Import restrictions lead to rise in edible oil prices

New Delhi, May 7: PRICES of all edible oils shot up in the past three days following the government’s decision to restrict their imports through six ports, the traders said. However, they feel that the decision might have been prompted by a surge in imports.

"As the bulk of edible oil imports were through Kandla, stopping imports from the port means the volumes diverting to Mumbai and the additional freight charges fixed for the future have already raised the price by Rs 150-200 per quintal," Mr Ramesh Jain, general secretary of Delhi Vegetable Oil Traders Association, said.

Mr Mansukhbhai Patel, president of Central Organisation for Oil Industry and Trade, agreed that there will be an increase in prices due to port restrictions but said, "Consumer is only one end of the spectrum and oilseeds farmers will benefit from the move as it will curb excess imports."

But Mr Jain said duty structure was a better tool to protect the farmers as the movement of edible oil from Mumbai instead of Kandla to Delhi would mean an additional freight charge of Rs 300 per tonne.

Due to this, crude palm oil prices had shot up from Rs 195 per 10 kg to Rs 202 per 10 kg. Groundnut oil was quoting at Rs 620 per 15 kg up from Rs 600 per 15 kg. There had also been a Rs 15 per 15 kg tin increase in the prices of soyabean, mustard and vanaspati oil, Mr Jain added.

An official of Adani Exports said the move could have been prompted by large-scale imports of all types of goods particularly from China through border areas like Nepal, but he expected a modification in the decision in the case of edible oils.

Adani Exports’ official said while the needs of edible oil in the South, West and the Eastern region would be met through the ports of Mumbai, JNPT, Vizag, Cochin, Madras and Calcutta, serious problems would be faced by both traders and consumers in the Northern Region.

Not ruling out shortages, Mr Jain said: "Since Mumbai is a busy port, getting consignments released takes greater time and being unable to do so within a specified period leads to more demurrage charges."

Indian Vanaspati Producers Associations director, IR Mehra, said infrastructural arrangements like pumping of CPO were not available in all ports and the decision assumes significance in the wake of the prime minister’s upcoming visit to Malaysia, a major exporter to India.

Mr Jain said another problem was of tankers which would not be available in sufficient numbers. Three or four contractors were arranging tankers in Kandla and unless they got themselves registered in Maharashtra there would be delay in delivery.

There were specific 10-14 tonne edible oil tankers and the ones used for chemicals, minerals and gases could not be used for the purpose, he added.

He also said there would be an increased use of diesel because of the distance involved, putting pressure on prices.

However Mr Patel said there would not be any fall in imports which would continue to be in the range of 42-45 million tonne annually though the excess supply which would have led to the figure rising to 50 million tonne would be curbed.

He said large volumes of edible oils used to lie in Kandla for days together and traders could get delivery at very short notices. (PTI)