Reduced MEP may boost groundnut oil export

The latest cut in the minimum export price (MEP) on edible oils is expected to boost exports, especially of groundnut oil. Recently, the inter-ministerial committee of the agriculture, commerce and food ministries had decided to bring down the MEP for edible oil from $1,400 a tonne to $1,100 a tonne, with the estimates of higher oilseed production. In December last year, the MEP had been cut from $1,500 a tonne to $1,400 a tonne.

Kishore Tanna, chairman, Indian Oilseed and Produce Export Promotion Council, said: “We are thankful to the government for their pro-active approach and keeping a close watch on developments in the oilseed and oil sector. Export of groundnut oil likely to increase to over 25,000 tonnes in this year.”

Export of edible oils is permitted in branded consumer packs of up to five kg, without any quantitative cap. “Fixing the floor price makes groundnut oil exports the most viable among all edible oil varieties. There is also a possibility for export of cotton oil,” said a Vimal Oils spokesperson.  B V Mehta, executive director of the Solvent Extractors’ Association of India, said: “The groundnut oil market is very limited in foreign countries. However, there is still a chance to export 15,000-20,000 tonnes.” India, the world’s top importer of vegetable oils, used to prohibit export of edible oils; this was relaxed and it had allowed sales abroad of cooking oils in small packs, with a cap of 20,000 tonnes in 2013-14.

However, due to price rise in the domestic market, the export did not exceed 10,000 tonnes in FY14.

Samir Shah, president of the Saurashtra Oil Mills Association, said: “There are some export inquiries in the market for the past few days. Also, the price of oil is at the bottom as compared to last year, which might support export (of groundnut oil).”

According to industry sources, India produces an average of300,000 tonnes of groundnut oil every year but this could be 700,000 tonnes this year.

Angshu Mallick, chief operating officer, Adani Wilmar, said: “The government move was inevitable but we don’t see much potential for groundnut oil exports. It is not such a huge market overseas.”