Edible oil import expected to fall 13% on sharp drop in consumption

Healthy oilseed output could improve domestic production of edible oil, reducing reliance on imports even further

Edible oil imports are expected to fall by 13 per cent this oil year (November-October) as the Covid-19 and lockdowns have hit demand for by over 1.5 to 2 million tonnes (mt). This fall was mostly because of closure of the hotels, restaurants, and catering (Horeca) segment.

Imports stood at 14.9 mt in 2018-19, and with the expected 2 mt fall, imports could hit a six-year low of 12.9 mt. In 2013-14, imports stood at 11.62 mt.

To be sure, the closure of the Horeca segment has significantly hit demand not just of edible oil, but also of sugar, value added milk products, and vegetables. However, unlike the others, edible oil was largely imported, with imports accounting for over 70 per cent. In contrast, India exports milk and sugar.

B V Mehta, executive director of the Solvent Extractors Association, said: “Domestic consumption of edible oil is 23 mt, but this oil year it is expected to fall over 2 mt. This will help reduce edible oil import this year.”

 

 

Mehta estimated that the domestic oilseed crop has been good and kharif sowing was promising. Hence, farmers are not retaining seeds and processors are crushing stock, resulting in better domestic availability.

Till June in this oil year, 8.1 mt of vegetable oil had been imported, which was 14.5 per cent lower than the corresponding period last year. The bulk of the fall was on account of reduction in refined oil, which has almost stopped after the government placed it under the restricted oil category. This could result in the share of imports falling to around 62 per cent of total oil consumed, compared with 74 per cent three years ago.

Meanwhile in the past week, the government took two major decisions regulating the sector.

It banned the sale of edible oil in loose packets, which might increase cost marginally, but will ensure better quality. Sources said this was done as there was a lot of blending with cheaper oil, beyond the permissible limits, in some areas at the retail level.

The Food Safety and Standards Authority of India issued an advisory on July 7 making it obligatory to have AGMARK certification before import of Blended Edible Vegetable Oil (BEVO). 

This is expected to reduce imports from neighbouring countries.