FNB News - Solvent extractors’ body supports move to hike import duty on edible oils

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Solvent extractors’ body supports move to hike import duty on edible oils

Tuesday, 22 August, 2017, 08 : 00 AM [IST]

Our Bureau, Mumbai

The Solvent Extractors’ Association (SEA) of India, in a recently-issued press release, has welcomed the move to raise the import duty on crude palm oil by 7.5%, RBD Palmolein by 15% and crude soybean oil by 5% and increase in duty difference from 7.5% to 10% between crude and refined palm oils with effect from August 11, 2017.

	Duty upto Aug 10, 2017	Revised duty w.e.f. Aug 11, 2017
Crude Palm Oil	7.50%	15.00%
RBD Palmolein	15.00%	25.00%
RBD Palm Oil	15.00%	25.00%
Crude Soybean Oil	12.50%	17.50%
Crude Sunflower Oil	12.50%	12.50%(no change)
Crude Rapeseed Oil	12.50%	12.50%(no change)
Refined Soybean Oil	20.00%	20% (no change)
Refined Sunflower Oil	20.00%	20% (no change)
Refined Rapeseed Oil	20.00%	20% (no change)

According to SEA, during the last few months, soybean, rapeseed and groundnut were sold below MSP, leading to drastic reduction in oilseed planting in current Kharif season. This alarmed the government and motivated it to hike the import duty on palm and soy to support the farmers to receive remunerative prices. Further, in order to encourage Indian industry in line with Make in India commitment, they also raised the duty difference between crude and refined palm oils from 7.5% to 10%. This will give a little cushion to domestic refining industry and improve the capacity utilisation in the country.

While this is a welcome step, it is also necessary that the government consider raising the import duty on crude sunflower and rapeseed oils to 17.5%, in line with crude soybean oil. Also, duty on refined soybean, sunflower and rapeseed oils be increased to 25% to be in line with RBD palmolein to avoid the import of such refined oils.

Import of Vegetable Oils in July ’17 up by 34% to 1,524,724 tonne
SEA has compiled the Import Data on Vegetable Oils (edible & non-edible) for the month of July 2017. Import of vegetable oils during July 2017 is reported at 1,524,724 tonne compared to 1,140,685 tonne in July 2016 i.e. up by 34%, consisting of 1,489,137 tonne of edible oils and 35,587 tonne of non-edible oils. The overall import of vegetable oils during first nine months of current oil year 2016-17, Nov.’16 to July ’17 is reported at 11,388,296 tonne compared to 10,903,728 tonne last year i.e. up by 4%.

Import of Vegetable Oil (Edible & Non-Edible)

Month	2016-17			2015-16			% Change
Month	Edible	Non-Edible	Total	Edible	Non-Edible	Total	% Change
Nov.’16	1155863	19601	1175464	1332936	4499	1337435	(-) 12%
Dec.’16	1174296	35389	1209685	1409435	11467	1420902	(-) 15%
Jan.’17	1008085	16774	1024859	1255054	3000	1258054	(-) 19%
Feb.’17	1234255	36188	1270443	1096424	16492	1112916	(+) 14%
Mar.’17	1097876	16449	1114325	1176312	14203	1190515	(-) 6%
Apr.’17	1324014	15475	1339489	1236068	12819	1248887	(+) 7%
May’17	1323792	60647	1384439	1004685	20193	1024878	(+) 35%
June’17	1293777	51091	1344868	1158902	10554	1169456	(+) 15%
July’17	1489137	35587	1524724	1118066	22619	1140685	(+) 34%
Total	11101095	287201	11388296	10787882	115846	10903728	(+) 4%

Current Situation

Currently, Soybean, Rapeseed & Groundnut being sold below MSP and prices have dropped between 20% and 30% below last year level. The current prices are the lowest in the last five years and farmers are totally discouraged to sow the oilseeds and this is reflected in switching over from oilseeds cultivation to other crops. The area under oilseeds reduced by over 17.0 lakh hectare in current Kharif season and reported at 154.29 lakh hectare against 171.15 lakh hectare last year. With a view to ensure farmers do not loose interest in oilseeds cultivation and receive remunerative price for his produce during harvesting, Indian
government raised the import duty on Crude Palm Oil to 15% from 7.5%, Degummed Soybean Oil to 17.5% from 12.5% and RBD Palmolein to 25% from 15% with effect from August 11, 2017.

Stock Position at Port & in Pipeline
The stock of edible oils as on August 1, 2017, at various ports is estimated at 883,000 tonne (CPO 270,000 tonne, RBD Palmolein 140,000 tonne, Degummed Soybean Oil 300,000 tonne, Crude Sunflower Oil 170,000 tonne and 3,000 tonne of Rapeseed (Canola) Oil) and about 1,590,000 tonne in pipeline. Total stock at ports and in pipelines increased to 2,473,000 tonne from 2,278,000 tonne in July, 2017. India’s monthly requirement is about 17.50 lakh tonne and operate at 30 days stock against which currently holding stock over 24.73 lakh tonne equal to 42 days requirements.

Stock Position at Ports & Pipelines (Qty. in ‘000 M.T.)

	1st Aug. 2017	1st July 2017	1st June 2017	1st May 2017	1st Apr. 2017	1st Mar. 2017	1st Feb. 2017	1st Jan. 2017	1st Dec. 2016	1st Nov. 2016	1st Oct. 2016	1st Sept. 2016	1st Aug. 2016
Port Stock	883	738	770	785	688	775	642	695	655	705	860	755	770
Pipeline	1590	1540	1390	1335	1225	1190	1088	1150	1170	1230	1230	1300	1380
Total Stock	2473	2278	2160	2120	1913	1965	1730	1845	1825	1935	2090	2055	2150

Import of Refined & Crude Oil Ratio
During Nov.’16 – July ’17, Import of refined oil (RBD Palmolein) has sharply increased to 2,197,455 tonne from 1,984,069 tonne in the same period last year. Also import of crude oil increased to 8,903,640 tonne from 8,803,813 tonne during the same period last year.

Import of Refined & Crude Edible Oils (Ratio)

Year (November-October)	Refined oils	Percentage	Crude oils	Percentage	Total
November 2016	2,40,948	21%	9,14,915	79%	11,55,863
December 2016	2,45,554	21%	9,28,742	79%	11,74,296
January 2017	1,96,623	20%	8,11,462	80%	10,08,085
February 2017	2,33,313	19%	10,00,942	81%	12,34,255
March 2017	2,19,270	20%	8,78,606	80%	10,97,876
April 2017	2,32,243	18%	10,91,771	82%	13,24,014
May 2017	2,94,409	22%	10,29,383	78%	13,23,792
June 2017	2,40,696	19%	10,53,081	81%	1,29,37,777
01/07/17	294399	20.00%	1194738	80.00%	1489137
(November 2016-July 2017) (November 2015-July 2016)	2,197,455 1,984,069	20% 18%	8,903,640 8,803,813	80% 82%	11,101,095 10,787,882
2015-16	26,23,002	18%	1,19,48,336	82.00%	1,45,71,338
2014-15	16,59,070	12%	1,27,62,201	88%	1,44,21,271
2013-14	15,76,354	14%	1,00,41,980	86%	1,16,18,334

Import of Palm & Soft Oil Ratio
During Nov.’16 – July ‘17, Palm Oil import has increased to 6,741,678 tonne from 6,175,524 tonne during the same period last year, overall share of palm oil products increased to 61% from 57%, thanks to larger import of RBD Palmolein. Soft Oils import reduced to 4,359,417 tonne from 4,612,358 tonne last year, however, within soft oils, import of sunflower oil has sharply increased at the cost of soybean oil.

Import of Palm Oil & Soft Oil (Ratio)
Nov.’16 – July ’17 (Qty. in ‘MT)

Year (November-October)	Palm oil		Soft oil					Percentage	Total
	(RBD palmolein + CPO + crude olein + CPKO)		Soybean	Sunflower	Rape	Safflower	Total	Percentage	Total
November 2016	8,01,311	69%	1,64,286	1,58,071	32,195	-	3,54,552	31%	11,55,863
December 2016	7,23,158	62%	2,32,132	1,85,824	33,182	-	4,51,138	38%	11,74,296
January 2017	6,08,762	60%	1,66,573	2,14,872	17,878	-	3,99,323	40%	10,08,085
February 2017	7,36,207	60%	2,51,740	2,09,422	36,886	6,090	4,98,048	40%	12,34,255
March 2017	6,80,065	62%	2,29,853	1,81,868	-	-	4,17,811	38%	10,97,876
April 2017	7,52,632	57%	3,04,942	2,34,516	31,924	6,090	5,71,382	43%	13,24,014
May 2017	7,99,346	60%	3,40,365	1,54,938	29,143	-	5,24,446	40%	13,23,792
June 2017	8,20,082	63%	2,90,904	1,69,345	13,446	-	4,73,695	37%	12,93,777
July,2017	820115	55.00%	468439	200583	---	---	669022	45.00%	1489137
November 2016-July 2017 November 2015-July 2016	6,741,678 6,175,524	61% 57%	2,449,234 3,153,768	1,709,439 1,202,647	1,94,654 255,943	6,090 -	4,359,417 4,612,358	39% 43%	11,101,095 10,787,882
2015-16	84,42,840	58%	42,34,809	15,16,220	3,77,469	-	61,28,498	42%	1,45,71,338
2014-15	95,36,904	66%	29,85,944	15,42,599	3,55,824	-	48,84,367	34%	1,44,21,271
2013-14	79,57,960	68%	19,51,233	15,09,250	1,99,891	-	36,60,374	32%	1,16,18,334

Average Prices and Rupee Depreciation

Since April’16 and onwards landed price of RBD Palmolein has remained same or lower than CPO, encouraging larger import of RBD Palmolein at the cost of CPO. The spread between palm oil and soft oil reduced encouraging larger import of soft oils. Importers continues to make larger import purchases of Sunflower oil, taking advantage of attractive price vis-à-vis Soya oil. Also, strengthening of rupee in the last six months supported the import of vegetable oils.
(Price in US$/CIF Indian Port/Tonne)

Oils	July 2017	June 2017	May 2017	April 2017	March 2017	February 2017	January 2017	December 2016	November 2016	October 2016	September 2016	August 2016	July 2016
RBD palmolein	683	700	727	705	731	773	788	773	729	709	759	735	643
Crude palm oil	681	697	725	706	734	783	794	772	729	704	753	730	642
Crude soybean oil	802	798	796	756	767	812	857	887	844	827	803	804	751
Crude sunflower oil	804	789	798	783	791	814	824	836	826	834	843	845	848
FE: $1 = (Average)	64.42	64.45	64.42	64.53	65.8	66.97	68.04	67.8	67.64	66.74	66.71	66.9	67.15

Import of Non-Edible Oils – Sharp Rise in RBD Palm Stearin

Import of Non-Edible oils during Nov.16 – July ’17 is reported at 287,201 tonne compared to 115,846 tonne during the same period last year. P.F.A.D., P.K.F.A.D., C.P.S. & RBD Palm Stearin are the major imports of non-edible oils.