27 December 2000

ANDHRA CM SMELLS A PALM OIL SCANDAL

From Jal Khambata

NEW DELHI: Sharp fall in the groundnut and other oilseed prices in Andhra Pradesh has prompted Chief Minister Chandrababu Naidu to shoot out a letter to Union Finance Minister Yashwant Sinha, accusing him of a scandal of either promoting some palm oil cartel abroad or deliberately giving a favoured treatment to the Vanaspati industry to go for heavy imports of crude palm oil.

Making out a case for further increase in the import duty on edible oil to provide a "ground-playing field" to the oilseed growers, Naidu has pointed out that the Vanaspati industry was resorting to large imports of crude palm oil because of the concessional duty of just 25 per cent as against 55 per cent prescribed for others.

He has stated that import of crude palm oil was "nil" in the last crushing year November 1998 to November 1999, while the imports between December 1999 and October 2000 have totalled 8.29 lakh tonnes, thereby affecting the growers and indigenous manufacturers of vegetable oil.

Though the letter lays stress on rationalisation of the import duty structure in the Union Budget "so that ground nut, coconut oil seed farmer and oil palm growers are given immediate relief from the crisis of unremunerative prices," Naidu has spelled out how the Vanaspati industry has been not only favoured but encouraged to import crude palm oil.

The statistics reeled out by Naidu in his letter reveal how the Finance Ministry has been fiddling with the oil import duties continually for various reasons instead of limiting to the budget for effecting the increases. The import duty applicable to all edible oils was uniform 16.5 per cent up to December last year when the duty on refined oils was suddenly raised to 27 per cent. The duty on the crude edible oil, including palm oil, however, remained untouched at 16.5 per cent.

Again in the Union Budget early this year, the import duty on the refined oil was further raised to 32.6 per cent without affecting the rate for the crude oil. And, come June 13, the

Come June 13 and the import duty structure for edible oil was further changed. The Vanaspati industry remained untouched as the duty for import of crude palm oil for it remained the same 16.5 per cent but anybody else importing the same crude palm oil for refining and selling was raised to 45 per cent. In November, the import duty for the Vanaspati manufacturers was raised to 25 per cent to suppress criticism but then it was made 55 per cent for others.

Naidu has stressed in his letter that he was not asking for any inflationary measure but only demanding rationalisation of the import duty so that the Vanaspati industry does not get undue advantage and at the same time it is compelled to give first preference to the indigenously produced oil instead of increasingly depending on imports.

According to the Andhra Pradesh Government sources, this is the second missive shot out by Naidu to Sinha on the issue of the prices of oil seeds as the chief minister had earlier also on November 3 drawn his attention to the plight of farmers because of the depressed prices of oil seeds. He had, in fact, written several letters earlier, the sources said.

In his latest letter, Naidu says the Finance Minister was "quite aware that domestic prices have not increased substantially following increase of import duties on edible oils announced on November 21, 2000 as there have been quick changes in international duties and prices."

He says the economy of the groundnut and other oilseed farmers has been seriously affected from the Centre encouraging imports at their cost and it was a matter of concern for him since Andhra Pradesh is the second largest groundnut growing state after Gujarat. The letter says the farmers were first hit by continuous drought for years and now the onslaught of imported oil has seen the prices of their produce plummeting even below the minimum support price. END