Slipping on edible oil

India must address its over-dependence on imports

The dependence on imports for meeting the demand for edible oils has gone up to 70 per cent from almost negligible levels in the early 1990s. In fact, it is projected to move up to over 74 per cent in the next oil year, that is, November-October 2017-18. Such excessive reliance on external sources for an essential item of mass consumption is always tricky, especially since the bulk of the imports are of palm oil and that too from just two countries, Malaysia and Indonesia. Predictably, any disruption in supply can cause a huge upset in the Indian market. Successive governments have favoured imports over homegrown oils and have kept import duties on palm oil low enough to enable it to outcompete indigenous oils. This has been so regardless of the fact that India can produce enough oilseeds to meet the local requirement. The repercussions of this policy are several and fairly disquieting. 

For one, barring importers, of course, it has hurt both oilseed growers and the edible oil industry. Over 500 oil units have closed down, resulting in retrenchment of labour. Most of the remaining ones are also operating at below their rated capacities. Many of them are said to be surviving by covertly mixing low-priced palm oil with superior indigenous oils and selling them to unwary consumers. This apart, the recent uprising of the Patidars (Patels), predominantly groundnut growers, in Gujarat and soybean farmers in Madhya Pradesh is also, in a way, linked to the erosion of profitability of these crops due to the government’s ill-advised policies. Mustard growers of Punjab and Haryana are equally peeved. The ruling National Democratic Alliance (NDA) needs to realise that it has already paid a political price for this by losing Punjab and may face a tricky situation in poll-bound Gujarat as well.

The recipe for achieving self-sufficiency in cooking oils is not unknown. It was conceived and successfully tried out by the Oilseeds Technology Mission set up by the then Rajiv Gandhi government in 1986 when import dependence had risen to 45 per cent. The strategy involved laying down a judiciously determined band within which local prices of oilseeds and edible oils were allowed to fluctuate freely. Market interventions by government agencies were resorted to only when prices tended to breach limits to the disadvantage of either farmers or consumers. Promotion of better technology and greater use of yield-enhancing inputs formed part of this plan. As a result, by 1992-93, India’s oilseed output doubled. 

The good work done by the mission was, however, nullified later by switching back to policies tilted in favour of consumers at the cost of the interests of the producers. Indian oilseed researchers have developed technologies that can raise the average yield of these crops from the present 12.25 quintals a hectare to over 14.5 quintals. The Indian Council of Agricultural Research has even identified additional area, mostly fallow land kept untilled after the kharif harvest, which can be brought under oilseed cultivation to boost overall production and availability of edible oils. Such initiatives should be lent all support to move towards self-sufficiency in edible oils.