India, one of the world’s largest consumers of edible oils, is facing a significant challenge as global prices of edible oils reach record highs. The price volatility, triggered by Russia’s invasion of Ukraine, has had a profound impact on the import market. This essay explores the implications of the price fluctuations, focusing on the importance of sunflower oil, India’s consumption patterns, and the influence of import prices on the Indian consumer.

The Global Price Surge and Sunflower Oil Volatility:
  1. Global edible oil prices reached an all-time high following Russia’s invasion of Ukraine.
  2. Sunflower oil experienced the greatest volatility in prices over the past year.
  3. The UN Food and Agriculture Organization’s global vegetable oils price index soared to a record high in March 2022 after the conflict.
  4. Ukraine and Russia, accounting for 58% of global sunflower oilseed production, were significantly affected.
The Impact of the Black Sea Grain Initiative:
  1. The Black Sea Grain Initiative agreement between Russia and Ukraine facilitated the safe navigation of vessels carrying grain and foodstuffs.
  2. This initiative allowed accumulated sunflower oil, meal, and seed in Ukraine to be shipped out.
  3. The opening of the corridor led to a decrease in international vegetable oil prices, falling below pre-war levels.
  4. Sunflower oil is currently being imported at around $950/tonne, which is lower than the $990/tonne of soybean.
India’s Dependence on Edible Oil Imports:
  1. India annually consumes approximately 24 million tonnes (mt) of cooking oil, with 14 mt being imported.
  2. Sunflower oil, the fourth most consumed oil in India after Palm, Soybean, and mustard oil, is heavily reliant on imports.
  3. Domestic production of sunflower and palm oil is minimal, while mustard and soybean have relatively high domestic output.
  4. Other locally produced oils like cottonseed, rice bran, groundnut, and coconut do not significantly influence prices.
  5. Sunflower oil consumption is predominantly concentrated in South India, where it is traditionally grown in Karnataka, Telangana, and Maharashtra.
The Influence of Import Prices on Indian Consumers:
  1. Import prices play a crucial role in determining the cost of edible oils for Indian consumers.
  2. As a result, fluctuations in global prices directly impact what Indian consumers pay for edible oils.
  3. The reliance on imported oils, particularly sunflower and palm oil, leaves the Indian market vulnerable to international price shocks.
  4. The cost of imports affects the overall affordability and accessibility of edible oils for the Indian population.
India's Edible Oil Imports and Global prices: What You Should Know
Courtesy:Jatin Verma’s IAS Academy

Important Points:

  • Global prices of edible oils reach record high due to Russia’s invasion of Ukraine 📈
  • Sunflower oil experiences the greatest price volatility in the last year ⚡️
  • The Black Sea Grain Initiative facilitates the safe shipment of sunflower oil, reducing international vegetable oil prices 🌊
  • India imports around 14 million tonnes of cooking oil annually, heavily relying on imports 🛳️
  • Sunflower oil is the fourth most consumed oil in India after Palm, Soybean, and mustard oil 🌻
  • Domestic production of sunflower and palm oil is minimal, while mustard and soybean have higher domestic output 🏭
  • Indian consumers’ edible oil prices are significantly influenced by import prices 💰
  • Sunflower oil consumption is concentrated in South India, where it is traditionally grown 🌾
  • Fluctuations in global prices directly impact the affordability and accessibility of edible oils for Indian consumers 🔄
  • India needs to enhance domestic production and reduce reliance on imports to ensure a stable and affordable supply of edible oils 🌱
Why In News

India’s edible oil imports are poised to reach an all-time high, reflecting the country’s increasing demand for these essential commodities. This surge in imports underscores the need for India to focus on bolstering domestic production and implementing strategic measures to ensure long-term food security and reduce dependence on external sources.

MCQs about India’s Edible Oil Imports and Global prices

  1. Which country accounted for the largest production of sunflower oilseed globally?
    A. India
    B. Ukraine
    C. Russia
    D. United States
    Correct Answer: B. Ukraine
    Explanation: Ukraine and Russia together accounted for nearly 58% of the world’s production of sunflower oilseed, with Ukraine being a significant contributor.
  2. Which factor contributed to the record high prices of edible oils globally?
    A. Political instability in Ukraine
    B. Decreased demand for vegetable oils
    C. Increased domestic production in India
    D. Technological advancements in oil extraction
    Correct Answer: A. Political instability in Ukraine
    Explanation: Global prices of edible oils reached a record high after Russia’s invasion of Ukraine, causing disruptions in production and supply.
  3. How does the reliance on imported oils affect the Indian market?
    A. It stabilizes edible oil prices.
    B. It reduces the overall consumption of cooking oil.
    C. It makes edible oils more affordable for consumers.
    D. It exposes the market to international price shocks.
    Correct Answer: D. It exposes the market to international price shocks.
    Explanation: The heavy reliance on imported oils, such as sunflower and palm oil, leaves the Indian market vulnerable to fluctuations in global prices, leading to price volatility and potential shocks.

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