Edible oil prices may ease in the domestic market soon, helping to cool food inflation and lessen the strain on household budgets. Following a fiat from the food ministry to cut prices by Rs 10-12/litre in view of the decline in global prices and the recent import tax cuts, major producers, including Adani Wilmar and Ruchi Soya, have said that revised retail prices will take effect in the next 7-10 days.
“Global prices of palm and sunflower oils have declined by 18-20% in the last one month, while it takes about 3-4 weeks to reflect in the retail markets,” BV Mehta, executive director, Solvent Extractors’ Association of India (SEA), told FE.
The food ministry held the meeting with representatives of leading edible oil makers and processors associations, including Adani Wilmar, Ruchi Soya, Mother Dairy, SEA, Soyabean Processors Association of India and Vanaspati Manufacturers Association of India.
According to department of consumer affairs data, modal retail prices of edible oils — mustard, soya, sunflower and palm oil — have declined between 5-11% in the domestic market since June 1. Adani Wilmar, India’s largest edible oil producer, last month announced a cut of Rs 10/litre (nearly 5%) for soyabean, sunflower and mustard oils. “We are passing on the benefit of the reduced cost to our customers. We are confident the lower prices will boost demand,” Angshu Mallick, MD & CEO, Adani Wilmar had said.
Similarly, Mother Dairy, one of the leading milk suppliers in Delhi-NCR, last month reduced prices of the cooking oils by up to Rs 15 per litre, citing softening rates in global markets.
India meets 56% of its annual edible oil consumption via imports and annual imports are around 13-14 million tonne (MT). Around 8 MT of palm oil is imported from Indonesia and Malaysia, while other oils, such as soya and sunflower, come from Argentina, Brazil, Ukraine and Russia.
In the race to get on top of rising inflation, the government on May 24 allowed tariff-free imports of crude soyabean and sunflower oils during this financial year and the next.
The tax waiver is subject to an annual cap of 2 MT for each oil, which will more than suffice to meet the needs of domestic refiners and ease supplies in the domestic market. The government also removed a residual 5% agriculture infrastructure development cess on the two crude edible oils.
Crude palm oil imports currently attract only a 5% agri infra cess and a 10% education cess upon it, meaning a total tax incidence of 5.5%. Basic customs duty waiver will apply till September 30.
Although global edible oil prices are still elevated compared to a year ago, the decision by Indonesia, the largest global exporter of palm oil, to lift the ban on exports is improving global supplies. Besides, trade sources said, exporters of crude sunflower from Ukraine have commenced using the Poland land route.