Why is achieving 'atmanirbharta' in edible oils a difficult ask?

Unless the focus comes back on high-yielding seeds that have a higher oil content than currently available varieties, self-sufficiency in edible oils will continue to be a mirage

Finance Minister Nirmala Sitharaman, in her Interim Budget speech on February 1, said the Modi government would launch an “Atmanirbhar Abhiyan” for oilseeds, building on a similar proposal mooted in one of her previous Budgets. The campaign, she said, would ensure availability of high-yielding seeds, market linkage procurement, value addition, crop insurance, and adoption of modern techniques in the five major oilseeds – mustard, groundnut, sesame, soybean, and sunflower.

These five together accounted for almost 95 per cent of the country’s oilseeds production of 41.35 million tonnes in 2022-23 (July to June). Any significant jump in their production will surely reduce imports.
 

Budget announcement
 

“Additional oilseeds area of 3.5 million ha (from 28.79 million ha to 32.31 million ha) will be brought under oilseeds cultivation through rice fallow, intercropping, high potential districts, and non-traditional states and season,” Sitharaman had declared in her 2022-23 (FY23) Budget speech.
 

That apart, the Centre had planned a separate mission on mustard and soybean to reduce the overall edible oil import dependency from 52 per cent to almost 36 per cent by FY26 – the edible oil marketing year, which runs from November to October.
 

The government in its Budget announcements implementation tabled the next year said during the fiscal 12 high yielding and climate resilient varieties of oilseed crops with improved quality, including four each of soybean and groundnut, three of safflower, and one of sunflower were released and recommended for commercial cultivation. It said that around 3,400 tonnes of breeder seeds of oilseed crops produced during FY22 were supplied to public and private seed production agencies during FY23 for downstream multiplication of foundation and certified seed.
 

Rising import reliance
 

India started importing edible oils during the 1990s. At present, on average, India imports 14-15 million tonnes of edible oils. Nearly 65 per cent is palm oil, of which 45-50 per cent comes from Indonesia and the rest from Malaysia. The rest of the imports include soy oil and sunflower oil.
 

According to an assessment by the Solvent Extractors Association of India (SEA), by FY26 (November to October), India's reliance on imported edible oils will continue to be 12-13 million tonnes per annum if the current trajectory in domestic oilseeds production and growth continues.
 

The average annual per capita consumption of edible oils in India is 17-18 kilograms. The country will need to add another 3-4 million tonnes to the existing 40-41 million tonnes of domestic oilseed production over the next few years to produce that extra 1.2-1.5 million tonnes of edible oils, says B V Mehta, Executive Director, SEA.
 

“Of this extra edible oils produced, around 0.5 million tonnes will go towards meeting the basic requirement of the rising population while the balance will help in cutting down imports,” Mehta told Business Standard.
 

If we manage to produce an additional 1.5 million tonnes of edible oils every year over a five-year period, we might manage to bring down total imports to less than 10 million tonnes from the current 14-16 million tonnes. To achieve this, the budgetary allocation of Rs 500-600 crore promised might not be adequate.
 

“The sum allocated will be spent just on salaries and allowances. We need an annual allocation of not less than Rs 5,000 crore. The strategy and roadmap are ready, but funding needs to be scaled up,” says Mehta.

 

Strategies on the cards
 

The Modi government has been working on a multi-pronged strategy to lower imports. The cornerstone is a higher minimum support price (MSP) for oilseeds as compared to cereals, and improving the procurement of oilseeds at times when prices crash. Lately, a renewed focus on expanding the area of palm oil and boosting the production of rice bran oils has been added.

However, unless it is supplemented by a robust procurement system, which ensures some sort of a guarantee on investments by farmers, a big switch is unlikely.
 

MSP and oilseed production
 

Experts say MSPs alone are not enough to encourage farmers to leave cereals in favour of either oilseeds or pulses, unless backed by strong procurement mechanisms or ready markets. In the past few years, India's pulses production has risen not just due to higher MSPs but also because of an assured procurement system by state agencies for building a buffer. A similar strategy could work for oilseeds.
 

The performance of Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA), which aims at providing MSP to farmers, has also been cited by the Commission for Agriculture Costs and Prices (CACP), which, in one of its reports, said that there was an urgent need to review PM-AASHA and address implementation issues.
 

Palm oil mission
 

A major initiative to boost domestic edible oil production is revamping the Oil Palm Mission with the objective of producing 2.8 million tonnes of palm oil locally by 2025-30. However, even if the mission succeeds, it will not be enough to lower the import dependency significantly.
 

At 2.8 million tonnes, by 2025-30, domestic palm oil production will still be less than 20 per cent of the total edible imports at the current pace. However, if the target is achieved, it will still make a significant contribution.
 

Rice bran oil
 

The third major way to boost domestic edible oil availability is by raising rice bran oil production from the current 1.0-1.1 million tonnes per annum to 1.8 million tonnes. However, to take the production beyond the targeted 1.8 million tonnes, domestic rice production has to grow manifold.
 

India at present produces 120-130 million tonnes of rice in a year, and increasing it is a challenge. Estimates show that from 1 metric tonne of paddy, 1.6 per cent of crude rice bran oil is extracted. When refined, this further goes down to 1.4 per cent. Therefore, for rice bran oil production to grow beyond 1.8 million tonnes per year is not a cakewalk.
 

The challenges
 

Time will tell whether the government’s current policies can achieve the target. Unless the focus comes back on high-yielding seeds having higher oil content than the currently available varieties, self-sufficiency in edible oils will continue to be a mirage.
 

On top of that, unabated cheap imports of edible oils, which have now been extended till March 2025, have ensured that Indian oilseed farmers struggle to realise the true value of their crop. On Wednesday, the government expressed its intention to purchase mustard seed from farmers at MSP as prices have fallen below the benchmark for the new crop getting harvested. Although, bumper harvest was indeed a reason, the unabated imports contributed to the fall.
 

“The influx of imports has transformed India into a prime destination of excess edible oil supplies from the world. This is significantly impacting domestic refining capacities as RBD palmolein constituted almost 25 per cent of the total edible oil imported into the country in 2022-23 season,” said a statement from SEA issued a few months back.