Edible oil firms weigh fresh price hikes amid cost pressures
Indian edible oil firms plan 5–6% price hikes as import costs surge up to 20% amid high crude oil, freight, and currency pressures. Rising global prices of palm, soybean, and sunflower oils are squeezing margins, with consumers likely to face higher retail prices amid ongoing inflationary conditions.
Indian edible oil companies, including Adani Wilmar and Emami, are preparing for a 5-6% price hike as global landed costs for palm and soybean oil surge by up to 20%.
Edible oil companies are preparing for a new round of price increases as elevated import costs, high freight rates and firm domestic oilseed prices continue to squeeze margins. Industry executives said the likely hikes, in the range of 5-6%, follow a similar increase in March by major players such as AWL Agri Business, Emami Agrotech and Patanjali Foods, underscoring persistent cost pressures across the sector.
Crude Connection
The West Asia war has also compounded matters for edible oil makers since edible oil prices tend to follow crude oil prices, especially during volatile times. On Wednesday, Brent crude prices surged toward $115 per barrel, amid reports of an extended US blockade of Iran, threatening further supply concerns, and disruptions in the Strait of Hormuz, a vital shipping lane.
Rising Landed Costs
India imports around 57% of its edible oil requirement. Palm, soyabean and sunflower account for the bulk of consumption of around 25-26 million tonne (MT). And the current landed costs of these edible oils have increased by 14% (palm), 20% (soybean) and 17% (sunflower) to $1,270/tonne, $1,335/tonne and $1,425/tonne, respectively, compared to prices prevailing a year ago.
“Fresh price hikes will depend on how edible oil prices move,” said Shrikant Kanhere, MD & CEO, AWL Agri Business, the maker of the Fortune brand of edible oils. “If crude oil remains elevated and geopolitical risks persist, price increases in edible oil cannot be ruled out,” he said.
While Aditya V Agarwal, director, Emami Group, struck a more cautionary note, saying he would “wait and watch” to see how the scenario would unfold in the coming days, industry executives say that companies would have to factor in the rise in import costs in their retail price.
“Higher freight, insurance costs and depreciation of rupee have impacted edible oil prices,” BV Mehta, executive director, Solvent Extractors’ Association of India (SEA), told FE.
The current all-India average retail price of major variants of cooking oils, according to the Department of Consumer Affairs, is up between 5-14% versus last year. While soyabean is up 8% y-o-y to Rs 158 a litre, mustard is up 11% (Rs 189 a litre), sunflower is up 14% (Rs 184 a litre).
The expected increase is likely to be implemented across major brands and product categories, industry executives said, though companies may calibrate the timing and extent of hikes depending on regional demand conditions and competitive dynamics. The move comes at a time when consumers are already grappling with elevated food prices, raising concerns about the potential impact on overall inflation.
Edible oils are a staple in Indian households, and even modest price increases tend to have a visible impact on monthly expenses. Policymakers have in the past attempted to manage price volatility through measures such as import duty cuts and stock limits, but the current pressures stem from a combination of domestic supply constraints and global cost factors that are harder to control.
Analysts expect the upward pressure on prices to persist in the near term unless there is a significant easing in oilseed prices or a decline in global freight rates. For now, the industry appears to be navigating a prolonged phase of cost inflation, with consumers likely to bear part of the burden in the weeks ahead.
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Source : Financial Express
