The Indian government is reportedly considering an increase in import duties on vegetable oils in an effort to support domestic oilseed farmers amid declining prices. According to sources cited in a Reuters report, the move follows concerns that lower domestic oilseed prices could impact farmers’ profitability and cultivation interest.
An increase in import duties, if implemented, would be the second such adjustment within six months. Industry analysts suggest that higher tariffs could lead to a rise in local vegetable oil and oilseed prices while potentially reducing India’s reliance on imports of palm oil, soybean oil, and sunflower oil.
In September 2024, India imposed a 20% basic customs duty on both crude and refined vegetable oils, raising the total import duty on crude palm oil, crude soybean oil, and crude sunflower oil from 5.5% to 27.5%. The duty on refined versions of these oils increased to 35.75%. However, despite these measures, soybean prices have continued to trade over 10% below the government-mandated minimum support price (MSP), leading to renewed discussions on potential tariff revisions.
A government official, speaking on condition of anonymity, stated that lower oilseed prices justify a potential increase in import duties on edible oils. However, the exact percentage of the proposed increase has not been disclosed.
Industry representatives have expressed concerns about the impact of declining oilseed prices on farmers. BV Mehta, executive director of the Solvent Extractors’ Association of India (SEA), emphasized the need to support domestic producers to sustain interest in oilseed cultivation.
In anticipation of potential policy changes, Indian refiners have reportedly canceled orders for approximately 100,000 tonnes of crude palm oil originally scheduled for delivery between March and June. India, which imports nearly two-thirds of its vegetable oil requirements, sources palm oil mainly from Indonesia, Malaysia, and Thailand, while soybean oil and sunflower oil are imported from Argentina, Brazil, Russia, and Ukraine.
Amid these developments, the U.S. Department of Agriculture (USDA) has revised its forecast for India’s rapeseed production in 2024/25. According to the USDA’s Foreign Agricultural Service (FAS) report, rapeseed production is estimated at 11.7 million tonnes, down from 12.3 million tonnes the previous year. The decrease is attributed to a shift in cropping patterns favoring more profitable crops and a reduction in the planted area from 9.3 million hectares to 8.9 million hectares.
Despite the projected 5% decline in rapeseed production, yields have remained stable at 1.3 million tonnes per hectare due to favorable weather conditions, improved soil moisture, and efficient fertilizer use. The USDA maintains its forecast for rapeseed crushing at 10.5 million tonnes, citing stable demand.
Rapeseed oil production has been revised downward to 4 million tonnes, a 5% decrease from previous projections, due to lower oilseed availability. However, favorable weather conditions during key growth stages are expected to help maintain oil content and extraction rates.
Consumption of rapeseed oil remains steady at 4 million tonnes, compared to an initial estimate of 4.1 million tonnes. While rapeseed oil remains a preferred cooking oil in rural areas due to its strong flavor and traditional use, urban consumers are increasingly opting for alternatives such as sunflower and refined oils.
The USDA has also adjusted its forecast for India’s rapeseed oil ending stock, reducing it from an initial estimate of 490,000 tonnes to 358,000 tonnes. The revision reflects lower rapeseed production and continued demand for edible oils in the country.
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