The Hindu Business Line (29/04/2020) - The monthly demand for edible oils in the country has fallen by 30 per cent, even though at home consumption of cooking oil shot up by 20-25 per cent, according to the Indian Vegetable Oil Producers Association (IVPA), apex organisation of vegetable oil producers in the country.
This is mainly because of a 30-35 per cent drop in outside home consumption, particularly by food service and institutional segments, IVPA said during a virtual round table conference last week attended by representatives from 60 Indian and international companies.
“The industry is facing three major challenges. There is a big drop in consumption due to the lockdown and this is hitting the sales. Firms are facing capital crunch because of lower capacity utilisation of factories both in domestic crushing and refining operations of imported oil. Besides, the sector is witnessing labour shortage issues,” said Sudhakar Desai, IVPA President, and CEO of Kolkata-based Emami Agrotech.
“Since the lockdown there is a temporary but major shift of demand from HoReCa (Hotels, Restaurants and Canteens) segment to the household consumption. I guess overall Indian import so far has dropped about 20 per cent driven by lower palm demand and negative growth in per capita consumption for the first time,” said Desai.
India normally meets nearly 60 per cent of its domestic requirement of 25 million tonnes of edible oils through imports.
“Import of palm oil for which the government has given licence for is going to be detrimental for the industry. Our refinery capacity utilisation will go down further considerably with finished products coming into the country. The government should not either issuing any import licences or limit the imports to 50,000 tonnes to 1,00,000 tonnes per month. That too for the duration of three months, not more than that,” Sandeep Bajoria of Mumbi-based Sunvin Group told BusinessLine.
Bajoria hoped that the domestic demand for edible oils would pick up once the lockdown is lifted.
According to IVPA, currently the outlook is bearish for vegetable oil prices and palm prices due to potential cutback in biofuel demand owing to the drop in Brent crude prices. The markets will remain subdued as lockdowns globally are leading to surplus availability of edible oils. Also putting pressure is the fact that Indonesia has not fully implemented its B30 biofuel programme, in which the South-East Asian country was planning to blend 30 per cent palm oil in biodiesel.
The vegetable oil producers’ body said since the palm oil demand in the country has fallen by 40 per cent and refineries have abundant stocks, there is no urgent need for the government to issue licences for import of refined palm oil.
It also expressed concern about cheaper imports from Nepal and Bangladesh at zero duty. If this happens, it would trouble not just domestic processing industry but also oilseed farmers and the government should take steps to prohibit cheaper direct imports, IVPA said.
Read more at https://www.thehindubusinessline.com/economy/agri-business/monthly-demand-for-edible-oil-down-30-ivpa/article31464084.ece#