Edible oil firms cut prices

Domestic edible oil producers have reduced the prices of various oils by Re 1 a kg this week to pass on the benefits of the appreciating rupee to the consumer. The country imports 40-45 per cent of its edible oil requirements.

"We have reduced the prices of various edible oils by Re 1 a kg following the strengthening of the rupee (by 6 per cent over the last one month). However, the reduction of import duty by the government had a negligible impact as prices went up in exporting nations (Malaysia and Indonesia)," said Ramesh Garg, chairman of K S Oils, the country's largest mustard oil producer.

When the Centre announced the duty cut, the landed cost of crude palm oil (CPO) increased from $700 a tonne to $730 a tonne as on April 24, while the cost of RBD Palmolein increased from $700 to $745 a tonne in the same period. The international palm oil prices are rising continuously because of the diversion of palm oil to biodiesel.

In a bid to check the rising edible oil prices, the government had on April 13 cut the import duty on CPO and RBD Palmolein by 10 per cent each to 50 per cent and 57.5 per cent respectively.

"The rupee's appreciation has cooled the domestic edible oil prices by Rs 1,000 a tonne or Re 1 a kg," said Sandeep Bajoria, ex-president of Central Organisation for Oil Industry and Trade (COOIT) and managing director of Sunvin Group.

India is one of the largest importers of edible oils buying around 5 million tonnes of edible oil annually, of which palm oil and its derivatives constitute 2.1-2.4 million tonnes. It imports palm oil mainly from Malaysia and Indonesia, and soy oil from Brazil and Argentina.

In 2005-06 oil year (November-October), the country imported 2.4 million tonnes of CPO. In the November-March period of the current year, about 1 million tonnes of CPO have been imported.

The domestic production of oilseeds is also down. According to the third crop estimates released by the ministry of agriculture, oilseeds production in 2006-07 is 23.26 million tonnes, 16.8 per cent down from last year's final estimates of 27.97 million tonnes.

Farmers in Rajasthan, Haryana and Madhya Pradesh have shifted large tracts of land from oilseeds to wheat and pulses owing to bullishness in these two commodities.