The Hindu Business Line : ‘Re-impose import duty on edible oil before harvest begins’

Agri-Biz & Commodities - Oilseeds & Edible Oil
Industry & Economy - Excise and Customs
States - Tamil Nadu
‘Re-impose import duty on edible oil before harvest begins’

Danger of further decline in oilseed prices, says TNAU.

‘For the time being, there is no alternative to imports but they have to be managed in a way that interest of both growers and consumers are not compromised.’

Our Bureau

Coimbatore, Oct. 2 The Tamil Nadu Agricultural University has sought immediate intervention of the Government for re-imposition of import tariff on edible oil, lest it wreck the lives of oilseed farmers.

The Domestic and Export Market Intelligence Cell (DEMIC) of the farm varsity has, after reviewing the present scenario, urged the Government to re-impose the import tariff before the start of oilseeds harvest, later this month.

“Apart from resorting to such a short-term measure, the Government should look to adopt a holistic approach to promote higher domestic production through subsidy and other incentives,” says Dr N. Raveendaran, Professor and Project Coordinator, and Ms D. Sriakila, Senior Research Fellow of DEMIC.

“There is danger of a further decline in oilseed prices due to zero import tariff. Already, oilseed prices are tending to weaken compared to commodity prices, which are on the upswing. As a result of the tariff relaxation, the market is flooded with imported edible oil albeit at cheap rates compared to earlier years,” he said and noted that the edible oil import could exceed 7 million tonnes (mt) in 2007-08, having reached 4.155 mt till July 2008.

“Such high imports would be detrimental to oilseed producers in India,” he said and pointed out that to curb the soaring prices of essential commodities, the Union Government slashed the import duty for refined oils to 7.73 per cent and allowed duty-free imports for crude vegetable oils.

Production short

With domestic production of edible oils falling short of effective demand, the deficit in domestic supply is being met by imports. For the time being, there is no alternative to imports but such imports have to be managed in a way that the interest of both growers and consumers are not compromised, argued Dr Raveendran.

Palm oil from Malaysia and Indonesia account for about 75 per cent of such imports and the rest comprise of soy oil from Brazil and Argentina. “High international prices for soy oil and larger domestic supplies limit its imports, and rising imports tend to have a wide influence on the domestic edible oil markets, domestic oil seeds growers, processing industries and consumers. A timely review of the tariff mechanism in the interest of the farmer, processor and consumer is essential.”

The DEMIC study showed that the per capita edible oil consumption in India at 11 kg/year was lower than that of most developed countries. The demand, however, is expected to increase from 12.7 mt in 2007-08 to 14.9 mt in 2011-12.

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