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Harish Damodaran

New Delhi, Jan 6

Edible oils and rice have emerged as the Centre’s latest inflationary bugbears, replacing the earlier prominent villains, namely wheat and pulses.

The year just ended has seen retail prices of mustard oil go up by Rs 8-10 a kg in major centres, while surging by up to Rs 20 for groundnut oil. On the eve of the New Year, the consumer in Delhi was paying Rs 66 for a kg of mustard oil, against Rs 58 on December 31, 2006, according to data compiled by the Price Monitoring Cell in the Department of Consumer Affairs.

The situation is worse for groundnut oil, where retail prices have zoomed from Rs 74 to Rs 95 a kg in Mumbai and from Rs 92 to — hold your breath — Rs 121 a kg in Delhi. Even consumers of vanaspati — the poor man’s vegetable fat that also serves as a substitute for desi ghee — have had no respite, with prices rising from Rs 56 to Rs 62 in Delhi and from Rs 58 to Rs 68 a kg in Mumbai.

The spiral in domestic prices has been mainly due to the runaway global inflation in vegetable oils, consequent to their diversion towards bio-fuel manufacture.

Crude palm oil is currently being imported at $990 a tonne (cost & freight, Mumbai), compared to around $600 a year ago, while the landed cost of crude de-gummed soya oil has correspondingly increased from $720 to $1,180 a tonne.

Adding to this has been the lacklustre domestic production.

The 2007 kharif groundnut crop is estimated at 5.18 million tonnes (mt), which is more than the 3.28 mt for 2006, but a far cry from the 6.30 mt, 5.26 mt and 6.86 mt levels of the preceding three seasons.

Worse, the prospects for the coming rabi harvest are none too bright, with sowing of rapeseed-mustard, sunflower and groundnut being lower by 7.7, 1.8 and 0.6 lakh hectares, respectively.

The other commodity that is causing nightmares to policymakers is rice, which is now retailing about Rs 3 a kg higher than just a year back. There is an ironical contrast here with wheat.

In case of the latter, the Centre has been struggling to procure sufficient grain to replenish its godowns. On top of that, it has contracted imports of 7.3 mt since 2006-07.

In rice, however, there has been no trouble whatsoever with procurement, including in the current season (October-September), where aggregate purchases may well touch or even exceed last year’s 25 mt level.

Moreover, till early November, rice was being freely exported, with shipments totalling 4.75 mt in 2006-07.

But despite that, wheat prices have actually fallen by a rupee over last year, even as rice has gained by Rs 3 a kg.

In fact, India is probably the only country to have witnessed a decline in wheat prices — that too when benchmark rates at the Chicago Board of Trade (CBOT) have nearly doubled in this period!

Besides wheat, there has also been some respite on the pulses front.

This is more so in gram, where prices have eased by Rs 4-6 a kg, even while arhar (tur or pigeonpea) continues to boil. Milk prices, too, have shown a perceptible increase over the last couple of years.

More Stories on : Oilseeds & Edible Oil | Rice | Economy

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