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How India can be 'atmanirbhar' for edible oil production?
Numerous commodity exporting nations that are either suppliers to, or opponents, to India in the global sector have produced the Globe Trade Organisation (WTO) an arena to spar with India.
- Agricultural commodities in issue involve pulses and vegetable oils that India imports in sizeable portions and sugar that India has been exporting in recent many years.
Why India needs to become self-reliant in oilseed production?
- Increase in aggregate demand of edible oils: According to the latest data, each Indian consumed 19.5 kg of edible oil every year on an average during 2015-16, up from 15.8 kg in 2012-13.
- It amounts to an aggregate demand of around 26 million tons of edible oils per year.
- Burden on the government's exchequer: In 2019, India imported around 15 million tons of edible oils worth approximately Rs 7,300 crore, which accounted for 40 per cent of the agricultural imports bill and three per cent of the overall import bill of the country.
- Over dependence on the international market for edible oils: It causes price volatility affecting both the consumers and producers.
- The labour shortage in palm oil plantations of Indonesia and Malaysia, drought in Argentina affecting soyabean production, lower production of sunflower crops in Ukraine and rigorous buying of edible oils by China, impacted price of edible oils in domestic as well as international markets.
- Potential to increase the domestic production of oilseeds: It could reduce the import dependence and also benefit the farmers.
- The Technology Mission on Oilseeds and other policy initiatives have helped India increase the area under oilseeds in India from 9 million tons in 1986 to 32 million tons in 2018-19.
- The initiatives like Oil Palm Area Expansion under Rashtriya Krishi Vikas Yojana, increasing the minimum support prices of oilseed crops, creation of buffer stock for oilseeds, cluster demonstration of oilseed crops, etc. are being implemented by the government to boost the domestic production.
Challenges faced by oilseed production in India
- International challenge to India’s oilseed production: There is an attack on India’s bold plan to move up domestic oilseeds output so as to reduce dependence on vegetable oil imports which price tag about $10 billion in foreign trade yearly.
- The WTO member-countries are questioning India primarily concerning incentives to oilseed growers to boost output.
- Domestic production can meet only 30 per cent of the total demand: India cultivated oilseeds on 25 million hectare of land, producing 32 million tons of oilseeds in 2018-19, with soybean, rapeseed and mustard and groundnut accounting for almost 90 per cent share in the area.
- Policy of excessive import of lower quality and cheaply-priced edible oils: It has dampened the prospects of domestic oilseed farmers, who could not get proper prices and so shifted to growing other crops.
- The current disruptions in production of oilseeds, especially palm oil imported from Malaysia, is another aspect of how badly managed the oil industry policy in India is.
- Opposition to development of vegetable oil industries: The rapid spread of large plantations owned by big companies has been repeatedly opposed in several parts of the world because of the threats they pose to biodiversity and the ecology.
- Its low health value and clear unsuitability for water-stressed areas has been widely questioned.
- Ecological impact of oil palm cultivation: It generally involves higher use of chemical fertilizer and pesticide, which adversely impact the natural fertility of soil and pollute water.
How India can become self-reliant in oilseed production
- India is well-equipped to become self-reliant in edible oils: It has the suitable natural conditions to produce several nutritious oilseeds including groundnut, mustard, coconut, sesame, rapeseed, cottonseed, and others of great value.
- Indian farmers have special skills in growing oilseed crops, which mix well with other crops using traditional mixed farming systems and crop-rotation.
- The reservoirs of skills at the village-level reflects in its small-scale oilseed processing and extraction units which produce high-quality oil whose by-product is the nutritious oil-cakes used in local dairies.
- Prospect of financial support from the government: The government, which earns 350 billion rupees ($4.77 billion) from levies on edible oil imports, can easily set aside 40 billion rupees a year for crop diversification, through more taxes on such imports.
- Higher output of oilseeds and fewer imports of oils will boost farmers’ incomes, create jobs in the domestic crushing industry and help save precious foreign exchange.
- Policies focused on oilseed production: India needs to learn from countries like Malaysia and Italy, who have managed to sell their edible oil worldwide, which in return has contributed to their economy.
Measures to be adopted to address oilseed production
- Registration and monitoring of imports: The government must mandate that all vegetable oil import contracts will have to be registered with a designated authority.
- Wide scale adoption of improved agricultural technologies: Based on a rough estimate, 3.6 million tons of additional oils can be produced by means of bridging the yield gap, assuming 1.5 tons per ha as a realizable yield.
- Support to farmers growing oilseed: The farmers need to be made aware about all newer varieties and provided with access to good quality seeds.
- The cluster demonstrations and other extension activities in this line can be promoted.
- Expansion of area under oilseed crops by utilising fallow land: India has 11.7 mha of rice fallow, which can be used for the cultivation of safflower and mustard crops, which don’t need much water.
- Increase in cultivation of oil palms over other vegetable oils: The oil palm is the highest oil yielding plant in the world and has a critical role to play in meeting the vegetable oil requirements.
- The oil palm has the potential to produce 20-25 MT fresh fruit bunches (FFB) per hectare after attaining the age of 5 years.
Road ahead
- The Ministry of Agriculture has studied that India has the potential to expand the area under oil palm by 1.9 million hectares, which can produce around 7.6 million tons of additional edible oil.
- India has tinkered with tariff rates very frequently in the recent past depending on thedemand-supply situation and domestic prices to regulate the imports and to protect the interest of the consumers.
- A stable and equitable trade policy with clear direction will provide clear price signals for different market stakeholders and boost the domestic production of oilseed crops.
- India must carefully evaluate how it plans to meet the growing edible oil demand in a way that checks distorting trends and which is better for small farmers, the environment and sustainability.
- The government of India should formulate a favourable policy, which provides a fresh impetus to our oilseed economy that benefits all stakeholders in the ecosystem.
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