Russia-Ukraine Crisis: Edible Oil Price Spike Prompts Call For MSP Hike

Sunflower oil prices have spiked in most parts of India as Russia intensifies its military operations after invading Ukraine, prompting demands for a hike in minimum support prices of edible oil to boost domestic production.

The national average retail price of sunflower oil rose 6.15% to Rs 166.33 a litre in the last seven days, and 11.38% in the last one month, according to data sourced from the Department of Consumer Affairs' price monitoring cell. Palm oil, too, surged in line.

In the last fiscal, India imported 2.2 million tonnes of sunflower oil. Close to 80% of that, according to data provided by the Ministry of Commerce, was from Ukraine. The ongoing war has disrupted supply chains.

“The prices have gone up because of the [geopolitical] crisis. There is another reason as well. It's important to note that sunflower crop was not great this year. A fall in domestic production and a disruption in imports have contributed to the rise in prices,” former MP and farmer leader Raju Shetti told BloombergQuint. “The government should provide some boost by raising MSP. The domestic production of sunflower oil approximates to 6.5 million tonnes, while India consumes more than 20 million tonnes.”

Commerce Minister Piyush Goyal, in a closed-door meeting with industry representatives on Friday, took stock of edible oil production in the country, PTI reported citing people aware of the meeting. Producers, according to the report, have assured that there is going to be no shortage in supply for the next two months.

Sunflower is a kharif crop and will only be sown in the next two months. “India cannot harvest sunflower this year. It can now only think about boosting domestic production next year to lessen its import bill,” said Pushpendra Singh, president at Kisan Shakti Sangh, a farmers' union. “To be able to do that, it needs to incentivise farmers by hiking MSP for the respective crops.”

“This will also lead to farmers producing other forms of edible oil like groundnut oil to fill in the gaps created by price rise of sunflower oil,” he said.

In June, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, had approved an increase in MSP for sunflower seeds to Rs 6,015 a quintal for marketing season 2021-22.

After Ukraine and Russia, India is importing most of its oil from Argentina. Officials in the Ministry of Commerce told BloombergQuint that the central government is looking for alternatives for importing sunflower oil. They didn't want to be identified as they aren't authorised to speak to the media.

Emailed queries sent to the ministry remained unanswered.