India is one of the world’s largest producers and consumers of edible oils and fats. It has the largest harvested area for oilseeds, accounting for 21% of the global acreage, and contributes 5% of production worldwide. The anomaly in harvested area and production level is rooted in the abysmally low yields.
At the same time, India is one of the biggest buyers of edible oils. It imports about 15 million tonnes of edible oils every year, as domestic production meets only 7-8 million tonnes of needs. Palm oil holds the largest share, at about 65% of imported oils (Figure 1).
Over the next five years, India’s edible oils consumption is expected to rise by 2-3% per annum, depending on economic and population growth. In such a situation, bridging the huge gap between imports and domestic output will be a major goal under the government’s Atma Nirbhar Bharat Abhiyan (Self-reliant India Campaign).
If India wants to produce as much edible oils as it is consuming through traditionally- grown oilseeds (Table 1), it would need at least 30 million ha for cultivation – which would be next to impossible.
The Department of Agriculture has therefore set a target of first increasing oilseeds production from primary sources from the current 31 million tonnes to 45 million tonnes by 2022-23. This is expected to help increase production from 7-8 million tonnes now, to a range of 10-11 million tonnes and then gradually up to 14 million tonnes. Contributions from secondary sources and tree-borne oilseeds are likely to add another 3 million tonnes by 2022-23.
Only oil palm cultivation can produce 4 tonnes of oil per hectare, where other oil crops don’t even yield 0.4 tonnes. Thus, the emphasis is on increasing oil palm cultivation. The objective is not only to bring about self-reliance in edible oils output, but also to transfer money to farmers from the amounts currently spent on imports.
To stimulate oil palm cultivation, a price incentive mechanism has been suggested for farmers, through the creation of an Edible Oils Development Fund. The contributions would come from levying a cess of 0.5% on the import of palm oil products.
On July 23 last year, Prime Minister Narendra Modi had appealed to farmers in the North-East States to take up oil palm cultivation. In 2019-20, the government had extended the area under oil palm by 17,000 ha, mainly in Mizoram, Assam, Nagaland and Arunachal Pradesh. It plans a further expansion in 2020-21 as part of the National Food Security Mission.
Last December, the government had allotted 0.3 million ha to various companies and organisations for the cultivation of oil palm in Telangana state in the south (Table 2). The anticipated rise in production will make Telangana the first state to become self-reliant. It will also be able to sell its surplus to other states.
National mission
There is a dichotomy between farm prices and consumer prices. When farm prices are buoyant, farmers get reasonable returns while consumers bear the burden of paying more for products. When there is a glut, products do not command a fair price – this dampens the farmers’ mood but provides for a lower price to consumers. Also, with 65% of India’s population being farm-dependent, the differentiation between farmers and consumers is often glossed over, as farmers are also consumers.
The government has to balance the interests of various stakeholders, as farmers, industry, the exchequer, consumers and others push for policies that best meet their needs. The national interest must also be kept in mind.
The government is planning to work in ‘mission mode’ to reduce dependency on imports of edible oils by raising local production, and spreading public awareness of the need for rational consumption. Under the National Mission on Oilseeds, there is a plan to spend nearly US$2.6 billion over the next five years, as reported in Times of India on Feb 21. The preparations for the mission are said to be foolproof and the plan will be implemented from April 1 in the upcoming financial year.
Earlier, a fund of about US$1.4 billion had been mooted to support the National Mission on Oilseeds and Oil Palm for five years. However, the Group of Secretaries is now looking at raising the money by levying a cess on the industry instead. The industry, though, wants the government to set aside a corpus – the principal sum – from the revenue earned from import duty on crude and refined edible oils.
To increase the production of oilseeds alongside acreage, more emphasis will be given to improving productivity. For example, in the eastern region, nearly 11 million ha are not utilised after the paddy crop is harvested. This can be used for growing various oilseeds or oil crops.
In addition, farmers will be encouraged to cultivate pulses and oilseeds instead of crops like paddy, wheat and sugarcane in Punjab, Haryana and other areas in northern India, where water is scarce. These crops are in abundance anyway, with annual surpluses. The transition away from growing grains is a key step in the government’s mission to boost oilseeds production.
Mustard cultivation in ‘mission mode’ has already increased in acreage this year, with output anticipated at between 11 and 12 million tonnes. Similarly, the production of other oilseeds could double over the next 5-8 years. With capital, government support, the right technology and execution, it will be possible to gradually grow oilseeds on various types of available soil.
Apart from seasonal crops, oil is obtained from the seeds of some evergreen trees in the country. There are also secondary sources of oil. The goal of development has been set at every level. Four ‘Sub-Missions’ have been created under the National Mission on Oilseeds (Figure 2).
Increasing investment in edible oils is among the government’s top priorities. To transform agriculture into sustainable enterprises, the central government has proposed the formation of 10,000 Farmer Producer Organisations. Of these, 100 are registered only for oilseeds and are allocated to four organisations – National Bank for Agriculture and Rural Development; National Agricultural Cooperative Marketing Federation of India Ltd; Small Farmers Agribusiness Consortium; and National Cooperative Development Corporation.
The attempt to make farmers self-reliant though free market mechanisms at this time of an economic slowdown is aimed at increasing their income. It will also allow farmers to engage directly with agri- business companies, exporters and retailers for services and sale of produce.
Self-reliance in edible oils can provide much needed food security to the nation in an uncertain world order. But it will bear fruit only if the central and state governments work together, and if short-term concerns about food inflation are not allowed to hinder progress and determine trade policies and import tariffs.
Bhavna Shah
MPOC India
