Agri Business

Free import of refined edible oil will help contain prices quickly

G Chandrashekhar | Updated on May 25, 2021

Duty on edible oil imports likely to be slashed for the next few months

The high-level meeting involving three Secretary level officials of Agriculture, Food and Consumer Affairs with edible oil processors, millers, importers and traders as well as several State governments held on Monday (May 24) to review the high prices of edible oil saw a chorus of demands from trade and industry representatives including fiscal relief in terms of exemption from GST on edible oil and strong hint that the Essential Commodities Act should not be invoked.

The commodity derivatives market came under attack from several speakers who alleged rampant speculation in the bourses and blamed futures trading for the strident price rise. Sadly, no one provided even an iota of evidence in terms of data to support the claim of rampant speculation.

Be that as it may, the only sensible and practical suggestion made by a speaker from Jaipur was that all restrictions on import of refined oils should be lifted. Indeed, this is the suggestion the government must seize in order to contain cooking oil prices. Primarily, the government is concerned about food inflation. So, every endeavour must be made to augment supplies and rein in prices for the coming months.

Free import of refined oils at least for a limited period is critical. There will be little time lag between import and distribution of refined oils for human consumption, unlike crude oils that need to go through the process of refining before distribution which itself provides a window for speculation.

It would also make economic, social and political sense for New Delhi to quickly resume distribution of cooking oil through the government’s welfare programmes such as PDS.

Earlier, Agriculture Secretary cautioned traders against hoarding in anticipation of higher prices and asserted that the government has tremendous reach to know where the stocks are. Although global prices were falling, there was no evidence of a corresponding decrease in domestic prices, he remarked.

Expressing concern over alarming dependence on import, the Food Secretary emphasised that the country needs to move towards substantial self-reliance or Atmanirbhar in vegoils.

While the government has noted most of the suggestions, it appears likely that duty on edible oil imports may be slashed at least for the next few months. Also, processors, importers and trades will be mandated to declare stocks. Currently, close to 20 lakh tonnes of imported oils are in ports and in pipeline.

The author is a policy commentator and agribusiness specialist. Views are personal

Published on May 25, 2021

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