Even as policymakers grapple with rising crude oil prices, domestic prices of cooking oil are shooting up sharply on the back of supply constraints and rising import costs. April CPI (Consumer Price Index) numbers showed a 9.2 per cent year-on-year spike in oils and fats, after a 7 per cent increase in the preceding months. There seems to be little relief in sight. India continues to import over 60 per cent of its edible oil requirement and global prices are being propelled upwards by multiple factors.
Crude oil shortages are prompting key palm oil producers such as Malaysia and Indonesia to tighten bio-diesel mandates, shrinking their exports and triggering an 18 per cent price rise in palm oil year-to-date. Sunflower and soyabean oil prices have also risen by 13-19 per cent on higher fertilizer prices, rising freight and shipping disruptions due to the Iran conflict. The rupee’s slide against other currencies is adding to the cost of imports. There are no easy fixes to this problem. In a bid to coax farmers to expand their oilseed acreage in the upcoming kharif, the Centre has announced increases of 3-8 per cent in Minimum Support Prices (MSPs) for the 2026 kharif season. However, oilseed output shrank by 6 per cent in the last kharif season despite 8-9 per cent increases in MSPs. Farmers are said to have switched from soyabean to maize in a bid to cash in on assured demand for maize from ethanol processors.
