Edible Oils and atmanirbharta

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Domestic production can only meet a little over 30% of the total demand for edible oils, remaining met through imports.

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 Edible Oils and atmanirbharta


  • The story: The prices of imported edible oil are at an all-time high, causing inflation and high dependence on imports. Government programmes and measures needed to increase palm oil production are always under a scanner.
  • Domestic requirements: India needs about 25 million tonnes of edible oil a year to meet its domestic requirements. India cultivated oilseeds on 25 million hectare of land, producing 32 million tons of oilseeds in 2018-19. Soybean, rapeseed, mustard and groundnut accounts for almost 90% share in the area.
  1. Primary sources - soybean, rapeseed and mustard, groundnut, sunflower, safflower and Niger (Niger nut)
  2. Secondary sources - palm, coconut, rice bran, cotton seeds and tree borne oilseeds
  • India's imports-dependence: Domestic production can only meet a little over 30% of the total demand for edible oils. The remaining requirement is met through imports. India is the world’s largest importer of edible oil with a share of 20.7%, [EU (13.5%) & China (12.8%)] Edible oils imports account for 40% of the agricultural imports bill and 3% of the overall import bill of the country.
  1. Palm oil - 62 % of total oil imports (from Indonesia & Malaysia)
  2. Soya oil - 21% (from Argentina & Brazil)
  3. Sunflower oil - 21% (from Ukraine & Argentina)
  • Import related problems: They inevitable are a burden on the exchequer, and increase India's dependence on the international market. Price volatility can hurt in a big way. Then there's uncertainty - Labour shortage in palm oil plantations of Indonesia and Malaysia, drought in Argentina affecting soyabean production, lower production of sunflower crops in Ukraine impacted price of edible oils. The government had to reduce import tariff of palm oil by 10 per cent in November to ease the domestic price.
  • Palm oil mission: Diversifying more areas for palm oil plantations is the need of the hour. Palm cultivation has high potential - 1 hectare can give about 4,000 kg of oil (only 500 kg of oil in the case of sunflower, coconut, and rice bran).
  1. National Edible Oil Mission-Oil Palm (NEMO-OP) - The government launched this Rs.11,000-crore program to increase palm oil production by 3 times (11 lakh tonnes of Palm oil by 2025-26). It plans to boost cultivation of oil palm to 10 lakh hectares and 16.7 lakh hectares by 2025-26 and 2029-30 respectively across 19 Southern and the North-Eastern States. Forex savings from reduced imports can be spent on encouraging farmers to take up palm and oilseeds cultivation.
  2. Others initiatives - Oil Palm Area Expansion under Rastriya Krishi Vikas Yojana, Increasing MSP of oilseed crops, Creation of buffer stock for oilseeds, Cluster demonstration of oilseed crops etc.
  • Current MSP: The MSP system for oilseeds has failed due to low procurement by government agencies. As the procurement of pulses on MSP has been increased, the government should also ensure the oilseeds procurement. [Against a domestic demand of 30 million tonnes of pulses/year, India now imports just 4 million tonnes. India’s success story of achieving self-sufficiency in pulses, must be replicated in the oilseeds & palm oil.]
  • Road ahead: Attracting corporate bodies towards palm oil production may help, though there remain serious environmental concerns. Effectively using 100% FDI in palm oil plantation to attract corpoate bodies can be done. Leasing, renting or selling of wasteland, degraded land, and other lands to private entrepreneurs, cooperative bodies or joint ventures for oil palm plantation can speed things up. Combining individual farming, contract farming and captive plantation may also help. And compensating farmers for at least 6 years for their land under oil palm against the potential loss; providing a one-time irrigation subsidy to farmers.


 

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PT's IAS Academy: Edible Oils and atmanirbharta
Edible Oils and atmanirbharta
Domestic production can only meet a little over 30% of the total demand for edible oils, remaining met through imports.
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