14/05/2009 (Business Standard) - Imports of edible oils are flooding the country even as the government has revised crop estimates for oilseeds for the current season. Solvent Extractors’ Association (SEA) of India has revised upward its estimate of the country’s vegetable oil import in 2008-09 (November-October) to 8 million tonnes against 7.5 million tonnes earlier.
This means edible oil imports would be over 25 per cent higher compared to last year’s imports. The April data shows over 100 per cent rise in imports of oil. During the current oil year, imports have jumped to 64 per cent in the first half, said a statement released by the SEA.
In 2007-08, India’s vegetable oil imports had touched a record high of 6.3 million tonnes while in the first six months of 2008-09 (November- April) imports have crossed 4-million-tonnes mark.
The reasons for the rise in imports are “lower-than-expected production of oilseeds in 2008-09 (October-September), increasing domestic consumption due to reduced local prices, decline in international cooking oil prices, and zero import duty on crude edible oil”, said BV Mehta, executive director of SEA.
Of the total vegetable oil imports, edible oil imports are seen at 7.5 million tonnes, while non-edible oil imports are expected to be 500,000 tonnes, the association said.
Industry players have doubted the upward revision in oil seed crop estimates announced by agriculture ministry on Tuesday. Ministry released the third crop estimates and total oil seeds crop has been revised 5.5 per cent upward from 28.12 million tonnes to 29.76 million tonnes. In the first estimate, oil seeds crop was estimated at just 25.96 million tonnes.
An industry player said that a sharp increase in imports suggest that crop is not that high and ministry might have to revise crop size downwards in final revision. Higher crop must see an increase in crushing and more supply of refined oil as well as in exports in some or the other way.
No such signals have been seen. Rather higher imports of refined oil mean crushing mills that are suffering from lower crop and lower availability of seeds would be further affected as more imported oil comes in, refineries will also have less to refine as imports of refined oil is rising.
Though prices of palm products have increased by $250 a tonne since November, imports are still attractive due to nil import duty on crude palm oil, SEA said.
Hence for the next six months, import of palm oil may continue to be over 500,000 tonnes a month, while import of soft oils — soyoil and sunflower oil — is likely to be 100,000-125,000 tonnes a month, the association said.
On the contrary, BV Mehta of SEA said, “The share of refined oil in total imports is rising fast and had the crop been higher the imports would not have gone up. This suggest that zero duty structure need not continue for long.”
Import of refined oil during November 2008 to April 2009 is reported at 614,000 tonnes (15 per cent of total imports) compared to just 92,967 tonnes last l year (4 per cent) and crude edible oil is reported at 3.47 million tonnes (85 per cent) compared to 215,000 tonnes (96 per cent) for the same period last year.