Edible oil imports surge as global prices drop sharply

Edible oil imports surge as global prices drop sharply

There has been a sharp spike in edible oil imports during the first five months of the current oil year (November-December) due to softening global prices of palm, soybean and sunflower oils.

According to the Solvent Extractors’ Association of India (SEA), edible oilhttps://www.financialexpress.com/about/edible-oil/ imports rose by 23.7% to 6.98 million tonne (MT) during the November-March period (2022-23), compared to the same period last year.

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Landed prices of crude soy and sunflower oil have declined by 45% and 53% to $1,040/tonne and $1,010/tone, respectively.

Higher imports have pulled down domestic prices of mustard and soybean seed.

Inflation in the oil & fats category declined by 7.86% in March 2023 Farmers’ organisations and edible oil processors have been urging the government to hike import duties to bring parity with domestic edible oil prices.

“Unbridled imports of palmolein is resulting in collapse of edible oil prices, which is impacting the marketing of mustard during peak harvest time and causing distress to farmers,” Ajay Jhunjhunwala, president, SEA, had stated in a communication to the food ministry.

At present, crude palm, soybean and sunflower oil imports attract only a 5% agri infra cess and a 10% education cess, meaning a total tax incidence of 5.5%.

According to trade body Soybean Processors Association of India (SOPA), between September and March (2022-2023), the price of imported crude soybean oil has declined by 31%; similarly, prices of sunflower and palm oils have fallen.

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“The steep fall in edible oil prices has resulted in a fall in oilseeds prices and the farmers are disappointed and discouraged by this policy of keeping duties very low, even after the world prices of edible oil have crashed,” Davish Jain, chairman, SOPA, has stated in a communication to commerce ministry.

India imports about 56% of its annual edible oil consumption of 24-25 MT. About 8 MT of palm oil is imported from Indonesia and Malaysia annually.

Mandi prices of mustard seeds continue to rule below the minimum support price (MSP) of Rs 5,450/quintal announced for the season, despite the government’s decision to procure oilseeds from farmers at MSP after two years.

Prices of mustard at Bharatpur mandi in Rajasthan, the hub of the oilseeds trade, is currently ruling at around `5,100-5,200/quintal; the prices are the lowest in two years.

“Cheaper imports of edible oil such as palm oil, along with low import duties, have resulted in decline in demand for mustard seeds this season,” Krishan Kumar Agarwal, president, Bharatpur Oil Millers Association, told FE.

The share of domestic edible oil includes mustard (40%), soyabean (24%) and groundnut (7%) and others.