16/09/2008 (The Hindu Business Line), Chennai - Vegetable oil imports into the country are turning cheaper as prices in the global market have declined by 31 per cent to 41 per cent since June 15. This has resulted in shipments in to the country rising 21 per cent in August after having declined in July compared with the same period a year ago.

Data from the Solvent Extractors Association of India show that c.i.f (India) prices of crude palm oil import have declined 41 per cent to $715 a tonne on Sept 12 from $1,220 on June 16. On Monday, crude palm oil for November delivery declined to a 15-month low of $649 on the Malaysia Derivatives Exchange.

In August, edible oil imports increased to 5.69 lakh tonnes (lt) against 4.69 lt a year ago. Vegetable oil imports for non-edible use increased to 53,275 tonnes from 46,738 tonnes a year ago.

For the current oil year ending October, edible oil imports totalled 41.98 lt till August compared with 37.67 lt a year ago. Imports for non-edible use increased to 5.62 lt from 5.29 lt.

A statement from the Solvent Extractors Association said imports during the next two months were likely to be 5.5-6 lt every month as it was a lean crushing season. At least 60 per cent of vegetable oil imports take place during April-October.

SOFT OILS RISE
Of the total imports, the share of palm group of oils during the oil year has increased to 88 per cent at 36.81 lt fom 67 per cent last year, while that of soft oils, including soya and sunflower oils, has declined to 12 per cent and 33 per cent respectively. Problems in Argentina, where farmers protested against export tax, and higher soyabean oil prices have resulted in this trend this year.

With the Argentine problem getting over, imports of soft oils increased in August to 89,103 tonnes. In fact, in April, soft oil imports dwindled to 1,000 tonnes and in May, it was down at about 15,000 tonnes before recovering in June.

POLICY CHANGES
Dwelling on the current trend, Mr B.V. Mehta, Executive Director of the association, told Business Line that the current trend in global vegetable oils was a source of worry. “Prices were ruling high when farmers went in for sowing of oilseeds but are dropping when harvest is due. In fact, prices of vegetable oils are lower than what it prevailed during the same period last year,” he said.

Stating that it was time for the Union Government to rethink its policies, he said it had to do three things to ensure farmers did not switch over to other crops from oilseeds.

“First, the Centre will have to lift the stock limits, which allow us to keep only one-twelfth of our annual demand. Next, the ban on futures trading in soyabean oil has to be lifted. Third, if possible, it should allow export of edible oils,” he said.

“During the end of this month, it would be good if the Government revisits the Customs duty structure of vegetable oils. Lower prices could result in imports rising when arrivals peak,” Mr Mehta said.

CUSTOMS DUTY
The Centre had cut Customs duty on vegetable oil imports in stages since the beginning of last year in its bid to tackle soaring inflation. On March 31 this year, it scrapped the duty for import of crude palm and soyabean oils, while the levy on refined vegetable oils was lowered to 7.5 per cent.

“The stocks limit, in particular, has to go because the industry will not be able to lift oilseeds if it remains. This will in turn affect the farmers, who will not be able to get remunerative price,” Mr Mehta said. “We need to strengthen domestic oilseed production and it can be done only through remunerative prices for the farmers,” he said