“In the current year, demand collapsed to about 21 million tonnes from the normal demand of 23 million tonnes, leading to fall in imports. We expect imports might fall even in the next year giving a sigh of relief to the government,” said Atul Chaturvedi, president, Solvent Extractors Association of India (SEA).
Between November 2019 to October 2020, India imported 133 lakh tonnes of edible oil against 149 lakh tonnes in the previous year. In the import basket, palm oil accounts for the largest share.
According to the industry estimates, annual edible oil consumption was growing by 6-7 lakh tonnes. “However, the demand contraction caused by Covid-19 may continue for at least another six months, affecting the out of home consumption at hotels, restaurants and canteens,” said BV Mehta, executive director, SEA.
The industry is expecting an increase in domestic edible oil production by about 10-15 lakh tonnes as production of groundnut has increased, while production of soyabean is also at a reasonable level.
The biggest increase is expected in production of mustard and its prices are ruling at historic high levels, while excellent moisture level supports expansion of rabi sowing. “We expect reasonably good increases in production of mustard. There is likely to be excess availability of oil in the system,” said Chaturvedi.
As India meets 70% of its edible oil demand with imports, multiple international factors like the US elections, impact of Covid-19 and La Nina weather conditions on edible oil exporting countries, buying by China all have a bearing on the domestic edible oil prices. Whether India faces a second wave of Covid-19 infections will impact the pace of demand restoration, industry veterans said.
Even though the edible oil prices are under inflationary pressure, the industry has strongly objected to reduction in import duty. It has claimed that the increase in edible oil prices may encourage farmers to increase domestic production, helping reduce the country’s import dependence.