Indian trade and industry bodies such as the Solvent Extractors Association (SEA) and Soybean Processors Association (SOPA) have shed copious tears for domestic oilseed growers and made shrill noises against the ‘excessive’ import of edible oils.
The associations have from time to time demanded that the government should immediately hike the Customs duty on imported oils (read: palm oil) rather steeply, or create a larger differential between refined and unrefined oils so as to ‘save’ oilseed farmers. How valid are these recommendations and is there justification for the associations to say what they are saying?
Before examining the merits of the patently self-serving recommendations, let us look at some background data. India’s oil year runs from November of one year to October of the following year.
We are now talking about oil year 2015-16. Vegetable oil imports in July 2016 (the latest available at the time of writing) were recorded at 1.12 million tonnes. In the last nine months – November 2015 to July 2016 – imported oil arrivals were 10.8 million tonnes, marginally up from 10.2 million tonnes during the corresponding period in the previous year.
Projected imports for the entire oil year 2015-16 are about 13 million tonnes, valued at about Rs 60,000 crores (about US$9.3 billion). This will be less than the aggregate imports for oil year 2014-15 at 14.4 million tonnes, valued at approximately Rs 65,000 crores (US$10 billion). In 2013-14, the import volume aggregated 11.8 million tonnes. The numbers are really big.
Without doubt, palm oil dominates India’s import basket, and why not? It is most economically priced and well accepted by consumers. Additionally, origin to destination transit time is short.
Over the last several months, in unison, the SEA and SOPA and possibly many others have alleged that India is being used as a dumping ground for unloading the excess supplies in the world market.
‘This has put tremendous pressure on local prices’, they complain, as well as assert that current prices are at levels where Indian farmers are in distress and losing interest in the oilseed crop. This is far from true as evidenced by the following data.