The Hindu Business Line : Govt may hike crude soya oil tariff value

THE Union Government is considering a review of its decision to cut the tariff value of imported crude soyabean oil to $485 a tonne from $565. It is likely to hike the value in tune with the prevailing global prices, according to sources.

The move follows protests from various bodies of the edible oil industry, the sources said. These associations had lodged the protest with the Finance as well as the Commerce Ministry, saying it could affect them as well as the farmers. The tariff value is the base price on which the customs authorities compute the import duty. For crude soyabean oil, the duty is 45 per cent. The Government had announced the cut in the tariff on March 1.

On February 15, tariff values were reduced for the entire palm oil complex, comprising crude palm oil (from $454 a tonne to $400), RBD or refined, bleached, de-odourised palm oil (from $489 to $415), `others-palm oil' (from $471 to $410), crude palmolein (from $479 to $412), RBD palmolein (from $497 to $425) and `others-palmolein' (from $488 to $420). The bodies, primarily the Solvent Extractors Association of India and Soyabean Processors Association of India, had expressed concern over the fact that the cut in the tariff value had come at a time when arrivals of the rabi oilseeds crop, especially mustard/rapeseed, had begun.

"Not only that, the tariff value announced is far lower than the prevailing market price. We are told that the recommendation had gone to the Finance Ministry a month ago before the actual notification was issued. Even then, the global prices were higher. There is no justification for announcing such a low tariff value," an official of the Solvent Extractors Association said.

Crude soyabean oil is quoted at $505.30 (Rs 22,075) a tonne f.o.b for March delivery, while for May delivery it is $500 (Rs 21,850).

"Including freight, it will easily be over $560 (Rs 25,000) a tonne. Even in February, it would have been about $530," the official said. Currently, soyabean oil in the domestic market is quoted at Rs 375.80 for 10 kg.

Soyabean prices, which had been ruling low until the start of February, have begun to gain on reports of fall in Brazilian crop. The soyabean crop in Brazil is expected to be 55 million tonnes, lower than initial estimates of 61 million tonnes due to drought.

"One effect of the lower tariff value will be that the oilseeds crop that is arriving in the market now could get lower prices. We don't want the farmers to get a price lower than the minimum support price fixed by the Centre," the official said.

Currently, mustard is quoting a little lower than the minimum support price of Rs 1,700 a quintal, though it has recovered from the low of Rs 1,450 it hit a couple of weeks ago.

"The industry is keen on the farmers getting the support price as it ensures that they will continue to cultivate oilseeds. It will reduce the country's dependence on edible oil imports but more importantly, it will ensure the solvent industries supply of raw material," the official said.

With the farmers' angle coming into play, the Centre was expected to announce a hike in the rate soon, sources said.

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