In order to check the abnormal surge in edible oil prices during Diwali festivities, as many as 18 states are in the process of imposing stock holding limits on oilseeds and edible oils after being empowered by the Centre for doing so.
Of the 18 states that are in the process of imposing stock limit on my edible oils apart from UP, include Rajasthan, Gujarat, Maharashtra, Odisha, Kerala, Jharkhand, Chhattisgarh, Andhra Pradesh, Tamil Nadu, Tripura and the Union Territory of Chandigarh.
Of the 18, Uttar Pradesh, has already imposed stock limits on edible oils, the Centre was informed at a meeting held today with as many as 23 states to discuss ways and means to ensure further easing of edible oil prices.
In the meeting, representatives of the Central government informed states of the various measures taken in the last few months to check prices of edible food and urged them to take all necessary actions to ensure that prices don’t flare up further.
The Central government in a letter written to states a few days back had urged them to exercise their powers extended by the Centre to impose stock limits and to see that all stakeholders in the value chain be it retailers, wholesalers or traders do not hold stocks in excess of two months of their storage capacity.
Earlier, this month the government for the sixth time since February 2021 lowered the import duty on edible oils. In the last reduction carried on in early October, it virtually abolished the basic customs duty on crude varieties of palm, soybean and sunflower oil and also slashed the agri cess on them till March 2022.
The decision to abolish the basic customs duty was taken barely days after it empowered states to impose stock limits on oilseeds and edible oils and directed them not to allow anyone to hold stocks equivalent to more than two months’ requirement.
The net impact of all the steps was that there has been moderate cooling down of retail prices of edible oils in between 1-3 per cent in the last one month as on October 21.
But as compared to last year, official data shows that prices are sharply higher.
Compared to last year data sourced from department of consumer affairs shows that, groundnut oil is still 19 per cent higher, mustard oil 44 per cent higher, Vanaspati 46 per cent higher as compared to last year, soybean oil 49 per cent higher, sunflower oil 38 per cent higher and RBD palmolein oil 62 per cent higher.
Though, the Centre is hopeful that prices will moderate further as new imported consignments come into retail markets and domestic kharif oilseed crushing picks up pace, but traders said that downside won’t be big enough as global edible oil prices are not expected to cool down soon.
As India imports around 13-15 million tonnes of edible oil annually of which almost 55-60 per cent is palm oil alone any change in global edible oil markets has a direct bearing on the domestic markets.
Palm oil is largely imported from Malaysia and Indonesia, for whom India is the biggest consumer.
Though, prices of edible oils have shown a slight moderating trend since the last one months after the last round of duty cut, but mustard oil prices have bucked this as well.
Market players feel that mustard oil prices might not come down very soon and will continue to remain at an elevated level till February-March when the new crop arrives in the market as pipeline stocks are virtually empty.
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