Cooking Oil Gets Dearer As Covid-19 Disturbs Demand-Supply Equilibrium

Edible oil prices have been constantly rising in India over the past 10 months and have registered an average 60 per cent difference since April 2020. Oil companies anticipate a further increase of up to 30 in the next two to three months.

While the rise in the prices is generally attributed to the huge dependency on imports resulting in demand-supply gap and the government's reluctance to take a view on the prices, another major reason that has been observed is the shift of the consumer from palm oil to sunflower oil during the COVID-19 period. There was an 80 per cent fall in demand for palm oil and a large part of it shifted to sunflower, according to observations made by the edible oil industry.

Edible oils are categorised into three — seasoning, shallow frying and deep frying. Palm oil is well suited for deep frying and is mostly used in hotel industry.

“Generally the hotel industry uses the oil that is less costly and useful for deep frying. During the lockdown period, hotels and other eateries were shut. Hence the consumers increased the usage of sunflower oil. In the unlock era, the usage, however, began to balance”, P Chandrasekhar Reddy, vice-president of Gemini Edible Oils told The Federal. An increase in demand for 5 million tons — two million palm oil, one million sunflower and two million soya bean seeds — has caused a shortage in the supplies from Malaysia, Indonesia and the other exporting countries. This triggered the rise in the prices. Palm oil rates too soared because the production suffered a slash during the peak of COVID-19 on account of shortage of human power. Workers moved to their hometowns for long durations and returned late.