Rising imports push down vegetable oil prices

Rising vegetable oil imports have weakened prices in domestic markets, leading to fears of a free fall and consequent distress for both industry and farmers. Vegetable oil imports rose 19 per cent in 2007-08, pushing prices down by 35 per cent.

 According to industry insiders, it is time to impose import duty to check further erosion in prices.

India imported 56.08 lakh tonnes of edible oils in 2007-08 and, according to BV Mehta, executive director of Solvent Extractors' Association of India, this may rise to 58 to 60 lakh tonnes this year. The last year also saw the import of vegetable oils peak; 63.1 lakh tonnes of vegetable oils (edible, non-edible and vanapati) since lifting of import restrictions in 1994.

Import duties were withdrawn in March-April this year after the prices had peaked. However, since August, prices have declined steeply to levels of November 2006, but the import duty has not been reviewed. This has led to heavy imports over the last two quarters of the year, according to the SEA.
 
Similar concerns have been voiced by the Soyabean Processors Association of India (SOPA). Rajesh Agrawal, spokesperson for SOPA, demanded that the government raise the support price of oilseeds by 30 per cent. This would mean a rise of Rs5-6 per kg for the consumer, but the consumer would absorb it since prices are at rock bottom levels, he feels. 

Domestic soyabean arrivals are also down - between 500, 000 to 600,000 bags per day as against 10 lakh during this period last year – and prices have dipped to Rs1,500 per quintal against Rs2,500 during the same period last year.
 
Ac coring to Mehta, low price realisations by farmers may affect availability of oilseeds as farmers may be forced to switch to other crops in the coming season.