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Quota Restrictions on Soy-Sunflower Oils to Hammer Down Domestic Oilseed Prices, Writes SEA to SOPA

5 Aug 2020 4:36 pm
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Mumbai (Commodities Control) - The Solvent Extractors Association of India (SEA), which a few days back, had openly criticized the Soybean Processors Association of India (SOPA) over the latter’s bid to put soy oil and sunflower oil imports in the country under quota restriction and accordingly shot off a letter to the Union Minister for Commerce and Industries, expressing its serious reservation over the SOPA’s proposal, now appears to be in a conciliatory mood with SOPA urging the latter to work for the overall development of the vegetable oil industry keeping in mind the interest of farmers and all segments of oil industry.

Atul Chaturvedi, President - SEA in his letter to the SOPA chairman, Dr Davish Jain said that since they belong to the same sector, the issues being faced by the members of both the bodies are similar and solutions to these issues would also be similar.

However, stressing on the imposition of a quota system for Soy and Sunflower Oils, our objective of getting better returns to farmers and industry would be counterproductive and would result in complete dislocation of supply chains and be disastrous for the nation and consumers.

In his letter to the SOPA chairman, the SEA president said that considering Indian demand is quite price sensitive, if crude soya /sunflower oils import is put under quota restriction, it would result in more palm oil flooding the Indian market which will hammer down domestic oilseeds prices.
Needless to mention Palm is the cheapest oil among all three oils.
The SEA president in its letter feared that “huge palm oil imports would not only harm long term interests of all the oilseed farmers. This cannot be objective of the Government as well as Industry when we are at the cusp of launching National Mission on Oilseeds to boost Oilseed Cultivation”, the SEA president said adding the solution to the problem lies in raising the import duty on all vegetable oils, linking with MSP, introduction of Bhavantar Scheme, coupled with higher export incentives for soybean meal and all other oil meals.
Chaturvedi said the SEA is in favour of pushing for more incentives for value addition in soya products as this will also go a long way in improving price realisation to farmers. This will be a win-win situation for farmers, S.E. units and refiners.
There is absolutely no conflict of interest between our Associations on these matters”, the SEA president said adding that as of now the contribution of soybean oil in total oil consumption basket is hovering around merely 5% to 6% and cannot meet the edible oil demand even when soya bean production jumps to 200 lakh tonnes.

Earlier, Chaturvedi in a letter to the Union Minister for Commerce and Industries, had described the suggested measures by the SOPA as worse than the disease saying that the quota system will breed corruption, confusion and implementation issues.

The SOPA chairman in his letter dated July 28 last month to the Union Commerce Minister Piyush Goyal, had suggested raising customs duty on crude soybean oil from 35% at present to WTO-bound rate of 45% and that on crude sunflower oil from 35% - 50%.

SOPA in its letter had also sought fixing quantitative import quota/limit for the two varieties of oils - crude soybean and sunflower oil at one lakh tones each per month during October to January period. Whereas for the remaining period, the SOPA had demanded the quota limits may be fixed at 2.5 lakh tones and two lakh tones respectively.

The SOPA chairman feared that if immediate steps were not taken to control imports of edible oils, the soybean prices would crash much below the MSP causing distress to the farmers amidst robust crop prospects this season.
(Commodities Control Bureau)

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