The Hindu Business Line : Soya oil importers seek reduction in tariff value

Trade bodies and large importers have reportedly approached the Government for a review of the tariff value regime. The current tariff value on crude soyabean oil is $535 a tonne as revised on March 14, while the current import price is $530 a tonne (cost, insurance and freight - c.i.f).

The landed cost including payment of customs duty at 45 per cent works out to about Rs 34,000 a tonne.

According to brokers, currently, crude soya oil is traded at Rs 34,500 a tonne ex-port - JN Port or Kandla. In recent weeks, importers have found their margin squeezed because of falling prices in the domestic market.

Many complain about disparity between domestic and import prices. Yet, they continue to import to keep the payment cycle going.

Given the current domestic market conditions - large stock of rapeseed/mustard, soft prices of most vegetable oils and beginning of oilseed planting season - it would be most inopportune to consider any reduction in tariff value.

In April, soyabean oil imports totalled 1.5 lakh tonnes (lt). For May, arrivals are projected at about 1.2 lt. A similar quantity is said to be slated for June and a bigger volume for July.

Any reduction in tariff value at this point of time will further depress domestic prices and send negative signals to oilseed growers. In addition to resulting in undue profits for importers, it will further jeopardise the liquidation of the massive rapeseed/mustard inventory currently with National Agricultural Cooperative Marketing Federation.

Over the next four months, international and domestic vegetable oil market will be largely weather-driven. Weather aberrations can potentially result in price spikes. The policymakers must constantly monitor the market for signals that can impact prices. A view on tariff changes can be taken after planting is completed by mid-July.

Projected imports of edible oil during May-October, the second half of the oil year 2004-05, are close to 30 lt. Imports during the current month are estimated at about 4.5 lt.

In the first half of the year, arrivals totalled 22 lt. Aggregate imports for the whole year would therefore be in excess of 50 lt. as compared with 44 lt in 2003-04.

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