The Hindu Business Line : ‘Govt should stop vegetable oil imports’

Mumbai, Sept 10 With the sharp fall in global vegetable oil prices, the Government should stop imports of vegetable oil through public sector companies, said Mr Dorab Mistry, Director, Godrej International Ltd.

Speaking at the World Oils and Oilseeds Convention in Singapore, Mr Mistry said the government import policy has become unnecessary and burdensome with the dramatic fall in vegetable oil.

“In some cases the entire subsidy of Rs 15,000 a tonne ($340 a tonne) will be eaten away by the decline in prices,” he added.

The Government also needs to pay attention to the plight of farmers who have enthusiastically planted oilseeds this year in the hope of receiving remunerative prices. “A continuation of subsidised imported oil will compound the problem for everyone including the Government,” he said.

‘Stop Imports’

At some stage during harvest time the Government will also have to seriously consider steps like raising the import duty on vegetable oil, to support domestic prices otherwise oilseed farmers will feel betrayed. The task of the Indian Government is unenviable but the first step is to stop further public sector imports, said Mr Mistry.

Soya Prospects

The US Department of Agriculture will bring out its latest estimate of the 2008 soya crop on Friday. “I would estimate that a 50 million bushel revision in the USDA’s crop estimate should not impact the market beyond a couple of days,” he said.

The market has to take on board the very real possibility that China’s import of soybeans in the 2008-09 will be lower than the previous year.

Soybean demand in the rest of the world is also likely to be hampered by the slow offtake of soya meal and the much larger availability of other oilseeds.

On the prices, Mr Mistry said the market should clear CPO price of $600-650 FOB Malaysia which is a good $100 a tonne below the price of WTI Nymex crude equivalent to $100/barrel.

At that level, biofuel demand will be strong enough to absorb the excess stocks. “However, I must caution that if Nymex WTI crude oil falls further, to say $80 a barrel, the level of $600-650 has to fall further,” he said.

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