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High Edible oil prices in India

  • IAS NEXT, Lucknow
  • 08, Nov 2021
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Reference News:

The prices of most major cooking oils have dropped and stabilised across the country in the run-up to Diwali.

Reasons for the drop in prices:

  1. Stabilisation of global prices.
  2. Duty cuts.
  3. Cut in wholesale prices by major private players.
  4. Stock limits imposed by the Centre, using the provisions of the Essential Commodities Act.

What led to increase in oil prices previously?

  • Global commodity prices are extremely high. COVID-19 is a major factor, disrupting supply chains, closing down industries.
  • There is insufficient labour in the oil production industry in many countries.
  • Excessive buying of edible oil by China.
  • Many major oil producers are aggressively pursuing biofuel policies and diverting their edible oil crops for that purpose.
  • Governmental taxes and duties also make up a major chunk of the retail price of edible oils in India.

India’s Dependence on Edible Oil:

  • India is the world’s biggest vegetable oil importer.
  • India imports about 60% of its edible oil needs, leaving the country’s retail prices vulnerable to international pressures.
  • It imports palm oil from Indonesia and Malaysia, soyoil from Brazil and Argentina, and sunflower oil, mainly from Russia and Ukraine.

Facts about Edible Oils:

  • Primary sources of Edible oil (Soybean, Rapeseed & Mustard, Groundnut, Sunflower, Safflower & Niger) and secondary sources of Edible Oil (Oil palm, Coconut, Rice Bran, Cotton seeds & Tree Borne Oilseeds).
  • In India major challenges in oilseed production is
    • Growing in largely rain-fed conditions (around 70% area),
    • high seed cost (Groundnut and Soybean),
    • small holding with limited resources,
    • low seed replacement rate and low productivity.