Govt seeks explanation from edible oil companies on rising prices

The government on Friday sought an explanation from edible oil firms for the rise in retail prices of cooking oils despite advising them to ensure price stability amid the availability of adequate stocks imported at lower duties.

On September 14, the Centre hiked the basic customs duty on various edible oils to support domestic oilseed prices, and subsequently on September 17 the food ministry convened a meeting with edible oil industry bodies to make sure that there was no rise in retail prices.

"The industry has been asked to clarify and furnish reasons as to why the prices are showing upward trend since the announcement of import duty hike, despite the government's directions to maintain retail prices in the coming festival season," a senior food ministry official said on Friday.

The ministry's assertion is that stocks imported at lower duties would easily last 45-50 days and therefore the processors should refrain from increasing maximum retail prices. Also, the price increase comes at a time when the festival season is round the corner and demand will be on the rise.

Effective September 14, 2024, the basic customs duty on crude soyabean oil, crude palm oil, and crude sunflower oil has been raised to 20 per cent from nil, making the effective duty on crude oils to 27.5 per cent.

Additionally, the basic customs duty on refined palm oil, refined sunflower oil, and refined soyabean oil has been increased from 12.5 per cent to 32.5 per cent, making the effective duty on refined oils to 35.75 per cent.

On Tuesday, Food Secretary Sanjeev Chopra chaired a meeting with the representatives from Solvent Extraction Association of India (SEA), Indian Vegetable Oil Producers' Association (IVPA) and Soyabean Oil Producers Association (SOPA) to discuss the pricing strategy.

"The leading edible oil associations were advised to ensure that theP of each oil is maintained till the availability of edible oil stocks imported at zero per cent and 12.5 per cent Basic Customs Duty (BCD) and take up the issue with their members immediately," an official statement had said.

"The central government is also aware that there is close to 30 lakh tonnes stock of edible oils imported at lower duty which is sufficient for 45 to 50 days domestic consumption," it added.

India imports a large quantity of edible oils to meet domestic demand. The dependence on imports is more than 50 per cent of the total requirement.

The country imports palm oil from Malaysia and Indonesia, while the country imports soyabean oil from Brazil and Argentina. Sunflower oil comes mainly from Russia and Ukraine.

The decision to hike import duties is part of the government's ongoing efforts to bolster domestic oilseed farmers, especially with the new soybean and groundnut crops expected to arrive in markets from October 2024, the food ministry had said.