As many as 18 states are in the process of implementing stock holding limitations on oilseeds and edible oils after being authorised by the Centre to do so in order to curb the unusual spike in edible oil prices during the Diwali festivities.
Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, Odisha, Kerala, Jharkhand, Chhattisgarh Andhra Pradesh, Tamil Nadu, Tripura, and the Union Territory of Chandigarh are among the 18 states that are in the process of setting stock limits on my edible oils.
At a meeting today with as many as 23 states to explore methods and means to guarantee further lowering of edible oil prices, the Centre was told that Uttar Pradesh has already placed stock limitations on edible oils.
Representatives from the central government briefed states on the various measures taken in recent months to keep edible food costs in line and asked them to take all necessary steps to keep prices from rising further.
In a letter sent to states a few days ago, the central government urged them to use the powers granted by the central government to impose stock limits and ensure that all stakeholders in the value chain, including retailers, wholesalers, and traders, do not stockpile more than two months' worth of inventory.
Government’s Efforts to Control Edible oil Prices
The government decreased the import tariff on edible oils for the sixth time since February 2021 earlier this month. It practically removed the basic customs tax on crude palm, soybean, and sunflower oil kinds and reduced the agri cess on them until March 2022 in the most recent decrease, which took place in early October.
The decision to repeal the basic customs duty came just days after it was announced that states would be able to set stock restrictions on oilseeds and edible oils, and that no one would be allowed to keep stock equivalent to more than two months' supply.
As a result of all of the actions, retail prices of edible oils have moderately decreased in the recent month, falling between 1-3 percent as of October 21.
Official data, however, reveals that costs are significantly higher this year than they were last year.
Groundnut oil is 19% higher, mustard oil 44% higher, Vanaspati 46% higher, soybean oil 49% higher, sunflower oil 38% higher, and RBD palmolein oil 62% higher than last year, according to data from the Department of Consumer Affairs.
The prices will moderate soon, says Govt
Though the Government is optimistic that prices will moderate further as new imported consignments arrive in retail markets and domestic kharif oilseed crushing ramps up, merchants say the downside won't be significant enough because global edible oil prices are unlikely to fall anytime soon.
Because India imports roughly 13-15 million tonnes of edible oil per year, nearly half of which is palm oil, any changes in global edible oil markets have a direct impact on domestic markets.
The majority of palm oil is imported from Malaysia and Indonesia, with India being the largest consumer.
Though edible oil prices have shown a little downward tendency in the months since the last round of tax reductions, mustard oil prices have defied this trend.
Market participants believe that mustard oil prices will not fall very soon and will remain high until the fresh crop arrives in the market in February-March, when pipeline inventories will be almost depleted.
