Chennai, March 16 A sharp rise in vegetable oil imports has begun to impact the solvent extraction industry as farmers are unwilling to sell oilseeds at lower prices.
“Vegetable oil prices have declined sharply in global and domestic markets. But our farmers are resisting the lower prices and it is affecting the working of the domestic industry currently when it is supposed to be the peak crushing season. The margin for most of the plants is negative, which is also affecting their operations,” said Mr B.V. Mehta, Executive Director of the Solvent Extraction Association of India.
Global, domestic prices
Average prices of RBD palmolein declined to $651 a tonne in February from $957 in August, while that of crude palm oil to $595 from $859 during the period. Degummed soyabean oil slipped to $705 ($1,208) and crude sunflower to $740 ($1,300).
In the domestic market, RBD palmolein dropped to Rs 36,000 a tonne from Rs 47,754, while crude palm oil to Rs 31,000 (Rs 55,075); degummed soyabean oil to Rs 40,000 (Rs 55,075); sunflower oil to Rs 40,500 (Rs 57,833) and rapeseed oil to Rs 45,000 (Rs 64,354).
As a result of the fall in global vegetable oil markets, imports have increased this oil year to October. In February, vegetable oil imports increased 48 per cent to 5.55 lakh tonnes with edible making up 5.19 lt and non-edible the rest. This is against 4.27 lt during the same period a year ago.
For the current oil year, imports during the first four months are up 68 per cent at 29.51 lt (versus 17.61 lt) with edible oils making up 28.25 lt (15.12 lt).
“We seem to have opened all the gates for edible oil imports. Going by the current trend, imports could be in the excess of 70 lakh tonnes by the end of the season against 63 lt last season,” industry sources said, adding that fears that the Centre might re-impose Customs duty on palm oil were also driving imports.
‘No duty till june’
“The fears are unnecessary as it is unlikely for the duty to be reimposed before June, when a new Government would have been sworn in. Currently, the Centre would be keen not to impose duty. Edible oils are in a way helping to keep inflation down,” the sources said.
The Wholesale Price Index-based annual rate of inflation for the week-ended February 28 slipped to six-year low 2.43 per cent.
A proof that growers are resisting drop in prices and holding back their produce is the data available for soyabean arrivals. So far, soyabean arrivals in various markets in the country have been estimated at 55 lt. “If one were to go by the Ministry of Agriculture’s estimate of 90 lt-crop and taking into consideration that 10 lt is needed for sowing, still 2.5 lt are with the growers,” said the sources.
“The rise in import also gives credence to complaints that palmolein is being blended with other oils such as groundnut and sunflower. They are then sold as pure groundnut or sunflower oil rather than blended ones,” the sources said.
Unethical blending
“The phenomenon of unethical blending is catching up and many are forced to do it for survival. And it seems to be rampant at the lower levels, like in the districts,” they said.
For the record, the share of soft oils against palm group of oils increased in February to 32 per cent from 18 per cent in January. Overall for the season, the soft oil’s share is 17 per cent against 83 per cent of the palm group.
Among soft oils, import of sunflower oil, which was nil last year, was up at 2.02 lt in the first four months. Imports have increased as crude sunflower oil can be imported at zero duty, while degummed soyabean oil attracts 20 per cent duty.
Something to cheer
A spark in the trade figures is the fall in import of non-edible oils by 49 per cent during November-February to 1.27 lt, mainly due to higher imports and domestic refining of crude palm oil. This has resulted in better availability of palm fatty acid distillates and crude palm stearin.
Source : Business Line