Edible oil imports likely to continue despite higher oilseeds production

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Saurabh Katkurwar | 28 Feb, 2017
Even as the Union Agriculture Ministry has reported a record 25 percent hike in the production of oilseeds, the country's goal of attain self sufficiency in edible oil will remain a far cry from reality -- for at least half-a-decade.

The reason: India's edible oil imports accounted for 63 percent of the consumption in 2015-16 (oil year from November to October). Thus, the higher harvest could hardly do anything to reduce the burgeoning supply deficit from domestic sources.

"We do not think that additional oilseeds production this year will help much in bridging the demand-supply gap, which has widened over the years due to increase in consumption and lower growth in production," said an official, who requested anonymity.

"In addition, the actual production of oilseeds may vary from the estimates as it happened with the wheat production last year. So we will have to rely on imports for now to meet our domestic demand."

The government estimates show the total amount of edible oil available for consumption in 2015-16 was 23.45 million tonnes, of which 14.82 million tonnes was imported.

The official added that the self-sufficiency in edible oil could be achieved in five years' time if the monsoon continues to be average, cultivation area is increased and technical innovations are adopted to boost production.

According to the latest estimates, the production of oilseeds is expected to increase by eight million tonnes, from 25.25 million tonnes in 2015-16 to 33.60 million tonnes in 2016-17.

The actual amount of oil extracted from oilseeds normally ranges from 14 to 65 percent.

As a bumper harvest is expected this year, there are voices seeking an increase in the import duty to protect local growers. But this is not likely to happen any time soon.

T.K. Manoj Kumar, Joint Secretary in the Department of Food and Public Distribution, said, "It is very early to say anything now. We are studying the data. The actual picture will be clear after final estimates come out in May."

Last September, the government had lowered the import duty on crude palm oil to 7.51 percent from 12.5 percent and that on refined palm oil to 15 percent from 20 percent to tame the increasing prices in the domestic market due to depleting stocks following the two years of drought.

Palm oil, soyabean oil and sunflower oil topped the list of oils imported in 2015-16.
India imported 9.54 million tonnes of palm oil in 2015-16, an increase of 17 percent compared to the previous year. Similarly, imports of soyabean oil and sunflower oil were pegged at 3.9 million tonnes and 1.4 million tonnes in 2015-16, respectively.

According to the Indian Agricultural Research Institute (IARI), India's Technology Mission on Oilseeds (TMO) -- the first comprehensive intervention aiming at self-sufficiency launched in 1986 -- could achieve success initially. However, the increasing demand spiked the volume of imports -- from 15 percent in 1995-96 to 53 percent in 2009-10 and now to 63 percent.

Meanwhile, the Indian Oilseeds and Produce Export Promotion Council (IOPEPC) has asked the government to allow bulk export of premium oils such as groundnut and sesame, which are produced in India. At present, export of edible oil packs of five Kgs is permitted.

"Due to the normal (average) monsoon, the kharif harvest was good this year and the rabi harvest is expected to be above average. In case we will have to import soyabean or palm oils, they will be available at cheaper rates. So, the government should allow export of premium oils such as groundnut and sesame, which are costly and consumed less here, in bulk amounts. It will boost oilseeds production domestically and ensure more profits for local farmers," IOPEPC Chairman Sanjiv Sawla told agency.