India’s important vegetable oil industry group urged the government to ditch an extension to reduced tariffs on palm oil, and lift a ban on futures trading, after imports surged by 18% to their highest in a year.
India, the top vegoil importer, last month brought in 1.17m tonnes of palm oil (including processed palm olein as well as crude palm oil), up by nearly 180,000 tonnes month on month and the highest since September last year, the Solvent Extractors’ Association of India (SEA) said.
The growth reflected a particularly large fall in the country’s palm oil prices, which since early May have more than halved to $920 per tonne, as landed in the port of Mumbai.
Prices of rival soyoil, by contrast, have declined by a more modest 31%, to $1,344 per tonne, allowing its premium over palm oil to soar from $37 per tonne to $424 per tonne over the past five months.
Indeed, while India’s soyoil imports rose by 7.0% month on month in September, at 261,815 tonnes they remain below the levels which reached as high as 519,566 tonnes earlier in the year.
And palm oil looked set to reinforce its advantage, SEA said, viewing the that “price difference of over $400 between crude palm oil and soyoil would encourage larger import of crude palm oil in coming months”.
The fall in prices was also a “great relief to consumers during the current festival period” in driving lower domestic values of vegetable oils.
However, the tumble in prices presented worries too, in undermining prospects for domestic production of oilseeds, which SEA as part of its remit strives to promote, in a drive for India self-sufficiency.
Indeed, the extent of the price falls in India’s oilseed sector had driven them “very near to the minimum support price” guaranteed by the government, the SEA said, adding that this represented “a cause of concern to government, industry and farmers.
“SEA has appealed to government to consider increase in import duty on crude palm oil and RBD palmolein by at least 10% to support the farmers”, and help the grower to receive a “remunerative price for his produce during harvest period”.
Furthermore, the association said that there was an “urgent need” to lift a ban on trading in crude palm oil and soyoil imposed in December last year to enable vegoil groups to limit their exposure to the volatile markets.
“In absence of futures trading and hedging facility, importers of palm oil and soyoil suffered heavy financial loss during last three-to-four months.”
The comments come two weeks after the government extended by six months, to March 2023, a cut in taxes on edible oil imports as introduced in February.
The current regime has scrapped completely the import tax on crude palm, soy and sunflower oils, although with a 5% agri cess and a social welfare cess, the effective levy comes in at 5.5%.
For refined palm oil types, the effective duty is 13.75%, while for refined soy and sunflower oils it is 19.25%.