Edible oil prices in India have surged to the highest level in over a decade this month, resulting in distress among millions of Indian households.
The prices of six edible oils — groundnut oil, mustard oil, vanaspati, soya oil, sunflower oil, and palm oil — have risen between 20% and 56% at all-India levels in the last year, as shown by data available on the Department of Consumer Affairs website.
The retail price of mustard oil (packed) has increased by 44% to Rs 171 per kg in May this year, from Rs 118 per kg in the same month last year.
The prices of soya oil and sunflower oil, too, have increased by more than 50% since last year.
The Department of Food and Public Distribution held a meeting with all stakeholders to discuss ways to address the issue of ‘abnormal rise’ in local prices.
Food Secretary Sudhanshu Pandey asked states and industry stakeholders to find ways to soften the prices.
There has been a 62 percent spike in the prices of domestic edible oil, according to Pandey.
(SOURCE- The India Today)
Hike in Edible Oil Price –
The increase in domestic prices is a reflection of international prices because India meets 56% of its domestic demand through imports.
In the international market, prices of edible oils have jumped sharply in recent months due to various factors.
The price of crude palm oil (for the most actively traded futures contract at the Bursa Malaysia derivatives exchange) was quoted at 3,890 ringgit per ton on May 25, compared to 2,281 ringgit a year ago.
At the Chicago Board of Trade (CBOT), the closing price of soya bean for July delivery was at $559.51 per ton on May 24, as against $306.16 at this time last year.
The prices of soya beans at CBOT and of Malaysian palm oil determine the prices Indian consumers pay for edible oil.
Even the Food and Agriculture Organization (FAO) price index (2014-2016=100) for vegetable oils, an indicator of the movement of edible oil prices in the international market, has soared to 162 this year, compared to 81 in April last year.
Production and Consumption of Edible Oil in India-
Edible oil companies in India import from different countries to meet the demand of Indian consumers.
According to the Agriculture Ministry, the demand for vegetable oils has been in the range of 23.48–25.92 million tonnes between 2015-16 and 2019-20. However, domestic supply in this period has been much lower, in the range of 8.63–10.65 million tonnes.
In 2019-20, domestic availability of edible oils from both primary sources (oilseeds like mustard, groundnut, etc.) and secondary sources (such as coconut, oil palm, rice bran oil, cottonseed) was only 10.65 million tonnes against the total domestic demand of 24 million tonnes — a gap of over 13 million tonnes.
Thus, India depends on imports to meet its demand. In 2019-20, the country imported about 13.35 million tonnes of edible oils worth Rs 61,559 crore, or about 56% of the demand.
This mainly comprised palm (7 million tonnes), soybean (3.5 million tonnes), and sunflower (2.5 million tonnes).
The major sources of these imports are Argentina and Brazil for soya bean oil; Indonesia and Malaysia palm oil; and Ukraine and Argentina again for sunflower oil.
It may be noted that India is the highest importer of edible oil in the world and over 60 percent of domestic needs are met through imports. This means international prices do play a big role in determining prices in India.
International crude edible oil rates have sharply increased this month, compared to the price a year ago. This includes crude palm oil and crude soybean oil.
The sharp rise in edible oil prices has sparked major concern among government officials as the commodity impacts a much wider portion of the population in comparison to other essentials oils like petrol and diesel.
(SOURCE- The Indian Express)
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