India’s vegetable oil imports shot up sharply in September, as refiners, blenders, packers and retailers built inventories to their capacity, anticipating restoration of higher import duty as recommended by domestic producers early this year.
Vegetable oil imports at 905,000 tonnes in September hit the highest figure for any month since these were allowed under an open general licence (OGL) in 1994. Total imports recorded a growth of 39 per cent from 668,000 tonnes in the corresponding month last year.
At present, refined oils attract an import duty of 7.5 per cent; there is none at all on unrefined oils. With the economy recovering from a downturn, the Solvent Extractors Association (SEA) wants a restoration to the earlier range of duties, of between 7.5 to 37.5 per cent.
Recently, a senior government official had hinted that the government will consider doing this if oilseed prices slip below the minimum support price (MSP), which is not the case as of now.
According to data compiled by SEA, overall import of vegetable oil (refined and crude) in the 11 months between November 2008 and September 2009 of the current oil year (November-October) jumped 57 per cent to 7.98 million tonnes (MT), from 5.43 MT in the same period last year. And, looking at the arrival of ships lined up during October, the total import is estimated to surpass 8.5 MT, valued at Rs 27,000 crore, next only to the bill for crude petroleum products.
SEA lists various reasons for this surge — the disparity in domestic seed crushing, increase in per capita consumption of edible oils, high price elasticity, the low import duties, coupled with low international prices.
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And, above all, depreciation of the dollar against the rupee by 5 per cent during the 11-month period.
The low price of edible oils translates into lower realisation to farmers for their produce, forcing them to defer the selling, says SEA. Which will also discourage them from expanding the area under rabi oilseed cultivation.
Of the total imports, that of refined oil (mainly RBD palmolein) between November 2008 and September 2009 was reported at 1.15 MT as compared to 0.54 MT in the same perod last year. That for unrefined oil was reported at 6.42 MT as compared to 4.28 MT for the same period last year. RBD Palmolein is the cheapest edible oil in the market and its consumption is rising fast. Palm products are nearly 80 per cent of all imports.
Import of palm oil between November last year and this September was recorded at 6 MT as compared to 4.16 MT for the same period last year. Import of soft oil was reported at 1.57 MT, consisting of 0.57 MT of sunflower oil and 0.93 MT of crude soybean oil as compared to 0.66 MT during the same period last year.