Financial Daily from THE HINDU group of publications
Wednesday, Nov 27, 2002
Agri-Biz & Commodities
Oilseeds & Edible Oil
Palm oil tariffs hiked by 10%
CHENNAI, Nov. 26
THE Government has hiked the base import price or tariff values on the palm group of oils by nearly 10 per cent following rapid increase in the prices of vegetable oils in the global market during the last couple of months. The Government had last raised the tariff of palm group of oils on June 13.
While hiking the tariff values of palm group of oils, the Government, however, left the value of crude soyabean oil unchanged. It has brought crude soyabean oil in to the tariff value net on September 2 this year following reports of under-invoicing.
In a notification issued on Tuesday, the Department of Revenue raised the tariff value on crude palm to $432 a tonne from $392. For RBD (refined bleached and deodorised) palm oil, the tariff has been set at $460, up from $414, while for RBD palmolein it has been fixed at $470 ($426) and for crude palmolein at $454 ($411).
The latest hike leaves only the landing cost of crude palm oil and crude palmolein cheaper than crude soybean oil. Though crude soyabean oil price has currently increased to $570 c&f from $510 when the Government brought it under tariff net, the tariff value will remain at $542/tonne.
The exercise of fixing tariff value for palm group of oils began in August 2001 to avoid under-invoicing of consignments following a hike in customs duty on edible oils.
In the 2001-02 Budget, the Government imposed 75 per cent duty on crude oil and 85 per cent duty on refined oils. However, the duty on crude palm oil was subsequently cut to 65 per cent in October following an assurance given by the Prime Minister, Mr Atal Bihari Vajpayee, to his Malaysian counterpart, Dr Mahathir Mohammed. The customs duty on crude soyabean oil is 45 per cent in view of the country's commitment to the World Trade Organisation. But the overall tax burden for refined oils comes to around 92 per cent including countervailing duty.
With this hike, the cost of RBD palmolein after payment of duty will be $902.4, while that of RBD palm oil will be $883.2. Crude palm oil will cost $172.8 and crude palmolein will be available at $749.10. The cost excludes freight and insurance.
Currently, palm oil prices in the global market are on the rise following increased demand.
According to trade sources, the hike in the tariff value was not unexpected in view of the rise in international prices. However, the trade was expecting the hike only after Gujarat polls. ``To that effect, we have been surprised,'' the sources said.
The sources pointed out that during 1999, when palm oil prices were ruling around $200 per tonne, the customs duty was only 10 per cent. The duty was raised mainly to protect growers and indigenous refiners.
The announcement had its impact on the local oilseeds market and the saw the prices of RBD palmolein hovering at Rs 370 per 10 kg against Rs 360 on Monday.
In the international cash market, RBD palm oil was quoted down $2.50 at $425 a tonne on Tuesday, while RBD palmolein also slid by same margin at $432.50 a tonne. In the futures market,
the benchmark third-month February contract dropped 14 ringgit to close at 1,539 ringgit per tonne.
The country imported 4.43 million tonnes of edible oil in 2001-02 (November-October) compared with 4.83 million tonnes in the previous year, according to the SEAI.
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