The government had reduced the import duty on palm oil by 10% in November to control rising prices. However, it did not help as exporting countries increased prices as well as export duties.
The association has also urged the government to subsidise the sale of edible oil through the public distribution system, as prices are expected to stay firm till April-May 2021.
Prices of edible oil have risen by 40-50% across the country in the last five months and 15% in the past one month. Prices are expected to remain on the higher side until March, top industry people said.
Atul Chaturvedi, president, Solvent Extractors Association of India (SEA), said the association has requested the government to freeze the tariff rate for the next six months so that the effective rate of the import duty goes down. The government had reduced the import duty on palm oil by 10% in November to control rising prices. However, it did not help as exporting countries increased prices as well as export duties.
The association has also urged the government to subsidise the sale of edible oil through the public distribution system, as prices are expected to stay firm till April-May 2021. The year-on-year increase in wholesale price is 40% in mustard oil, 52% in sunflower oil, 34% in refined soyabean oil, 33% in refined rice bran oil and 37% in refined palm oil. Retail prices are at least 20% higher than wholesale rates.
According to Chaturvedi, the Chinese economy recovered the fastest and it has been buying. “Chinese demand has been very strong for the last 3-4 months and they have been picking up a lot of soybean seeds or palm or sunflower. Secondly, production of palm in Malaysia and Indonesia has relatively been low because of the problem of labour availability. Thirdly, as far as softs oils are concerned, India sources from Argentina – largely soybean oil. Argentina and Brazil have been facing a drought-like situation largely on account of El Nino. Besides, a strike at Argentine ports prevented any shipment from that country for sometime. All these things put together have contributed towards the price rise,” he said. “Apart from this, Ukraine and Russia had a much lower sunflower crop – a loss of almost 2-3 million tonne in both the countries. This resulted in a volatile situation.”
Chaturvedi said prices have gone up by almost 40-50% in the last four-five months, with sunflower shooting up by almost 50%. “But the worse is probably behind us and up to March we do not see prices softening. This year, domestic mustard crop seems to be looking up. Palm production is likely to go up. Most experts feel that palm production could go up by 5 million tonne overall, out of which 4.5 million tonne could be contributed by Indonesia and the rest by Malaysia,” he said.
BV Mehta, executive director, SEA, said the first quarter could remain tight and prices may begin to cool after March when the Argentinian crop arrives and palm production begins. The share of palm stood at 7.2 MT (55%) of the total 13.2 MT of edible oils India imported in 2019-20. High local prices, coupled with increased domestic production, may arrest the growth in imports, he added.