New Delhi: Edible oil prices such as groundnut, soybean, sunflower and palm oil have risen by 20-30% over the last one year in India, due to recovery in demand in the country and labour shortage in producing countries due to the coronavirus pandemic, said reports.
According to the Times of India, reduction in production of palm oil in Malaysia is one of the reasons why prices of other edible oils are also increasing. The production decline is also reported to be one of the main reasons for firmness in the prices of crude palm oil in the global market.
Known for its versatility, palm oil is used in food, cosmetics and biofuels. Indonesia and Malaysia account for 90% of global supply.
According to Nikkei Asia, the pandemic has led to a decline in Indonesia’s palm oil exports, which dropped 11% in the first half of the year to 15.5 million tons. However, “the price increases have conversely caused exports to rise 6% in terms of value to $10.1 billion”. Similarly, in Malaysia, palm oil production through August this year slipped 5% compared with the same period last year.
In 2019, India accounted for 19% of global palm oil imports, while China accounted for 13%. As of September 2020, China and India were also the two biggest importers of Malaysian palm oil, according to a report. India imports around $10 billion of edible oil (15 million tonnes) annually, including 9 mt of palm oil and 2.5 mt of each soybean oil and sunflower oil, as per latest data.
As per reports, the retail prices of palm oil in Delhi and Mumbai increased to Rs 110 per litre and Rs 109 per litre, respectively, in 2020 from Rs 87 per litre and Rs 75 per litre, respectively, in 2019. Other oils witnessed a similar trend. Mustard oil’s price in Delhi and Mumbai rose to Rs 155 per litre and Rs 162 per litre, respectively, in 2020 from Rs 121 per litre to Rs 144 per litre, respectively, in 2020.
According to the TOI report, citing consumer affairs data from the price monitoring cell, the average price of mustard oil was Rs 120 per litre on Thursday compared to Rs 100 per litre a year ago.
The issue was flagged to home minister Amit Shah at a Group of Ministers meeting last week, said the report. The group discussed that while onion prices have reduced and potato prices stabilised, edible oil prices have seen a spike. The report added that it’s now up to the government to take a call on reducing the import duty on palm oil, since its price hike impacts the prices of other edible oils.
Crude and refined palm oil attract 37.5% and 45%, import tax, respectively. Imports of crude soybean oil and crude sunflower oil attract 35% import duty.