‘Edible oil price drop should be passed on to consumers expeditiously’
04/05/2023 (Live Mint), New Delhi - The decline in the price of edible oil should be passed on to consumers expeditiously, Union food and public distribution secretary Sanjeev Chopra on Thursday told the leading industry representatives during a meeting.
The secretary has advised the leading edible oil associations to take up the issue with their members immediately and ensure that the maximum retail price (MRP) of each oil be reduced in line with the decline in the international prices of edible oils with immediate effect. He further expressed that the manufacturers and refiners also need to reduce price to distributors (PTD) with immediate effect, so that the price decline is not diluted in any way.
The international prices of imported edible oils are on a downward trend, which gives a positive scenario in the edible oil sector in India. “With the edible oil prices beginning to show a downward trend and are set to witness further reduction to be made by the edible oil industry, the Indian consumers can expect to pay less for their edible oils. The falling edible oil prices will help in cooling the inflation as well," the Food and Public Distribution ministry said in a statement.
“India still imports around 55-60% of its edible oil requirements. Hence, cooling down of global prices will have a positive impact on edible oil prices, especially palm and soybean, which is used in blending oil," said Madan Sabnavis, chief economist at Bank of Baroda. “Any reduction in edible oil prices will bring down CPI inflation proportionately. For example, if prices come down by say 10%, then inflation will reduce by 0.36%," he said.
The international and domestic prices of edible oil were on an upward swing during 2021-22 due to many global factors including higher input and logistic cost. However, the edible oil prices in the international market have been shrinking for the past six months and have fallen by $200-250 per tonne in the last two months. However, the downtrend reflection has not been substantial yet in the domestic prices despite bumper crops of ground nut, soybean, and mustard.
The fall in the prices of edible oils in the domestic market is gradually being reflected in the domestic market which is providing relief to the consumers. “Price reflection at the retail level takes time and retail prices are expected to come down shortly," informed the leading cooking oil companies.
Mint on Wednesday reported Mother Dairy will cut the maximum retail price or MRP of Dhara edible oil by ₹15-20 per litre across variants with immediate effect. Adani Wilmar Ltd, too said it took price reductions, for instance, on its top-selling 1 litre pack of Fortune soybean oil in May; prices of this variant have been going down month-on-month since January, the company said.
Data available from the Price Monitoring Division of the Department of Consumer Affairs showed that though there has been a decline in retail prices of major edible oils in the last year, the drop has been lower than the fall in global prices.
The all-India average retail price of soy oil was ₹138.20 per kg on 4 May against ₹141.02 per kg on 4 April, a decline of 2%. Year-on-year, it was down by 18.31%. On the other hand, the average Cost, Insurance and Freight (CIF) price of imported crude soybean oil fell 37% on year to $1,155 a tonne in March.
While the landed prices of imported crude sunflower oil have dipped 48%, the all-India average retail price of sunflower oil dropped 4.1% on-month to ₹145.18 per kg on 4 May, and the year-on-year fall was 24%.
In the case of palm oil, the all-India average retail price was ₹110.05 a kg on 4 May against ₹111.79 per kg on 4 April, a fall of nearly 1.2%, and 30.6% year-on-year.
The department also said whenever a reduction in price to distributors is made by the manufacturers and refiners, the benefit should be passed on to the consumers by the industry and the food and public distribution department may be kept informed on a regular basis. Some companies which have not reduced their prices and their MRP is higher than other brands have also been advised to reduce their prices.
Other issues such as price data collection and packaging of edible oils were also discussed in the meeting.
Earlier, in pursuance of the department’s meetings with leading edible oil associations, the MRP of edible oils such as sunflower oil, soyabean oil and mustard oil were reduced by the industry. The reduction in oil prices came in the wake of reduction of international prices and reduced import duty on edible oils making them cheaper. The department has advised the industry to ensure that the complete benefit of the reduced duty is passed on to the consumers.
Representatives from Solvent Extraction Association of India (SEA) and Indian Vegetable Oil Producers’ Association (IVPA) were present to discuss further reduction in the retail prices of cooking oils amidst a fall in the global prices.