INDIA – Oilseed growers in India want the government to revitalize the domestic rapeseed market by raising the import tax on palm oil, the most widely used vegetable oil, which will also raise the prices of the commodity, cushioning thousands of local farmers from further price crash.
Last year India abolished the basic import tax on crude palm oil (CPO), but it continues with a 5% tax known as the Agriculture Infrastructure and Development Cess on CPO imports. The country levies a 12.5% import tax on refined, bleached, and deodorized palm oil.
India meets more than 70% of its cooking oil demand through imports of palm oil, soy oil, and sunflower oil from Malaysia, Indonesia, Brazil, Argentina, Ukraine, and Russia.
“We have requested Prime Minister Narendra Modi to personally look into the issue of falling oilseed prices and the need to raise palm oil import duty,” Rampal Jat, national president of the Kisan Mahapanchayat farmers’ council, told Reuters.
He advised the government to instruct its agencies to buy rapeseed at guaranteed prices, which would provide immediate relief to farmers.
Domestic rapeseed prices plummeted from 4,500 rupees (US$55) per 100 kg, lower than the government-set minimum support price of 5,450 rupees (US$66.34) per 100 kg.
“Only last year, most farmers received 8,000 rupees (US$97.38) for their rapeseed crop, so the fall in prices is quite steep,” said Rameshwar Prasad Choudhary, a rapeseed grower from the western state of Rajasthan, which accounts for more than half of India’s rapeseed production.
According to Statista, India produced 11 million metric tons of rapeseed oilseeds in the fiscal year 2022. The production volume of all oilseeds in that year in the country stood at 41 million metric tons. Of these, cottonseed and soybean oilseeds had the highest production volume.
India, the third largest producer of rapeseed mustard after Canada, and China contributing to around 11 % of the world’s total production is projected to produce more than 11.5 million metric tons of rapeseed in this fiscal year, per data from the Solvent Extractors’ Association of India, the top vegetable oil industry body.
However, Sandeep Bajoria, CEO of Mumbai-based vegetable oil brokerage and consultancy Sunvin Group noted that lower oilseed prices could force some farmers to switch to other crops, a detrimental move that the country would burden for.
India’s vegetable oil imports cost around US$18 billion annually, and the government has often urged farmers to boost oilseed output to cut India’s rising import bill for the staple, but with the shift, the country could be faced with a soaring budget to import more of the commodity.