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G. Chandrashekhar

Mumbai , Jan. 11

THE edible oil industry is agog with reports of an imminent change in the carotenoid specification for crude palm oil with some influential players having high-level political connection lobbying with the Government, especially the Ministry of Finance.

Reports widely circulating in trade circles suggest that the Finance Minister himself is seized of the issue and that a decision to downgrade the quality condition would be announced very soon.

Interestingly, it was the Ministry of Finance that stipulated carotenoid value (above 500 parts per million) as a quality parameter to determine whether any imported oil consignment was genuine crude palm oil. It followed suspicion that many importers brought refined palm oil deliberately degraded so as to pay a lower rate of customs duty.

Since then the powerful refiners lobby has been pressuring the Government to revise the specification. Although New Delhi remained resolute so far, there is now an impression that it would buckle under political pressure.

It would be an irony if the Government were to decide to dilute the carotenoid condition without adequate scientific support, an oil technologist commented.

A delegation of scientists at the Thiruvananthapuram-based Regional Research Laboratory is currently touring Indonesia to study and draw samples of palm oil from production centres and storage places in tanks and ships.

The delegation is expected to return by month-end and test samples of oils for quality specifications. Many believe that it would be unwise on the part of the Government to succumb to political or industry pressure and that a decision should be taken after the samples are tested and report of the scientists presented.

Despite the stand of some of the industry associations that the carotenoid condition was unreasonable, imports continue unabated. In December, crude palm oil arrivals were 1.77 lakh tonnes and crude palmolein 57,800 tonnes.

Meanwhile, disposal of palm stearine, which is a residual product received when palm oil is fractionated, is becoming a serious issue. The demand for stearine in the domestic market is rather limited. Importers and refiners are therefore forced to find marketing outlets, often unauthorised, for disposal of palm stearine. It is widely believed that stearine is incorporated in vanaspati, an act that is unsafe for humans.

Some interests have reportedly begun to lobby the Government for a higher duty differential between crude and refined palm oil. Currently, it is 65 per cent and 75 per cent respectively. According to traders, higher differential would put an end to import of refined palmolein. It would also place the domestic market at the mercy of large refiners while driving merchant importers out of business.

There are several policy aberrations and distortions in the vegetable oil sector. A section of the industry and trade is sanguine that the Government would take a holistic view and come out with a policy that is equitable to all sections of the industry and trade in the forthcoming Budget.

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