Retailers8217; margin slashed

RAJKOT, June 23: The State Government's effort to control groundnut oil prices by persuading the millers to observe a voluntary ceiling' of...

RAJKOT, June 23: The State Government8217;s effort to control groundnut oil prices by persuading the millers to observe a voluntary ceiling8217; of Rs 46 a kg seems to have run into resistance from retailers, who complain that the ceiling had sliced off their profit margin.

While there is no oil shortage, the retailers have reduced the offtake as the profit has dropped to a meagre 20 paise a kg. More serious, however, are reports that the retailers have started mixing cheaper oils in the State8217;s favourite cooking medium.

A report from Vadodara, the hometown of Civil Supplies Minister Jaspal Singh, said groundnut oil was selling between Rs 49 and Rs 51 a kg in most of the markets. Only at the main oil market of Chokhandi, the price was Rs 47.

Vadodara Oil Merchants Association secretary Hari Thakkar and district officers admitted that some retailers might be charging a higher price because of the 8220;communication gap8221;, but claimed the price would become uniform at Rs 47 8220;in a day or two8221;.

In Surat, where cottonseed oil is a more popular cooking medium, the price of groundnut oil is not such an emotive issue. It has come down by about Rs 30 per tin of 15 kg. Before the ceiling was fixed, the price was Rs 50 per kg. But Surat is clearly an exception.

In Rajkot, the three major oil mills 8211; Raj Moti, Lakshmi and Kaneja 8211; are selling the oil at the agreed Rs 440 per 10 kg. Said Himmatbhai Unadkat, a major oil lobby player: 8220;All of us are offering stocks at the prescribed price, but there is little trading.8221;

The resistance from the retailers has led to an artificial shortage which, in turn, has given rise to talk of hoarding. But leading millers denied it, saying hoarding would harm them. 8220;There is enough stock in Rajkot, and crushing is on. There are more stocks in Junagadh and Keshod. The problem is there isn8217;t much demand,8221; said a miller.

Story continues below this ad

According to him, the millers stood to gain by selling at the prescribed price because about 30 mills in Jamnagar had 8220;200-500 tonne groundnut stocks8221; each. These mills were not working because power supply had not yet been restored since the cyclone. Once they started operations, there would be a glut, the miller claimed.

There are reports that certain retailers, in order to retain the profit margin, are mixing cheaper, non-edible castor oil in Rajkot. Millers are making these allegations, but no official confirmation was available.

Most millers are cynical about the success of the price ceiling. They describe it as an eyewash and claim such experiments had never succeeded.