Domestic consumption of edible oil has gone up notwithstanding the impact of lockdown imposed to contain spread of the COVID-19 pandemic and compulsion to switch to work-from-home by many employers. Also, major social functions such as marriages have come to a halt, hitting the functioning of hotel and its associated sectors.
Sources in the industry told The Hindu that 60% of oil is consumed for domestic purpose during normal days and the rest by consumption by hotels and other commercial firms, including bread and biscuit-makers. While the average per capita consumption is 16 kg, 21 million tonnes is the requirement of which 16 million tonnes is imported due to short-supply in the country.
Soya bean oil is imported from Brazil and Argentina, sunflower is sourced from Russia and Ukraine and palm oil from Indonesia and Malaysia. Work-from-home and the preference for stay at home during the lockdown have led to increase in domestic consumption by 20% compensating to a large extent the loss suffered due to closure of hotels and catering services, according to a conservative estimate.
Edible oil is an essential commodity the supply of which cannot be disrupted. With the unlocking in phases, there is a slight increase in demand from the HoReCa (hotel, restaurant and café) segment.
Business cycle
“We noticed a slight increase in demand for palm oil and larger packs, nothing significant. Not too many people are visiting restaurants, so we are not sure how long will it sustain. The domestic household demand is still maintained and we are witnessing a 10% increase in demand from this segment,” says P. Chandrashekhara Reddy, vice-president, sales & marketing, Freedom Healthy Cooking Oils (Gemini Edibles & Fats India Pvt. Ltd.).
On the impact of the lockdown, he said their business cycle involved three essential steps: import/sourcing, refining, packing and shipping. “As we mostly rely on imported edible oils for refining, we are sourcing sunflower oil from Russia and Ukraine, palm oil from Indonesia and Malaysia. Our plants at Kakinada and Krishnapatnam are able to meet 50% of the demand of Andhra Pradesh and Telangana,” he said.
“We have ensured the availability of enough packing material and staff for packing. We have standardised vendors for the transport of packed edible oil to the distribution outlets. Due to COVID-19, although the cost of transport is 70% higher, we still get the required trucks for shipping of goods and meeting the demand,” Mr. Reddy said.
