The food ministry on Tuesday urged the edible oil companies to maintain the current prices of cooking oils until there is availability of imported oil at lower import duty.
According to official estimates, there is close to 3 million tonne (MT) of stock of edible oils imported at lower duty which is sufficient for 45 to 50 days domestic consumption.
Food minister Sanjeev Chopra chaired a meeting with the representatives from Solvent Extraction Association of India (SEA), Indian Vegetable Oil Producers’ Association and Soybean Oil Producers Association to discuss the pricing strategy.
This follows the companies had indicated that edible oil prices may jump 10-15% following 22% increase in import duties on edible oil by the government last week. Experts say that India imports about 58% of its edible oil consumption of 24-25 MT.
Duties on crude palm, soyabean and sunflower oils have been increased to 27.5% from the current level of 5.5%. The levy on refined edible oil, meanwhile, has been raised to 35.75% from 13.75%.
On the increase in edible oil import duty, an official note stated “these adjustments are 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,”.
It stated that the decision follows comprehensive deliberations and is influenced by several factors: increased global production of soybean, oil palm, and other oilseeds; higher global ending stocks of edible oils compared to last year; and falling global prices due to surplus production.
“This situation has led to a surge in imports of inexpensive oils, exerting downward pressure on domestic prices. By raising the landed cost of imported edible oils, these measures aim to enhance domestic oilseed prices, support increased production, and ensure that farmers receive fair compensation for their produce,” it stated.
The SEA has projected the total import of edible oil in the current oil year (November 2023-October 2024) in the range of 16-16.5 MT. In the 2022-23 oil year, the import of edible oils rose 17% on year to a record 16.47 MT helped by a lower duty of only 5.5% on crude oil imports.
In December, 2023, basic duty on crude palm, soybean and sunflower oil was abolished from earlier 2.5%. In June, 2023, import duty on refined oil was reduced to 12.5% from 17.5% to ensure spike in retail prices and the duty structure was earlier extended till March 31, 2025.
“Higher duty will allow industry to pay remunerative prices to oilseeds farmers while impact on the retail prices of cooking oil will be limited,” BV Mehta, executive director, SEA had told FE.
Because of higher imports, the government had asked agencies such as Nafed and NCCF to purchase around 2.8 MT of soyabean at minimum support price (MSP) from farmers from key producing states – Madhya Pradesh, Maharashtra, Karnataka and Telangana — as prices were below MSP.
The government agencies had purchased 1.2 MT of mustard from the farmers in key producing states of Haryana, Madhya Pradesh, Rajasthan and Uttar Pradesh last rabi season.
From: financialexpress
Financial News
