The saga of OIL ....

The prices of six edible oils — groundnut oil, mustard oil, Vanaspati, soya oil, sunflower oil and palm oil — have risen between 20% and 56% at all-India levels in the last one year, data on the Department of Consumer Affairs website show. The retail price of mustard oil (packed) has increased by 44% to Rs 171 per kg on May 28 this year, from Rs 118 per kg on the same date last year. The prices of soya oil and sunflower oil, too, have increased more than 50% since last year.

In fact, the monthly average retail prices of all six edible oils soared to an 11-year high in May 2021. The sharp increase in cooking oil prices has come at a time when household incomes have been hit due to Covid-19.

India heavily depends on imports to meet its demand as domestic production is not enough to meet the demand as per ministry of agriculture ( another great source for income for the government in the name of Import Duty which could be as high as 40% to 50% . While Palm oil (import dependency ~ 62%) , Soya Oil (import dependency 21% roughly) or Sunflower oil (import dependency roughly 16%) need to be imported to meet-up domestic demand , we are quite self sufficient in respect to mustard seeds ... offered logic somehow cannot justify the price hike in this category.

Interestingly "China factor" is also hitting hard in respect to increase of Palm oil price for India (!!) in recent days - India mainly procures palm oil from Indonesia & Malaysia and with New Delhi’s move to restrict imports of refined palm oil and palmolein after Malaysia’s Prime Minister criticised India’s actions in Kashmir and its new citizenship law, the supply chain got badly impacted ( https://www.reuters.com/article/us-india-malaysia-palmoil-exclusive-idUSKBN1ZC0T6) .. though diplomatic channel subsequently moved ahead to neutralise the situation - the "China factor" came in between : according to Malaysian Palm Oil Council, Malaysia's Palm Oil exports to China increased by 438, 747 tonnes or, 31.1% to about 1.85 million tonnes for the period from January through August of 2020, China has also announced it's commitment to purchase 1.7 million tonnes of Palm Oil from Malaysia till 2023 !!! Increase in the cost of import changed the price dynamics back home in India raising the price for several products using palm oil as raw material !!

It is also to be noted that palm-oil based biodiesel is in demand now , especially in China & the USA. Palm oil biodiesel is nontoxic and biodegradable in addition to emitting far fewer carbon emissions than traditional petro-diesel - hence we may not expect any relief in near future unless we source the same from some other countries or create any alternate channel.

Now, similarly for Soya we depend on Brazil and Argentina , owing to pandemic they are in major crisis in respect to production affecting surplus for export ! We are also having a similar crisis in respect to Sunflower seeds as we import them from Russia and Ukraine , here apart from pandemic , they have had much lower production impacting the export (https://www.financialexpress.com/market/commodities/prices-of-edible-oils-to-stay-high-till-march-experts/2167187/)

Hence people here in India need to suffer as we are not geared up to find any alternate source of supply .. albeit govt took a knee jerk decision of reducing the import duty by 10% few months back , but that's not enough to meet the domestic demand. It's time for the policy makers to review the situation on war footing - certainly the situation can be managed if import duties are further lowered along with GST ! But I doubt whether we can even dream about it ... higher the price , higher the tax collection !!! Gala time for politicians & policy makers !!