New Delhi: The prices of edible oil have started touching the sky during the festive season. Palm oil prices have seen an increase of 37% in the last one month. Due to this, the household budget of the common man has deteriorated. The expenses of restaurants, hotels and sweet shops which use this oil to prepare snacks have also increased. The prices of mustard oil used in households have also increased by 29% in the same period. This surge in oil prices has come at a time when retail inflation has reached a nine-month high of 5.5% in September. A report by Times of India (TOI) reveals these figures. Inflation has increased due to high prices of vegetables and food items. Due to this, the possibility of reduction in interest rates by the Reserve Bank of India (RBI) has reduced at present. Last month, the government had increased the import duty on crude soybean, palm and sunflower oil. This has led to a rise in prices.
Effect of increase in import duty
With effect from September 14, import duty on crude palm, soybean and sunflower oil was increased from 5.5% to 27.5% and on refined edible oil from 13.7% to 35.7%. These oils constitute a major part of India’s edible oil imports. Officials have said that global prices of crude palm, soybean and sunflower oil have increased by about 10.6%, 16.8% and 12.3% in the last one month.
India imports about 58% of its edible oil demand. It is the second largest consumer and largest importer of vegetable oils. Consumers may have to face higher prices for the next few months. The reason is that there is less possibility of the import duty being reduced.
Steps taken for the benefit of farmers
The government had earlier said that these adjustments are part of the government’s ongoing efforts to support domestic oilseed farmers, especially with the new soybean and groundnut crops coming into the markets from October 2024. Industry sources believe that it is necessary to maintain the existing import duty system to ensure that farmers get good prices for oilseeds.
Times of India quoted Solvent Extractors Association (SEA) executive director BV Mehta as saying that if we want to make ourselves self-reliant in the matter of edible oil, then farmers will have to be encouraged to cultivate oilseeds. This will happen only when farmers get good prices for years. We will not go for excessive import of oil.
The unexpected rise in global prices of major edible oils has affected the prices of all edible oils. While increasing the duty, the government had considered several factors including increase in global production and high global ending stocks.