The industry body SEA (Solvent Extractors’ Association) has said that it is weighing options to source cooking oils from other countries to maintain domestic supply and keep retail prices under check with imports of sunflower oil getting affected due to the conflict between Ukraine and Russia.

• India’s total imports of edible oils surged to a record Rs. 1.17 lakh crore in 2020-21 marketing year.
• More than half of India’s edible oil consumption is imported, India’s dependence on edible oil imports is to the tune of 65%.
• Sunflower oil accounts for 14% of all edible oil imports
• India imports 25 lakh tonnes of sunflower oil annually, of which 70% comes from Ukraine and 20% from Russia.
• About 93% of India’s sunflower seeds oil imports are sourced only from Ukraine and Russia.
• India imports palm oil from Indonesia and Malaysia, while Soyabean oil comes from Brazil and Argentina.
• The aggregate demand is around 26 million tons of edible oils per year.
• In 2019, edible oils accounted for 40% of agriculture import bills and 3% of overall import bill of the country.
  • Palm Oil (62%) > Soya oil (21%) > Sunflower oil (16%)

India’s dependence on imports for edible oils

• Demand and supply gap: The gap between demand and supply of edible oils is around 56% and is met through imports.
  • India’s significant import dependence for edible oils started in late 1990s when the imports were just 1.7 mt which rose to 5 mt in 2007-8.
  • After that there has been a constant rise in imports, in sync with the rise in domestic demand from an emerging middle class.
• Rise in edible oil prices: The retail prices of audible oil or already plateauing, The price of sunflower oil rose from Rs.98 per litre in 2019 to Rs.161 in 2022

• MSP for oilseeds: Minimum support price (MSP) operations for oilseeds has been marginal over the years.
  • Domestic mandi prices are now much above the MSP level. Mandi prices of soya bean oil are nearly double the MSP currently.
• Cropping patterns of the country: incentives for Indian farmers to grow oilseeds are still weak, high yielding rapeseed and sunflower varieties and remunerative prices could boost the output of the nation.

• Volatility of prices: The dependence on the international market for edible oils leads to a significant burden on government exchequer and also causes price volatility affecting both consumers and producers.
  • For instance, 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 the price of edible oils in domestic as well as international markets in the later part of the pandemic year.

Road ahead

• Changing cropping patterns:for instance, rice farmers should be encouraged to grow sunflowers during India’s rainy months and wheat producers to cultivate rapeseed in the winter.
  • Higher production of rice bran oil and expensive peanuts could also serve as supplements.
  • About 2 million tonnes of edible oil can be produced using available rice bran.
  • Cotton seed is also a promising source of vegetable oil and has an untapped potential, about 1.4 Mt of oil can be augmented with cotton seeds.
• Moving part of the supply chain locally: experts have argued that the government can import soya beans and crush them domestically rather than simply purchasing Soyabean oil.
  • It would potentially boost oil supplies at home and meet the rising demand for feed from the poultry industry.
• Technology Mission on oil seeds: The technology Mission and other policy initiatives in India increase the area under oilseeds in India from 9 million tonnes in 1986 to 32 million tonnes in 2018-19.
• Initiatives by government: several initiatives like oil palm area expansion under the Rashtriya Krishi Vikas Yojana, increasing the MSP of oilseed crops, creation of buffer stock for oilseeds, cluster demonstration of oilseed crops etc are being implemented by government to boost the domestic production.
• Stable tariff structure:A stable and equitable trade policy with clear direction would provide clear price signals for different market stakeholders and boost the domestic production of oilseed crops.
• Adopting improved agriculture technology: 3.6 million tonnes of additional oils can be produced by means of bridging the yield gap, it requires a wide scale adoption of improved agricultural technologies like quality seeds, optimum usage of Agro chemicals and better management.
  • Improved varieties like Pusa 12, JS 20-34 of soybean, pusa double zero 30 and 31 of mustard which are low erucic acid as well as high yielding