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Wednesday, July 04, 2001

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Threat of `once-used-oil' imports looms large

G. Chandrashekhar

MUMBAI, July 3

THERE is possibly no limit to the ingenuity of edible oil importers. Many are going through tough times with poor trade economics, unstable international prices and investigation of certain trade practices. The Government is already seized of such grave issues as invoice manipulation, duty evasion, mis-declaration of cargo and import of substandard quality. Most players seem to be unfazed over developments in the marketplace.

Another trick of the trade has now come to light. There is an attempt to import what is described as `once-used oil'. Offers from prospective suppliers in Europe have started to do the rounds of the market. Prices are extremely attractive, a discount var ying between 30 and 40 per cent of the normal market price.

Once-used oil - as the very description suggests - is vegetable oil already used at least once. There are aggregators who collect such oil from large user establishments such as food outlet chains and snack manufacturers. Usually, the oil is a blend of r efined soyabean and rapeseed oils, but the composition can vary. Further use for such (once-used) oil is rather limited in Europe where food laws are extremely strict.

For such oils, third world countries as India offer an attractive marketing outlet. Not only is the Indian market quite price conscious, traders here are often able to get away with any grade of import. Although several departments of the Government - fi nance, health, civil supplies - are involved in granting clearance to imported oils, in practice, monitoring of import quality at the point of entry is lax and far from satisfactory.

Over the last few weeks, in the international market, soft oil prices have moved up by $20-30 per tonne. Currently, degummed soyabean oil is quoted at $330 a tonne, crude sunoil at $430 a tonne and rapeseed oil $410 a tonne, all cost and freight India.

The extant duty on soyabean oil is the lowest - 45 per cent on crude and 50.8 per cent on refined - while duty on other crude soft oils is 75 per cent and on refined oils even higher.

There are apprehensions that the once-used-oil, if and when imported, may be declared as soyabean oil and cleared at the lowest possible rate of duty. It is time the customs authorities and the port health officials took guard against such a possibility and tightened their systems.

Whether such oil will have any health implications or not will be difficult to tell unless samples are tested and the quality standards ascertained. A major part of such oil may be used by institutional consumers such as restaurants and halwais, while th ose who eat the food made out of once-used oil may never know. Demand for edible oil usually witnesses rapid expansion during August-November because of a series of festivals.

According to Indian food laws, imported edible oils must conform to the standards laid down in the Prevention of Food Adulteration Rules, 1955. The Central Committee for Food Standards has not laid down any quality norms for vegetable oil once used.

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