In the backdrop of falling global prices, the central government has asked edible oil manufacturers to further bring down the maximum retail price (MRP) of imported cooking oils by up to ₹10 per litre within a week. The government has also directed edible oil companies to maintain a uniform MRP of the same brand of oil across the country.
The announcement was made by food secretary Sudhanshu Pandey after the food ministry held a meeting of all edible oil associations and major manufacturers to discuss the current trend and pass on the benefits of falling global prices to consumers by reducing the MRP.
"We made a detailed presentation and told them that global prices have declined by 10 per cent in the last one week alone. This should be passed on to consumers. We have asked them to reduce the MRP," Pandey told a news agency after the meeting.
Reacting to the news, shares of Adani Wilmar (AWL) surged as much as 2.7% to hit an intraday high of ₹592 on the BSE. Similarly, Patanjali Ayurved-owned Ruchi Soya’s share price gained 1.3% to ₹1,058 on the BSE. The stock price of other edible oil companies such as Manorama Industries, Gokul Agro, Marico, Ajanta Soya also rose up to 2% on the BSE.
Adani Wilmar and Ruchi Soya are the largest players in branded oil business, contributing 12% and 6%, respectively, in total oil consumption of 22MT in India. The combined share of the top six players in branded oil business (Adani Wilmar, Ruchi Soya, Emami, Cargill, Bunge and Marico) has been estimated at around 40% in FY20.
Last month, Adani Wilmar, Mother Dairy, and other edible oil manufacturers slashed edible oil prices by up to ₹15 to pass on the benefit to its consumers following the government’s effort to reduce import duties on the commodity. While Adani Wilmar, the largest edible oil producer in the country, had slashed edible oil prices by ₹10, Mother Dairy, a cooperative company in Delhi-NCR selling edible oil under the brand name 'Dhara', had reduced the prices of its cooking oils by up to ₹15 per litre.
Edible oil prices, which had skyrocketed in recent months due to the Russia-Ukraine war and exports ban by Indonesia, have dropped by $300 a tonne to a six-month low in global markets and are expected to decline further as curbed supplies have eased.
The international and domestic prices of edible oils surged during 2021-22 due to lower production of oilseeds, supply-chain disruption caused by the Russia-Ukraine war, as well as higher manufacturing and logistics costs. However, the reduction in import duty on crude and refined edible oils has contributed to the cooling of the prices. The further fall in cooking oil prices would allow the Indian government to curb rising food inflation.
In May, the government scrapped customs duty and agriculture infrastructure development cess on the import of crude soyabean oil and crude sunflower oil to curb the rising edible oil prices, which were fanning food inflation. As per a notification from the ministry of finance, the import of 20 lakh metric tonne (MT) each of crude soyabean oil and crude sunflower per year will remain duty-free for a period of two years. In a further boost to the industry, Indonesia, the world’s largest palm oil producer, had also lifted its ban on palm oil exports following an improvement in domestic supply. Palm oil imports account for more than half of India’s total imports in the vegetable oil segment. Indonesia supplies more than half of India’s edible oil imports.