20/02/2008 (My Iris) - The India`s vegetable oil imports in 2007-08 (October-September) are likely to increase by 7.2% at around 5.9 million tons, against 5.5 million tons last year, due to lower carry forward stock of oilseed and rising oil consumption, reports Business Standard.

The executive director, Solvent Extractors` Association of India (SEA), B V Mehta, said imports are likely to rise in every quarter this year, however India`s import ratio of palm oil and soyoil in the current oil year is likely to be 80:20, from 67:33 a year ago, on account of high prices of soyoil and a sharp rise in freight duty.

Last year, the country had 3.5 million tons of mustard seed carry forward stock, while at the start of the current oil year in October, it was left with only 150,000 tons, he said.  The country imports nearly 50% of its annual edible oil needs of close to 10 million tons in the form of palm oil from Malaysia and Indonesia, and soft oils like soyoil from South America.

In 2007-08, oilseeds production in India is estimated at 25-26 million tons compared with 24 million tons last year, Mehta said that the total availability of oilseeds this year will be lower due to a sharp decline in carry over stock. The Rabi output is expected to fall below 9 million tons this year, from 9.5 million tons achieved in the previous year, mainly due to lower mustard seed crop.

Mehta said Mustard seed output is seen lower (this season) due to unfavorable cold wave and ground frost conditions in northern India, and 11% decline in acreage. According to Mehta, mustard seed output this season is likely to be around 5-5.5 million tons, down from 6.2 million tons a year ago.

Mehta said, `Even if the government cuts import duty, effective duty would be 11-12% only, and the overall price reduction may be just Rs 2.50 a kg.` Hence, in reality, the consumer will not benefit much. Also, as the market is very volatile currently, impact of the duty cut will be wiped out within a few days with the producers hiking prices, he added.