Experts believe that prices will continue to escalate till monsoon or the period when new crop arrives.
Blame it on scarcity of oil seeds, or rise of edible oil prices globally, or Indian speculators pushing up prices artificially, but down the line consumers become the victims as they end up shelling out more for their daily requirement. In last one year, edible oil prices have already gone up by 50%. The fear factor is that the experts believe that still there is huge room for further hike in edible oil prices.
On one hand the central government is working on controlling inflation rate but with increasing scarcity of crop, the prices are set to rise till monsoon or the time when new crop arrives. On other hand, thanks to rise in crude oil prices, edible oil prices too in are set to rise in international markets.
India consumes around 165 lakh tonne edible oil, out of which 95 lakh tonne is imported palm oil. On Tuesday, the director of Godrej International Ltd, Dorab Mistry announced in his speech at China that palm oil may gain to 4,000 ringgit ($1310) by June, which is currently traded at around 3,500 ringgit. Edible oil prices in India are highly dependent on international prices as 60% of edible oil is imported. Therefore, by June end prices of the commodity in India is also likely to rise by 15%. "The edible oil prices may touch peak till monsoon or new arrivals. After this it may start falling but till then, prices are set to climb in India," said city-based analyst and commodity trader, Biren Vakil.
At present, groundnut oil, which is consumed maximum in Gujarat, is sold at around Rs120 per kg in wholesale market while in retail it is around Rs135 per kg. Compared to last year, the prices of edible oil are up by 53%. Similarly, rapeseed, which is consumed most among the domestic-made edible oil in the country, has also seen rise in its price by 33% in the last one year. Cottonseed oil, believed to be the second highest consumed oil after groundnut in Gujarat, has also become expensive by around 14% in last one year.
"Groundnut oil is adulterated with palm oil. In reality, groundnut oil is consumed merely 2% nationally. Even in Gujarat, it is a myth that people are consuming pure groundnut oil, which in reality it is adulterated with palm oil," said Rajkot-based edible oil trader and analyst, Govind Patel. In case of rapeseed, experts blame it on manipulators speculating prices in forward markets. "Few years ago, guar gam prices were escalated by gangs trading in forward markets. This time the focus is on rapeseed. There is no fundamental reason behind rise in mustard and rapeseed oil prices. Now, the government has to take some action to control rise in price," said CEO of Adani Wilmar, Atul Chaturvedi.
In the coming time, even the weakening rupee is going to eat away its share from the wallet of the common man. "India, which is dependent on imported edible oil, will have to pay more as the rupee has depreciated. If rupee was under 45 levels, the cost of palm oil or oil made India would not have shot up. If rupee remains depreciated at around 50 or 51, we will have to pay more," said BV Mehta, executive director of Solvent Extractors' Association of India.
According to the edible oil manufacturer, the prices of cottonseed oil and groundnut oil are likely to rise further. "Due to various factors, the prices of both the edible oil varieties will rise by up to Rs3 to Rs5 per kg," said CMD of Vimal Oil & Foods, Jayesh Patel.
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