Import dependence | Business Standard Editorials

lipped from: https://www.business-standard.com/article/opinion/import-dependence-121051201480_1.html

India must attain self-sufficiency in edible oils

Buoyed by the good performance of agriculture in the past few years and the India Meteorological Department’s projection of timely, normal, and well-distributed rainfall in the ensuing monsoon season, Krishi Bhavan has set ambitious crop output targets for the next agricultural year. These goals envisage the production of most crops to scale new highs, though it might result in a general downturn in agricultural prices to the detriment of growers. However, pulses and oilseeds are the two exceptions. Pulses, which were only marginally short of requirement last year, might witness self-sufficiency for the first time, resulting in price moderation. But oilseeds and edible oils might remain costly due to an unabated supply crunch.

Surprisingly, while the government has rightly opted to persist with the special drive to boost pulses output, launched in 2017 to check the unprecedented price spike after the two consecutive droughts in 2015 and 2016, it has not chosen to do the same in the oilseeds sector. In fact, oilseeds and edible oils have a better case for special efforts to enhance local production and ease dependence on imports, which have surged to almost 70 per cent. The country’s annual vegetable oil purchases now average 14-15 million tonnes, making them the third-biggest item of imports, next to crude oil and gold. Worse still, with business as usual, these imports could swell further to 20 million tonnes by 2030, resulting in a precarious ship-to-mouth existence for the cooking material. Such a situation is, obviously, untenable for a country of the size of India, where the edible oils demand has been growing annually at around 5 per cent since 2000. The matter of particular concern is that the bulk of the imports comprise palm oil sourced just from two countries — Indonesia and Malaysia. Any disruption in supplies from there, for whatever reasons, can prove disastrous.

Fortunately, the task of bridging the supply gap in vegetable oils is not undoable, especially after tasting success in pulses. In fact, this feat was once achieved in the past under the guidance of the Oilseeds Technology Mission, appointed by the then prime minister, Rajiv Gandhi, in 1987. The winning strategy sought remunerative prices to serve as an incentive for farmers to raise oilseeds output by investing in yield-enhancing technology. Market prices were allowed to fluctuate freely within a well-judged range where they remained lucrative for the growers but without going out of the consumer’s reach. This strategy made India nearly self-sufficient in cooking oils in just three years by 1990. However, its gains could not be sustained because of the general neglect of agriculture in the initial phase of the post-economic reforms era.

However, that kind of strategy alone would not work today. The prices of edible oils are already too high and, yet, these crops can’t compete with the staple cereals propped up by the government through liberal hikes in minimum support prices. Oilseed crops now need a profitability edge, acquired through higher production at reduced costs. The mantra to do so is to provide some key inputs either free or at subsidised rates and ensure effective marketing support. This is what is being done in the case of pulses with good results. The same needs to be replicated in oilseeds.

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