The Solvent Extractors’ Association of India (SEA) has said geopolitical issues are leading to major fluctuations in edible oil prices and affecting supply chain efficiency, despite the Indian government’s move to reduce import duties.

In his monthly letter to the members, Sanjeev Asthana, SEA President, said the escalating conflict between Iran and Israel has sent ripples through global markets, fuelling fears of a broader regional war in West Asia — a region pivotal to global energy supplies. The continuation of this conflict threatens to disrupt energy-intensive industries and further strain global supply chains, already weakened by post-pandemic aftershocks and ongoing geopolitical uncertainties.

Among the commodities impacted, edible oil prices have surged by $40–50 a tonne in just one week.

Impact of external factors

Stating that domestic markets also responded in tandem with this international spike, he said the domestic market had begun correcting downward due to duty reduction. However, it has once again been influenced by global trends and moved upward accordingly.

“This underscores how, despite domestic policy measures like duty reductions, external geopolitical developments introduce significant volatility and disrupt price stability and supply chain efficiency in the edible oil sector,” he said.

Recently, the government had increased duty differential between crude and refined edible oils by reducing the duty on crude edible oil imports. Thanking the government for this decision, Asthana said the strategic move of increasing differential from 8.25 per cent to 19.25 per cent was timely and impactful to counter the inverted duty structure by exporting countries.

It discourages refined palmolein imports, thereby boosting demand for crude palm oil and revitalising the domestic refining industry. It does not impact the overall volume of edible oil imports, he said.

Kandla congestion

On the impact of heavy congestion at Kandla port, he said such a situation could impact the edible oil supply chain. Kandla is a major port where many large vegetable oil refineries are located and supply to Western and Northern India.

On June 16, two edible oil vessels (45,000 tonnes) were under discharge, while eight vessels (1.57 lakh tonnes) were waiting for berth.

Five edible oil vessels (1.59 lakh tonnes) are expected to arrive within next one week, and are experiencing waiting periods of 9-10 days. Based on the line-up of incoming edible oil vessels, this waiting period could escalate to 15-20 days, he said.

“Such prolonged delays could lead to a scarcity of edible oil in the local market impacting the supply chain. Moreover, these delays lead to heavy demurrage costs due to the extended waiting periods, subsequently increasing the overall import costs and leading to a rise in edible oil prices for the end consumers,” Asthana said.

Considering the critical nature of edible oil as an essential commodity, SEA has taken up this issue with Food Ministry, Gujarat government, and Kandla port authorities. It requested them to facilitate speedy discharge of edible oil vessels and also provide one additional berth for discharge of edible oils, till rush is over.

Welcoming the government’s decision to increase in minimum support price (MSP) for oilseeds ranging for the 2025–26 kharif season, he said it is crucial that farmers actually receive the MSP, particularly during the harvesting period.

He said FSSAI (Food Safety and Standards Authority of India) recently issued an advisory directing food business operators to avoid using the term ‘100 per cent’ on food product labels. SEA has strongly urged FSSAI to reconsider this advisory, emphasising that when such claims are factually correct and substantiated, they are legally permissible under current FSSAI regulations. “We have requested FSSAI to withdraw the advisory in light of these facts,” he said.

Trade agreement

SEA President said that the US, under bilateral trade agreement negotiation, has been aggressively promoting its agricultural exports to India, including dairy products such as lactose, casein, whey protein concentrate; and items derived from soya, corn, and wheat. It is vital that the government safeguards the interests of Indian farmers and ensures a level-playing field for domestic producers, he said.

On castor oil market, he said India fulfils nearly 90 per cent of the global demand for castor oil, earning over ₹10,000 crore in foreign exchange through exports of approximately 7 lakh tonnes. However, this year’s castor crop is expected to fall short by 3.8 lakh tonnes due to reduced acreage and yields, which may impact export volumes too, he added.

Published on June 20, 2025