Vanaspati Prices Up On Higher Palm Prices

Vanaspati prices have surged by an average 8-10 per cent in the last three weeks on account of higher prices of crude palm oil (CPO), the primary raw material. Vanaspati prices have increased from Rs 760 (15 kg jar) to Rs 825. The landed price of crude palm oil has gone up from last month's average of $609 a tonne to $675, a rise of nearly 11 per cent. In 2005-06 oil year (November-October), the country imported 2.4 million tonne of CPO. In the November-March period of the current year, about 1 million tonne of CPO have been imported. The crude palm oil is used in production of vanaspati and refined oil. The import duty on CPO was brought down from 67.6 per cent to 61.8 per cent in the 2007-08 Budget. However, the lowering of duty had little impact as international palm oil prices rose significantly. Also the domestic production of oilseeds is down. According to third crop estimates (released by the ministry of agriculture last week), oilseeds production in 2006-07 is 23.26 million tonne, 16.8 per cent down from last year's final estimates of 27.97 million tonne. Farmers in Rajasthan, Haryana and Madhya Pradesh have shifted large tracts of land from oilseeds to wheat and pulses owing to bullishness in these two commodities.