New Delhi: Despite marginal appreciation in global edible oil prices in the recent months, which has also slightly pushed up local rates, oilseed crushing has not picked up pace because of poor crush margins and inadequate supplies.
Though the drop in edible oil prices is good news for consumers, but industry players fear that prolonged drop in prices could wean farmers away from oilseed cultivation as prices of other competing crops shoot up.
Capacity utilisation of refiners has also gone down because of low margins, industry sources said.
“Cheap imports largely due to zero duty on imported crude oil along with poor expectations from the rabi oilseeds output has made crushing quite uneconomical,” B V Mehta, executive director, Solvent Extractors Association of India (SEA) told FE.
Mehta also said that speculative activity in soyabean oil futures is also adversely impacting the domestic prices.
The landed cost of key imported edible oils like RBD Palmolein, Soybean oil and Sunflower oil since July 2008 reveals that prices have been declining sharply, a Fe analysis showed.
The landed cost of RBD palmolein was quoted at $760 per tonne this month against $1200 per tonne in July 2008, a hefty drop of more than 57%.
Similarly, import price of soybean oil had come down from $ 1,208 per tonne in July 2008 to $935 per tonne this month, a drop of more than 29%.
Meanwhile, with the expectation of a lower rabi oil seeds production, the imports have been increasing during last few months.
According to SEA data, total import of edible oil during November 2008 - October 2009 jumped to 81.83 lakh tonne as against 56.08 lakh tonne last year.
Early last year when global edible oil prices rose sharply the government had abolished customs duty on imported crude vegetable oils and reduced the duties to only 7.5% for the refined oils.
“We are urging the government to rationalise the duty structure in view of decline in global prices for supporting domestic refining industry,” Mehta said.
He said the imposition of import duties would enable oilseeds growers to get better prices for their produce during harvest and encourage them to expand oilseed area during the rabi season.
India imports almost half of annual edible oil consumption estimated to be around 12 million tonnes.
According to estimates, around 2 million tonnes of soyabean oil from Argentina and Brazil while about 3.5 million tonne of palm oil is imported annually from Malaysia and Indonesia
Source : Financialexpress