various forms including mist, powder, and swallowing will result in death within 48 hours — preceded by unbearable pain as the lungs and kidneys fail. China has always denied the stockpiling of any bio-toxins, or ever using them. [However] experts on China affairs believe that it has the potential to use them in situations when conventional warfare methods may fail.
But in any case, conspiracy theories aside, what do you think of this move? Do you think the government should impose taxes on castor seed exports or do you think the oil producers are simply making a fuss of the whole situation? Let us know your thoughts on Twitter.
Until next time…
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Also don't forget to check our daily brief. In today's issue we talk about why the association of sugar mills wants you to eat more sugar and cheap airline tickets. Do read the full draft here.
