From a 10-year perspective, India’s edible oil imports have elevated from 11.6 mt (valued at Rs 60,750 crore) in 2013-14 to 16.5 mt (Rs 138,424 crore) in 2022-23, with the soar pronounced within the final three years (desk 1). During the earlier 10 years between 2004-05 and 2013-14, imports had shot up much more, from 5 mt to 11.6 mt.

Dipping self-sufficiency

In 2022-23, India’s edible oil manufacturing from domestically grown oilseeds and different sources akin to cottonseed, rice bran and maize/corn amounted to round 10.3 mt. Adding imports of 16.5 mt took the whole availability to 26.8 mt, with the share of home manufacturing on this at solely 38.6%.

Compare this to 2004-05, when home output, at 7 mt, exceeded imports of 5 mt and translated right into a self-sufficiency ratio of near 60%. “Last year, our availability (from imports plus domestic production) was more than the actual consumption requirement of 24-25 mt. We are projecting the latter to reach 30-32 mt by 2029-30. If adequate efforts aren’t taken to boost production, our annual imports could top 20 mt,” stated BV Mehta, government director of the Mumbai-based SEA.

That would additional deliver down the self-sufficiency ratio to a 3rd or beneath.

Profile of home oils

Table 2 exhibits that the 2 greatest contributors to India’s edible oil manufacturing now are mustard and soyabean. At No. 3 and No. 4 are cottonseed and rice bran.

The kapas or uncooked un-ginned cotton harvested by farmers comprises solely about 36% lint, the white fluffy fibre that textile mills spin into yarn. The steadiness is seed (62%) and wastes (2%) which are separated from the lint throughout ginning. Cottonseed, in flip, comprises 13% or so oil.

Higher yields from genetically modified (GM) Bt expertise helped enhance not solely lint, but in addition cottonseed oil manufacturing from lower than 0.5 mt to 1.5 mt between 2002-03 and 2013-14.

Falling cotton output and yields in current occasions — from Bt expertise’s diminishing effectiveness and the emergence of new insect pests has led to the manufacturing of its oil dropping too, to 1.25 mt in 2022-23.

Just as with cotton, there have been spin-offs from elevated output of rice and maize, when it comes to their byproducts. The oils extracted from bran (the outer brown layer of rice after removing of the husk and earlier than sharpening/whitening) and germ (the within endosperm of maize grains separated throughout milling) have each seen important manufacturing development during the last decade or extra. So has oil from domestically cultivated palm timber, albeit from a low base.

Among typical oilseeds, solely mustard has retained its sheen. While groundnut oil manufacturing has additionally grown, roughly half of its kernels are at present both instantly used for desk consumption or exported. That leaves not a lot for crushing and oil extraction. It makes groundnut extra of a dry fruit and fewer of an oilseed.

The different oils — coconut, sesame, sunflower and safflower — have all registered declines in home output. Although there are some premium homegrown manufacturers — for example, ‘Parachute’ coconut oil of Marico and ‘Idhayam’ sesame oil of the Virudhunagar (Tamil Nadu)-based VVV and Sons Edible Oils Ltd — these oils have struggled towards the onslaught of cheaper imported oils.

The 16.5 mt of edible oil imports in 2022-23 included palm (9.8 mt; from Indonesia, Malaysia and Thailand), soyabean (3.7 mt; from Argentina and Brazil) and sunflower (3 mt; from Russia, Ukraine and Argentina). The bulk of imports comprise crude oils. Like crude petroleum, these are shipped in tankers and processed in large refineries. Refining includes de-gumming (eradicating gums, waxes and different impurities), neutralisation (eradicating free fatty acids), bleaching (eradicating color) and de-odourisation (eradicating unstable compounds).

Vulnerability to imports

A serious facet impact of excessive import dependence is the vulnerability of each producers and shoppers to worldwide value fluctuations. Edible oil inflation is India has broadly moved in tandem with world inflation. However, the extent of volatility — be it will increase or decreases — is extra within the latter’s case (see chart).

The UN Food and Agriculture Organization’s vegetable oils value index (base interval worth: 2014-2016=100) soared from 98.7 factors in August 2020 to an all-time-high of 251.8 factors in March 2022, the month that adopted Russia’s invasion of Ukraine. The index has since plunged to 120 factors in October

2023. Landed costs of imported oils greater than halving — from $1,828 to $910 per tonne for crude palm and from $2,125 to $1,005 for sunflower between March 2022 and now — has additionally introduced down retail edible oil inflation in India to unfavorable territory since February this yr.

Stepping up edible oil output from home sources will go a way in insulating Indian farmers and households from extra world value volatility. But that will require openness to expertise — together with GM hybrids in mustard and soyabean amenable to herbicide software — and the federal government offering some sort of value assist to oilseed growers, whether or not by way of procurement or tariff coverage.

Such assured minimum support price (MSP)-based procurement is at present obtainable just for wheat and paddy. And with the principle nationwide events — the BJP and Congress — competing to supply greater than the Centre’s MSP for the 2 cereal crops in some states, there isn’t a lot incentive for farmers to change acreages to oilseeds or pulses. Nor does the surging import invoice on the 2 appear to be transferring policymakers for now.