In 2023, the edible oil sector experienced a record increase in imports, a scenario of low import duties and reduction in domestic prices providing relief to consumers.
India’s import of edible oils reached an all-time high of 164.66 lakh tonnes (lt) during the oil year 2022-23 (November-October) against 140.29 lt in the corresponding period of 2021-22, registering a growth of 17.36 per cent.
BV Mehta, Executive Director of Solvent Extractors’ Association of India (SEA), told businessline that edible oils surged to become the third largest import commodity in the oil year 2022-23, with an import bill of around ₹1.38 lakh crore. Latest data show that India imported 145.29 lt till November of the calendar year 2023 against 132.02 lt in the corresponding period of 2022.
DOMESTIC PRICE
Keeping the domestic prices of edible oils under check was one of the main objectives of the government during the year. In 2023, domestic price of edible oils returned back to the 2021-22 levels, leading to an increase in imports.
In June, the government reduced the import duty on refined soyabean and sunflower oil from 17.5 per cent to 12.5 per cent. Now the effective import duty, including cess, for refined oils is 13.75 per cent. Major crude edible oils attract 5 per cent import duty, and the effective duty is 5.5 per cent after including cess. This move of the government was aimed at keeping the price of edible oils under control.
As of December 20, the retail price of sunflower oil decreased by 25.5 per cent year-on-year, while prices of other oils like mustard oil, soyabean oil, and palm oil declined by 18.2 per cent, 17.9 per cent, and 13.7 per cent, respectively.
IMPORT PRICES DIP
Import prices of edible oils witnessed a significant decline in 2023. RBD palmolein saw its CIF import price drop from $982 a tonne in January to $876 a tonne in November, and CPO price from $997 a tonne in January to $897 a tonne in November. While crude soyabean oil’s import price declined from $1,285 a tonne in January to $1,068 a tonne in November, crude sunflower oil’s price came down from $1,295 a tonne in January and $979 a tonne in November.
CONSUMPTION UP
These factors also led to the increase in the per capita consumption of edible oils by at least 1 kg in 2023. For this, Mehta said, “Earlier we were consuming around 16.5-16.75 kg of edible oil a year. Now it’s around 17.5 a kg. Main reasons for this being the cheaper oil and increase in the per capita income of consumers.”
PRODUCTION RISES
Both oilseeds and edible oil production in India increased during the year. According to SEA estimates, there was 267.63 lt of marketable surplus of oilseeds and 75.19 lt of edible oil availability during the oil year 2022-23. During 2021-22, marketable surplus of oilseeds was at 243.96 lt and edible oil availability was at 70.86 lt.
However, the government’s first advance estimates of production of major kharif crops for 2023-24 estimated the production of oilseeds at 215.33 lt against final estimates of 261.50 lt in 2022-23.
Soyabean crop output was estimated at 115.28 lt this year (149.85 lt in final estimates of 2022-23). According to first advance estimates, the kharif groundnut crop is estimated at 78.29 lt (85.62 lt).
However, SEA’s recent crop survey assessed Gujarat’s groundnut crop at 33.4 lt, up from 30 lt last year, despite decrease in acreage by 74,000 hectares.
The year 2024 promises to be another crucial one for the Indian edible oil sector. Balancing the need for affordable edible oils with the protection of domestic refiners, and the long-term goal of self-sufficiency will require careful policy adjustments and increased focus on domestic production.