Cooking oil prices in retail markets across the country have increased almost every month in the past year, despite the Union government taking several measures to cool them. With the global supply of sunflower oil now affected due to the Russia-Ukraine war, any immediate relief for consumers is unlikely.

According to data compiled by Consumer Affairs Ministry, pan-India average retail prices of groundnut oil, mustard oil, vanaspati, soyabean oil, sunflower oil and palm oil were between ₹137.3 and ₹191.88 per litre in February and were 10.8-31.7 per cent higher from the levels a year-ago.

However, in the case of soyabean oil and sunflower oil, prices in February were lower from the May-November 2021 period. Also, groundnut prices were down during the August-November 2021 period. For all other cooking oils, current prices are higher.

Stockholding limit

The Union Food Ministry, on February 3, notified the stock limit order on edible oils and oilseeds making it “mandatory” for States to implement it and also extended the validity of the limits until June 30, which was to expire on March 31. The earlier order issued on October 8 had “empowered” States to impose the stock limits.

The Ministry had claimed that the stock limit would curtail any unfair practices like hoarding, black marketing and check price increases. It had also asked the retailers, wholesalers and processors to conform to the quantitative limits by March 4 by disposing of the surplus in one month.

But rates of all these edible oils which are monitored by the government have increased by 0.1-7.3 per cent during February from the January level, implying no impact of the order.

“When there is a fundamental problem of global supply constraint after diversion of palm oil to biodiesel, the government reaction is more of pressing a panic button and it is unnecessarily blaming traders,” said an industry executive, who had attended several meetings with government officials. The government has been “arm twisting manufacturers” to cut prices instead of accepting the fact that domestically produced edible oils have to be sold at par with global prices as the country imports about 60 per cent of the demand, he said requesting anonymity.

Members of the Solvent Extractors’ Association of India (SEA) were last month advised by the industry body to cut the maximum retail price (MRP) by ₹3-5 per kg with immediate effect to soften the prices.

The Centre last month reduced the agricultural infrastructure development cess (AIDC) on crude palm oil (CPO) to 5 per cent effective from February 13 from the current 7.5 per cent which will help it to widen the gap between crude and refined oil. After this reduction, the effective gap stands at 8.25 per cent between CPO and RBD palmolein. The effective duty on these crude edible oils is now 5.5 per cent.

Rising prices

Since July 2021, the Centre has taken various measures, particularly reducing import duties on crude and refined edible oils to control prices and inflation. However, since India imports nearly two-thirds of its requirement and global prices have been continuously surging, there has been no relief from high cooking oil prices.

With the Russian-Ukraine crisis compounding the problem, palm oil has surged to a record high and turned into the costliest edible oil for India. On Wednesday, crude palm oil for delivery in May traded at 6,658 Malaysian ringgit a tonne ($1,587.5). Edible oil prices are currently skyrocketing since Ukraine accounts for over 70 per cent of the global exports market and supplies from that country have come to a halt in view of the Russian aggression.

Even otherwise, Indian consumers can expect little relief from high edible oil prices at least until May as a combination of factors such as labour shortage in South-East Asia oil palm plantations, surging crude oil prices and dry weather in South America will keep them elevated. These factors have resulted in palm oil and soyabean prices gaining sharply this year.

Edible oil prices in the world are skyrocketing and this “imported inflation“ is not only giving sleepless nights to all stakeholders but also to the hapless Indian consumers, said SEA President Atul Chaturvedi last month. “These prices are showing no immediate signs of moderating and some exporting countries like Indonesia have also started regulating exports of Palm oil by way of licensing. The tensions in Black Sea region between Russia and Ukraine is adding fuel to fire into the sunflower oil complex,” he said adding inclement weather in Brazil has also reduced soyabean crop drastically.

(With inputs from Subramani Ra Mancombu, Chennai)

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