Edible oils, incredible prices

India is one of the world’s biggest buyers of vegetable oils, meeting the demand-supply gap of no less than 55 per cent through imports. The country’s edible oil import bill rose from about Rs 65,000 crore in 2018-19 to reach an estimated Rs 1.5 lakh crore in 2020-21, even though there has been a slight decrease in the volume of imports. The war in eastern Europe has triggered a sharp rise in the prices of edible oils as sunflower oil — which accounts for around 15 per cent of India’s total imports — comes mainly from Ukraine. Domestic edible oil production has increased marginally in recent years, but it is well short of the requirement in view of the ever-rising consumption.

With around 100 edible oil refineries or solvent extractors dominated by MSMEs in Punjab and Haryana, both states have a bigger role to play in order to boost India’s oilseed production. The MSP regime, which guarantees procurement and price of the produce, has made farmers stick to the wheat-paddy cropping pattern for decades. This fixation has stymied efforts aimed at promoting crop diversification. Farmers can opt for oilseeds in a big way if they are assured of remunerative prices. Punjab can lead the way by considerably reducing area under the water-guzzling paddy and using it for growing mustard and sunflower. This switchover is also necessitated by the state’s groundwater crisis, which is likely to worsen in the coming years if timely remedial steps are not taken.

It is heartening that the country’s mustard seed production is set to rise by 29 per cent in the 2021-22 rabi season, according to the Central Organisation for Oil Industry & Trade. Mustard is an important cash crop for farmers in Rajasthan, Uttar Pradesh and Madhya Pradesh, and the prospects can become better for growers in Punjab and Haryana with sustained incentivisation. Self-sufficiency in edible oil production is a distant dream, but there is ample scope for drastically lowering the dependence on imports and minimising the damage caused by global shocks.

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