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Current Affairs

Sunflower oil prices increase

Date: 26 March 2022 Tags: Basics of Economics

Issue

The edible oil prices have risen by 20-30 percent in March owing to the conflict between Ukraine and Russia.

 

Background

India is a major importer of cooking oil. This includes palm oil, sunflower, and soybean oil etc.

 

Details

  • Data showed that prices rocketed by 70 percent year on year basis. The prices are further expected to grow as end to the war looks uncertain.

  • There are fears of supply chain distortion that can further push up the price of sunflower oil in international market.

 

Importance of Ukraine and Russia

  • Russia and Ukraine accounts for 60 percent of the global sunflower oil production and exports. 

  • The Black Sea region contributes 60 percent of world sunflower oil output, which has been affected due to closure of ports.

  • India is the top importer of edible oil. Russia and Ukraine export five lakh tonnes of sunflower oil to India annually.

 

Future prospects

  • Domestically produced mustard and groundnut seeds are expected to cool down the prices and prevent sunflower oil prices from hitting the roof.

  • It is expected that prices may rise by 5-10 percent in future as demand and supply oscillates. The scrapping of basic customs excise duty has given some relief.

 

Oil import dependency in India

  • India imports more than 60 percent of its edible oil requirements. This is about 13 million tonnes out of total consumption of 22-23 million tonnes.

  • Sunflower oil accounts for 15 percent of India's total imports. Ukraine is the largest exporter of sunflower oil in the world.