New Delhi, Nov 28 - Edible oil prices in India, the world's second-biggest vegetable oil importer, will rise in 2008 with rapeseed/mustard sowing set to dip by up to 30 percent, an official at a leading farm body said on Wednesday.
Farmers planted rapeseed on 7.3 million hectares and produced around 5.5 million tonnes in 2007, but analysts say acreage is likely to shrink and output fall next year as higher wheat prices lure farmers to grow more grains.
"What is a ... concern is that mustard sowing is said to be lower this year than last year by 20-30 percent," Alok Ranjan, managing director of the National Agricultural Cooperative Marketing Federation of India (NAFED), told Reuters.
Ranjan said in an interview that high temperatures in the western state of Rajasthan were also likely to lead to a drop in production.
India harvests two oilseed crops annually but only one of rapeseed, which is sown in November-December and harvested from February.
Ranjan said domestic edible oil prices have been lower than those in global markets, but a sharp spike was inevitable if the rapeseed crop shrinks.
India has managed to keep a lid on domestic prices through a series of import duty cuts and a freeze on the tariff value used to calculate levies. A leading oilseed trader from the western state of Gujarat, a major groundnut growing region, said global prices were almost 22 rupees above Indian rates of around 520 rupees ($13.1) per 100 kg.
Ranjan said NAFED has bought 60,000 tonnes of edible oils since the beginning of the current financial year in April, and plans to buy more.
"We are importing edible oil as a commercial venture, not on behalf of the government" Ranjan said, adding the farm body would process its entire 390,000 tonnes of rapeseed stocks by February, when the new season crop will start to arrive.