Vegetable oil imports jumped 26% in November on dumping from Malaysia and Indonesia due to zero duty on palm products in the last five years and reduced demand for crude palm oil for bio diesel, pushed the export of palm products to India to reduce burgeoning stock held by the exporting countries,according to Solvent Extractors’ Association of India.
The disparity in crushing currently stands at $ 40 to $ 50 a tonne, which is not viable for a crusher. Also, the margins have decreased and it has been negligible for the past two years, which has had a negative impact.
In November, vegetable oil imports stood at 1.2 million tonnes compared to 944,309 tonnes last year.
High prices of soybean and lower realisation for soy oil and soymeal in export markets resulted in lower crushing and availability of domestic oil as well as the anticipation of the government increasing import duty, imports of vegetable oils increased.
Crude soybean oil imports in November increased to 121,097 tonnes compared to 14,980 tonnes last year, a whooping rise of 708%. RBD oil imports last month stood at 14,980 tonnes compared to 208,076 tonnes last year, a fall of 92%.
Last oil year, edible oil imports stood at 11.8 million tonnes, which was record imports and this year it is expected to go up to 12.3 million tonnes, which will also be at an all-time high. Domestic consumption of edible oil is rising 2-3% every year.
The sector has asked the government raise the import duty on crude palm oil to make the refining and fats business viable. Owing to a 5% difference between crude and refined oil, the edible oil business has suffered immensely. Since the edible oil crushing and refining business offers disparity, large players are focusing on value-added segment, where business potential is quite high.
Solvent Extractors’ Association of India has asked the government to raise import duty on crude vegetable oil to five% from 2.5% currently and refined oil to 15% from 7.5%.