The apex industry body, Central Organisation for Oil Industry & Trade (COOIT), has demanded an indicative price band for edible oils to compute import duty which will protect farmers’ interest for better sowing during the next season.
In a presentation to the agriculture minister Sharad Pawar, COOIT has suggested that if prices of crude and refined oils of any variety remain consistently below Rs 50 a kg, then the import duty should be increased and if prices remain above Rs 55 a kg, the government should intervene and reduce the import duty.
OIL NOT WELL
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Duty rates may vary between 0 and 37.5 per cent depending upon the shift in prices on either side of the range for smooth trading of edible oils.
If a wholesaler is selling refined oil at Rs 55 a kg, the commodity would reach the consumer at the price of Rs 70 a kg which is affordable even with a bare income, said Davish Jain, president, COOIT.
This would also provide farmers a better realisation which will provoke them to sow edible oilseeds next season thereby, reducing reliance on imports, he added.
The organisation’s demand assumes significance as farmers are highly discouraged with percolation of falling global edible oil prices in domestic market. Although, edible oil consumption continues to be strong, with Dorab Mistry, director of Godrej International, projecting a rise of over 10 per cent in India’s oil demand to reach 15.1 million tonnes this year from 13.5 million tonnes last year. Yet prices are falling continuously due to the ongoing lean season.
On the National Commodity & Derivatives Exchange (NCDEX), poled prices of refined, bleached and diodized (RBD) palmolein slumped over 10 per cent in one month to close at Rs 42.54 a kg. In Mumbai spot market too, the commodity plunged to Rs 41.70 a kg from Rs 44.50 a kg a month ago. The benchmark refined groundnut oil, soyoil and sunflower oil ended marginally lower in local market here on Tuesday at Rs 57.50 a kg, Rs 47 a kg and Rs 48 a kg respectively.
Palm oil for August delivery on the Malaysia Derivatives Exchange fell 0.8 per cent to 2,577 ringgit ($741) a tonne on Wednesday.
The government’s inaction towards the whole affair is the most disheartening. If the minimum support price of oilseeds is controlled why not the end products, asked Jain. He warned that any price below Rs 70 a kg would discourage farmers enormously to divert field to other crops including foodgrains.
Meanwhile, industry experts are divided over import situation in coming months. Gobind Patel, a Rajkot-based industry veteran forecasts imports to decline on huge stockpiling which was supported by Davish Jain of COOIT.
Under zero duty regime, Indian traders imported huge quantity of vegetable oils in anticipation of higher prices in future thereby, raising edible oil reserves to 1.5 million tonnes in the seven months to May.
However, Cargill India CEO (refined oils), Siraj Choudhary, hopes that the current stockpiling is little over one month of the country’s consumption of 1.1-1.2 million tonnes. Choudhary said, “Summer is a low consumption period and hence, stockpiling increases normally. Since, festival season is ensuing, the excess inventory will be consumed comfortably.”
As per industry norm, any stock equivalent to over 20-22 days of domestic consumption is considered alarming.
As the soybean sowing is due to commence with an ensuing rainfall and moreso, another bumper year expected, farmers may be discouraged if prices do not march upwards, an analyst said.
According to data compiled by, the Solvent Extractors’ Association (SEA), India witnessed 59 per cent year-on-year increase in vegetable oil imports.
