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There appears to be no respite for the Indian consumers on the edible oil front. Consumers should brace themselves for difficult times ahead, as Indonesia, India’s main source of palm oil imports, banned exports of all edible oil raw materials on Friday to ease domestic shortage.
Indonesian President Joko Widodo announced on Friday the suspension of all cooking oil and raw material exports from April 28 until further orders. The decision comes in the midst of a severe shortage and skyrocketing prices for edible oils in the South-East Asian nation.
This is expected to aggrevate the Indian edible oil market , which is already reeling from inflation amidst post-Covid consumption push coupled with the Ramadan period and marriage season.
"This uncalled-for action (by Indonesia) has got massive repercussions for India. Local prices in Indonesia may fall as a result of this decision, but prices in India may skyrocket. It is going to be a difficult time," Atul Chaturvedi, President, Solvent Extractors' Association of India (SEA) told Businessline.
Oil imports to India
India imports about 8.3 million tonnes of palm oil including crude palm oil (CPO), Palmolein and PFAD (Palm Fatty Acid Distillate), nearly half or which(4 million tonnes) comes from Indonesia. Malaysia is the second largest source of palm oil (3.8 million tonnes), with Thailand accounting for the remaining half-a-million.
Edible oil prices have been on the rise due to disruptions in sunflower oil since the outbreak of the Ukraine-Russia crisis. The latest development from Indonesia is feared to have an impact on the prices. CPO prices are already up by 15 per cent from $1,594 per tonne (CIF Indian port) to $1,828 since February 2022. This has had an effect on non-palm oils, such as Crude sunflower oil, which has increased by 41 per cent from $1,506 to $2,125 in the past one month.
However, Sudhakar Rao Desai, President of the Indian Vegetable Oil Producers' Association (IVPA raised doubts about the sustenance of the Indonesian decision as the country may find it difficult to handle huge quantities of palm oil it produces. "Indonesia exports nearly 20 lakh tonnes of palm oil per month. Given the storage constraints in Indonesia, I don't think they would be able to sustain after fifteen days. I don't see much panic," he said.
Edible oil expert, Govindbhai G Patel from Rajkot, maintained that to ease the possible supply shortage and control the price rise situation, there would be a requirement of diplomatic intervention besides the tax measures of removal of the existing five per cent import duty on edible oils. “This may give some breather till the situation normalises,” he said.
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