Agri Business

SEA favours re-look at tariff rate quota in falling edible oil market

BL Mangaluru Bureau | | Updated on: Jun 23, 2022

SEA says allowing the TRQ at nil duty can prove disastrous for the domestic oilseed farmer.

Solvent Extractors’ Association (SEA) of India has stressed the need for a re-look at TRQ (tariff rate quota) for the import of soyabean and sunflower oil in view of the fall in the prices of edible oil globally.

In his monthly letter to the members of SEA of India on Thursday, Atul Chaturvedi, President of SEA, said the price of CPO (crude palm oil) crashed now by $625 from the highest of $2010 a tonne in March, soyabean oil down by $384, and sunflower oil by $285.

“We had earlier, immediately on the announcement of TRQ, drawn the attention of the Government that TRQ allocation for sunflower and soyabean oil of 4 million tonnes at nil duty could be disastrous in case price falls in the international market, which is turning out to be true and alarming,” he said.

Also considering the lifting of the CPO export ban by Indonesia, increase in availability of sunflower oil from Ukraine by road through neighbouring countries, and the expected higher production of palm oil and soya oil in the world will push the price further down, he said.

By allowing the TRQ at nil duty, the Government would bind itself, he said, adding, this can prove disastrous for the domestic oilseed farmer.

“We have strongly suggested to the Government that TRQ is no longer required as the basic objective of reducing inflationary burden on consumers has already been met with massive fall in import prices of palm, soya and sunflower oil. The need of the hour is to ensure markets don’t slide further, as it will dishearten oilseed farmers and impact our long-term goal of augmenting oilseed production in the country,” Chaturvedi said.

MSP

Referring to the recent announcement of increase in the minimum support price (MSP) for kharif crops, including oilseeds, for 2022-23 season, he said the Government should use MSP as a tool for both encouraging the crops that are in short supply like oilseed and pulses, and disincentive to reduce crops such as wheat and rice that are abundant. MSP should be used for offering higher MSP or special incentives, particularly for farmers from Punjab and Haryana, for shifting their area from rice to maize in kharif crop, and to rape-mustard crop from wheat in rabi crop to balance ecosystem, he said. The Government had recently raised the MSP for groundnut by 5.41 per cent, sunflower seed by 6.40 per cent, and soyabean by 8.86 per cent.

Monsoon

Quoting the latest statement of India Meteorological Department, he said the monsoon has covered all of southern and eastern India and most of the central state of Madhya Pradesh. India’s annual monsoon rainfall has covered more than half of the country and conditions are favourable for its advance into central, northern and western regions this week. The monsoon’s progress will help farmers accelerate sowing of summer crops, which has been lagging due to below-normal rainfall in the first half of June, especially in central India.

He said the latest Agri Ministry report indicates oilseed sowing is down by 18 per cent compared to same period last year and reported at 475,000 ha (5,79,000 ha). But sowing has picked up now due to revival of monsoon, he said.

Verdict on IGST

On the recent verdict of Supreme Court striking down the levy of IGST on ocean freight in CIF contracts, he said Indian import of crude soya and sunflower oil is mostly on CIF terms. Importers will now be relieved that they will not have to pay the 5 per cent IGST on ocean freight. “The Government must now clarify that those who have paid the IGST and not claimed ITC of the same can claim the refund and ease the procedures for such refunds,” he said in the letter.

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Published on June 23, 2022
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