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G. Chandrashekhar

MUMBAI, June 9

A KOCHI-DATELINED report (BL June 3) on suspected adulteration behind the steep fall in coconut oil prices should come as no surprise to those watching the developments in the country's edible oil sector.

In general, adulteration of edible oil — blending cheaper oil with premium oil — has always been profitable business for unscrupulous players. Higher the price of premium oil greater is the propensity to adulterate it with low priced oil.

For ages, raw groundnut oil — the premium cooking medium and favourite of the masses — had been mixed with castor oil to the extent of 5-10 per cent since it used to be the cheapest vegetable oil in the country and groundnut oil the most expensive. After refined palmolein started to come in some 25 years ago, it became a ready adulterant as it blended well with groundnut oil. While unauthorised blending of refined palmolein with raw groundnut oil is an infringement of the law and does not advance consumer welfare, it does not hurt consumer health.

In the last two years, there have been reports of high-priced refined sunflower oil mixed with cheaper oils. There were deaths due to dropsy following suspected adulteration of mustard oil. The latest is the widespread belief that what is being imported as crude olein is either being palmed off as refined olein or is perfunctorily refined and sold as refined palmolein. These sub-standard oils largely affect the institutional consumers such as restaurants, halwais and unorganised eateries.

In case of coconut oil, blending with palm kernel oil should come as no surprise, which has always been highly priced. The consumers have always paid as much as 100 per cent more for coconut oil than their counterparts elsewhere in the world. This is because of the continuing embargo on import of coconut oil. Even today, when quantitative restrictions on imports have been removed, in the entire vegetable oil complex, import of coconut oil alone is routed through State trading enterprise. No imports have therefore taken place despite a high-level of customs duty. However, coconut oil prices have fallen in the domestic market because of rising import of palm kernel oil, which is a close substitute.

Palm kernel oil is akin to coconut oil in its quality characteristics. Its arrivals into the country have been rising steadily. According to vegetable oil import data published by the Solvent Extractors' Association of India, imports doubled from 14,000 tonnes in 1999-2000 (oil year November to October) to 29,600 tonnes the following year and in 2001-02. The imports expanded further by 70 per cent to 49,500 tonnes.

In the current oil year, imports increased as over 42,000 tonnes (between November 2002 and May 2003) of palm kernel oil arrived in the country. Interestingly, the Finance Ministry has not specified any tariff value for palm kernel oil. As the liberal import policy and consequent large arrivals of substitute oils have pulled coconut oil prices down, there is concern in States such as Kerala. Politicians and trade lobbies are ready to attack the liberal import policy, purportedly to protect coconut growers in the State.

However, despite consumers paying high price for decades, the small coconut farmer in Kerala has continued to remain small.

The benefit of high consumer prices of coconut oil has not flowed to the small grower. Falling coconut oil prices have now created an opportunity for policy makers to address the issues faced by small coconut farmers and make them competitive in terms of cost and quality.

Be that as it may, across the country implementation of food laws has been extremely tardy. Adulteration is rampant in many foods, but perhaps none as much as edible oil because of chronic shortage and volatility in prices.

Traders and others are able to get away with adulteration because Government's food quality inspection services are lax. Inadequacy of inspectors, lack of professional competence and of course human frailties all combine to defeat the intent of the law.

The Prevention of Food Adulteration Act and rules thereunder have to be implemented by State governments, many of which are either not interested in the job or the matter does not figure in their priority list.

Almost all the States failed to implement the edible oil packaging order promulgated by the Centre in 1998.

Until Governments crack down on adulteration and provide exemplary punishment, the nefarious activity will go on.

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