24/12/2008 (Commodity Online), New Delhi - The Vanaspati Consultative Committee, an apex body of the Vanaspati industry has urged the Union Government not to increase customs duty on Crude Palm Oil as consumer prices of edible oils continue to be high with prices of major oilseeds ruling above Minimum Support Price (MSP).

The prices of oilseeds continue to be high and above MSP in all major crops except sunflower which is a very small crop compared to the total oilseed cultivated in the country.

The vested interests lobbying for increasing customs duty on CPO do so to make speculative profits in the stocks of soyabean seeds and groundnut shells hoarded by them.

Any increase in prices of palm products will further increase the price of mustard oil which is already ruling at a high rate of Rs.75/- per kg and other oils. It will open the flood gates for cheap quality of vanaspati from Sri Lanka & Nepal, thereby adversely affecting the domestic vanaspati manufacturers, creating unemployment and affecting the livelihood of thousands of people connected with it.

Major edible oils which are available from the indigenous sources are mustard oil, soyabean oil, groundnut oil, sesame oil, the prices of which are ruling between Rs.50 to Rs.75 per Kg at wholesale level and between Rs.60 to Rs.125 per kg at retail level in consumer packs thereby making these products out of reach of the majority of the Indian households, Pramod Dugar, Chairman Vanaspati Manufacturers’ Association of India and J K Khaitan, President of Indian Vanaspati Producer’s Association of India said in a memorandum to Prime Minister Manmohan Singh.

Crude Palm Oil and its fractions constitute about 85% of the import basket and approximately over 50 lakh MT is imported and consumed. As such, against the total consumption of 110 lakh MT of edible oils, 50 lakh tones is in the form of palm products.

The decline in crude palm oil prices has resulted in making palm oil available to masses at cheaper price as low as Rs.36/- per kg., though the appreciation of dollar against Rupee in recent times by around 25% has also acted as duty / extra cost to imports.

Any change in policy including customs duty on crude palm oil will have direct impact in increasing the price of edible oils (essential commodity) when around 50% of the edible oils are imported to meet the domestic demand.

However, in case any support is to be provided to the sunflower cultivators whose locations are limited to a few districts, the Government should involve in market intervention by purchasing sunflower seed at MSP. The quantity of sunflower seed left to be marketed by the farmers is too smaller quantity to revisit the customs duty structure and make a policy change affecting all the edible oil consumers in the country.