The Hindu Business Line : Edible oil prices shoot up by 20-50%

After gold, it is the turn of edible oils to get affected by international factors. Consumers, who have witnessed huge increase in the prices of the yellow metal in the last few weeks, are in for yet another shock.

Prices of edible oil have shot up 20-50 per cent due to a sharp rise in the price of raw oil globally.

While the price of sunflower oil (packed) has gone up to Rs 100 from Rs 78, soya oil reached Rs 70 (Rs 55) and rice bran oil Rs 66 (Rs 44).

Bio-diesel factor

“This is largely attributed to huge sops being given to bio-diesel by countries in the European Union,” said Mr O.P. Goenka, a national expert on edible oil and former President of the Federation of Andhra Pradesh Chambers of Commerce and Industry.

“The EU member countries offer huge subsidies and high prices for bio-diesel. Encouraged by this lucre, part of crude palm oil and rape seed oil stocks are being diverted to units that produce bio-diesel,” he said. This has resulted in scarcity, raising prices globally.

Mr Rajender Prashad Agarwal, President of AP Oil Millers’ Association, said the price of soya oil in the retail market had gone up to Rs 70 a kg from Rs 55 a month ago. “International price for this soft oil is ruling at $1,450 a tonne,” he said. He said about 20 per cent of edible oil source was going to the bio-diesel industry, leading to a sudden shortage for the edible component.

Some good news

However, there is good news. The phenomenal increase in cotton and groundnut production have helped in stabilising cottonseed and groundnut oil.

While international developments resulted in rising prices, increase in domestic consumption of edible oil is also a contributing factor.

“Per capita consumption, which was hovering as low as 5-6 kilograms annually increased to 11-12 kilograms this year. The rise was up to 40 per cent in the last two years,” Mr Goenka said.

This was due to a sharp increase in purchasing capacities of the consumers across the country. Mr Agarwal suggested removal of the four per cent value added taxon edible oils as it benefited the farming community.

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