Edible oil prices in India are likely to see a rise, with industry officials urging the central government to resolve the matter.
BV Mehta, executive director of the Solvent Extractors Association, a trade body, told the Times of India, “I don’t want to create any panic but it is a big jolt suddenly and will have implications”.
India is witnessing a price hike due to two reasons – the ongoing war in Ukraine, and Indonesia deciding to clamp down on edible oil exports.
Russia-Ukraine war disrupts sunflower oil flow
India used to source sunflower oil from Ukraine, which couldn’t be sourced anymore, due to the war. The Economic Times reported that the country had seen a 21% jump in palm oil demands in March, a month after President Vladimir Putin sent Russian forces into Ukraine.
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The world’s largest democracy imports over 90% of its sunflower oil from Ukraine and Russia, mostly the former. With the conflict, India turned to Argentina and Russia for its sunflower oil needs. However, as per Sandeep Bajoria, chief executive of Sunvin Group, a vegetable oil brokerage and consultancy, “But there are limitations. We cannot import more than 100,000 tonnes per month in Ukraine’s absence. Demand is there for 200,000 tonnes”, ET said.
In April, India purchased 45,000 tonnes of Russian sunflower oil at record high prices, since global supplies were disrupted due to Ukraine’s exports being jammed up.
No support from South American soy oil
India could have relied on South America’s soy oil crop, but a bad yield meant the nation was deprived of that alternative as well, ET reported.
The Indonesian palm oil problem
This left India with palm oil as the best choice, and the nation imports most of it from Indonesia. Some of the oil comes from Papua New Guinea, Thailand, and Malaysia.
However, the Indonesian capital has seen people protesting over rising food costs. In light of shortages and price spikes, President Joko Widodo, announced Friday the nation will ban exports of cooking oil and other raw materials.
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Starting next Thursday, the ban continues for an indefinite period. Widodo said in a statement, “I will continue to monitor and evaluate the implementation of this policy so that the availability of cooking oil in the country is abundant and at an affordable price”.
Mehta outlined the impact on India, telling TOI, “Already sunflower oil supplies were hit due to the war in Ukraine. Now if palm oil supply is disrupted then prices will skyrocket. Prices were already high and Indonesia’s decision will add to the pressure and hurt supplies”.
With rising edible oil prices, and the government’s refusal to mitigate costs, household budgets in India have taken a hit.
