Olive oil spot prices in the domestic market may remain steady at the current level in the next few days mainly on appreciating euro value against the rupee amid steady imported supplies.
Earlier, it was expected that domestic prices will fall by 10-15% on fresh imports after duty reduction, provided exchange rates remained stable.
On April 1, 2008, the government reduced customs duty levied on all grades of olive oil to 7.5% from the previous rates of 45% on virgin olive oil and 40% each on refined olive oil and olive pomace oil.
?Olive oil prices in the country would remain stable, and contrary to expectations, would not fall as a result of the government?s reduction of import duties to 7.5% from April 1,? VN Dalmia, president, Indian Olive Association (IOA) told FE.
The Association is the national apex association of olive and olive oil producers, growers, distributors, importers, users and consumers.
?A phenomenal rise in euro value has prevented olive oil companies from reducing prices,? said Dalmia.
The fact is that much of the duty reduction benefit has been wiped out due to the recent appreciation of euro. Current spot price of olive pomace oil is largely steady, around Rs 400 a liter, he said.
Euro value against the rupee was appreciated by 11%, since April. The exchange rate in early April was about Rs 63. Euro rate now hovers above Rs 68 with banks projecting Rs 70 as conceivable in the near future.
?If this rise in rate continues, we may have to think of increasing prices,? he said.
The price differential of olive oil has reduced dramatically with the rise in prices of other edible oils. With the vast health benefits inherent in olive oil, the reduced price differential presents great value for consumers to secure quantum improvements in their health, sources said.
It is estimated that the country may import 4,500 tonne in 2008. The country imported 2,300 tonne of olive oil in 2007 mainly from Spain and Italy.