Over-reliance on imports hampers India's edible oil self-sufficiency plan

The government’s recent decision to set up a National Mission on Edible Oils and Oilseeds to achieve self-reliance in edible oils in the next seven years does not inspire enough confidence in meeting the hitherto elusive objective. The reasons for the paucity of optimism on this count are many. For one, oilseed missions of this kind, and with similar mandates, have existed since the mid-1980s, but without much success. In fact, one such mission, called the National Mission on Edible Oils-Oil Palm (NMEO-OP), set up in 2021 with an outlay of Rs 11,040 crore, is in operation even now, though the others have either folded up or merged with the revamped National Food Security Mission. The new initiative, thus, involves neither any innovative thinking nor a novel game plan, to ensure better success. Dependence on import for meeting the domestic requirements of this mass-consumed kitchen staple has continued to remain untenably high. It is about 60 per cent even now. 

  No doubt, the indigenous production of oilseeds and edible oils has also been increasing steadily, but the growth rate has failed to keep pace with the rise in demand. The lag has become all the more conspicuous in recent years. According to the official data, the output of edible oils has risen since 2006-07 by 2.2 per cent a year, while the demand has surged at almost double the pace — over 4.3 per cent. As a result, the import of cooking oils has swelled from 4.37 million tonnes in 2006-07 to nearly 15.5 million tonnes in 2023-24. Accordingly, the annual import bill of edible oils, too, has soared from $2.2 billion to over $15 billion during this period. Edible oils are now the third-largest item of imports, next only to crude oil and gold. 

The only time when the country came close to being self-sufficient in edible oils, for a brief period, was in the early 1990s. That was thanks largely to a well-judged strategy, evolved and meticulously implemented by the very first Technology Mission on Oilseeds (TMO), launched in 1986. This mission, unlike its subsequent none too successful avatars, had managed to show some quick results chiefly because it was given full autonomy and requisite powers to take policy decisions and enforce them without any bureaucratic meddling. The main mantra for boosting domestic edible-oil output, adopted by the TMO, was to make oilseed cultivation remunerative enough for farmers to invest in yield-boosting technology, while, at the same time, keeping the market prices of cooking oils affordable for the consumer. The government’s market intervention, by way of changes in import tariffs and curbs on domestic trade, was restricted strictly to the situations when prices tended to breach the upper or lower limits specified to protect the interests of both producers and consumers. 

However, this phase did not last long because the government blurred the focus of the technology mission, and increased its workload, by burdening it with the additional responsibility of raising the output of pulses as well. The result, expectedly, was that the mission, renamed the Technology Mission on Oilseeds and Pulses, could do justice to neither oilseeds nor pulses. While the pulses remained in short supply as ever, the gains made in oilseeds were also frittered away. 

Overwhelming dependence on import for an item as essential as cooking oils is, obviously, inadvisable. The bulk of the imports consist of palm oil and its derivatives, sourced from just two countries (Indonesia and Malaysia), though some other oils, notably soybean oil and sunflower oil, are imported in limited quantities from other countries as well. Changes in the market dynamics of these oils in the global bazaar, or a disruption in supplies due to any other unforeseeable factor, can pose formidable problems. Increasing indigenous edible-oil supplies is, therefore, absolutely imperative. 

But the local production of oilseeds can improve only if these crops are able to compete with alternative crops in terms of profitability. This is far from so at present. Oilseeds do not enjoy the kind of procurement-based marketing support that is available to food and some other crops, though their minimum support prices (MSP) are announced, and routinely enhanced, every year. Most growers of oilseeds generally have to dispose of their produce at lower than the MSP. As a result, the cultivation of oilseeds has been pushed largely to marginal, less fertile and unirrigated lands. Over 70 per cent of the area growing oilseeds relies primarily on rain. The use of fertilisers, or other yield-boosting cash inputs, including plant-protection chemicals, is also rather limited in the case of oilseed crops because of marketing uncertainties. Unless these issues are suitably addressed, and oilseed cultivation is made remunerative, no oilseeds mission would succeed in attaining the coveted goal of self-sufficiency in edible oils. 

surinder.sud@gmail.com