Oil's Not Well: Inside India's Cooking Woes

Retail inflation in edible oils rose sharply, from 2.5% in September last year to 14.6% in December. This is because of a spike in the price of imported oils

- Sayantan Bera

For Abhishek Raghuvanshi, a farmer from Vidisha district in Madhya Pradesh, 2024 was a surprisingly good year. His summer crop of soybeans produced the highest-ever yield of 1.4 tonnes per hectare, nearly three times the production a year earlier, when most of the harvest was lost to adverse weather. Last year, thankfully, there was no excess rain, drought spell or pest attack on the crop.

Government procurement at the minimum support price (MSP) was another boon for Raghuvanshi because market prices were about 20% lower than the MSP. Though he could sell just about two-thirds of his total production to government agencies, without this support Raghuvanshi's losses would be significant.

The good tidings for Raghuvanshi, however, are not enough a cure for India's chronic deficiency in cooking oils. Production of summer-grown (Kharif) oilseeds like soybean and groundnut in 2024-25 was higher than the five-year average. The government also raised import duties in September by 22% to support domestic farmers and push them to plant more oilseeds. Planting during the winter (Rabi) crop season was higher than the five-year average, yet lower than the previous year, on account of a drop in mustard acreage.

Meanwhile, consumer prices are shooting up. Retail inflation in edible oils rose sharply, from 2.5% (year-on-year) in September last year to 14.6% in December. This is because of a spike in the price of imported oils, particularly palm oil imported from south-east Asia.

Currently, India imports about 65% of its annual requirement of cooking oils; over half of it is palm oil from Malaysia and Indonesia. Once considered to be the cheapest, palm oil is now as expensive as soy and sunflower oil.