Source: Businessline.
Vegetable oil prices have risen by almost 30 per cent in average since the Russian invasion of Ukraine in February this year
The Russia-Ukraine war has had an immense impact on the edible oil market and once again highlighted India’s vulnerability to the global edible market vagaries.
Even before the war, global vegetable oil supplies had tightened due to a drought in South America which resulted in the reduction of soybean yield.
Malaysia’s palm production, too, declined due to the impacts of Typhoon Rai in December 2021. Drought-impacted Canadian rapeseed production for 2021-22 declined 35 per cent from the previous year.
The war in Ukraine pushed prices of agricultural products to historically high levels and raised concerns about global food security. As with a number of other commodities, prices for many vegetable oils were at very high levels prior to the Russian invasion in February. Since then, vegetable oil prices have risen by almost 30 per cent in average.
Despite the government’s effort to decrease the edible oil dependency on the world, India will still have to import 72 lakh tonnes of edible oil at the value of ₹70,000 crore in 2030-31, which would be 23 per cent of the total requirement of 300 lakh tonnes edible oils.
India’s dependency
The data from the Oilseeds Division of the Department of Agriculture and Farmers Welfare show import dependency will decrease to 23 per cent in 2030-31 from 52 per cent (2021-22), but India will still need edible oil from other countries.
The outcome indicator presented by the Oilseeds Division shows the oilseeds area in the country will increase from 287.6 lakh hectares (2021-22) to 338.1 lakh hectares in 2030-31.
The oilseeds production will also increase from 385 lakh tonnes in 2021-22 to 602.2 lakh tonnes in 2030-31.
But at the same time, the edible oil requirement in the country will go up from 267.1 lakh tonnes in 2021-22 to 300 lakh tonnes in 2030-31. The production of edible oil, however, will go up from 126.4 lakh tonnes to 228 lakh tonnes during the same period, leaving a gap of 72 lakh tonnes.
Palm oil (crude + refined) constitutes about 62 per cent of the total edible oils imported, and is mainly sourced from Indonesia and Malaysia, while soyabean oil (22 per cent of total imports) is imported from Argentina and Brazil.
Sunflower oil (15 per cent of total imports) is imported mainly from Ukraine and Russia. International prices of edible oils are under pressure due to the shortfall in global production and an increase in export tax/levies by the exporting countries.
Consumption on rise -
During the 1980s and 1990s, per capita consumption of edible oils was at 6-7 kg per person per year. India was more or less self-sufficient to cater to that need.
According to government data after the 2000s, there was a boom in edible oil consumption throughout the country. The per capita consumption which was 7.3 kg/year in 1994-95 increased to 18.3 kg/year in 2014-15.
This led to an increase in demand. the production of oilseeds in the country could not keep pace with the increased demand. Interestingly, the Indian Council for Medical Research (ICMR) recommends 30g per person per day of edible oils — that is 12 kg per person per year.
In India, soybean contributes the highest towards oilseeds production while rapeseed and mustard produce the highest edible oil due to high oil content (40 per cent). Palm oil is the most consumed oil but 96 per cent of this is imported. Soybean, mustard, and sunflower are other major edible oils consumed in the country.
Government’s efforts
The government has been implementing a Centrally-sponsored scheme, National Food Security Mission — Oilseeds and Oil palm (NFSM-OS and OP) from 2018-19 to increase the production and productivity of oilseeds in the country.
The government has also launched a separate mission for oil palm, namely National Mission on Edible Oils (Oil Palm) — NMEO (OP) in 2021-22.
Both NFSM — Oilseeds and NMEO (OP) are being implemented in the country with the objective of augmenting the availability of edible oils by increasing the production and productivity of oilseeds and oil palm and reducing the import burden.
In a bid to control the continuous rise in cooking oil prices — since government had earlier cut the basic duty on crude palm oil, crude soyabean oil and crude sunflower oil from 2.5 per cent to nil — the agri-cess on these oils has been brought to 5 per cent.
Yield gap analysis
Oilseed growers and oil producers highlight that the government must address micro-irrigation, quality seeds, marketing infrastructure and government policy issues to decrease dependency on imports. Technology and market support to farmers are the key to increasing oilseed production, said experts.
According to the government, there exists a tremendous potential for enhancing the yield of nine oilseed crops by adopting the technologies already available. The productivity (yield) gap between improved technology and farmers’ practices ranged from 21 per cent in sesame to 149 per cent in sunflower.
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