Exclusive on Edible Oil

Edible oil
Tops food imports
by Dr. Noor Ahmed Memon.

The edible oil imports stood at $2.43

billion out of the total import volume of
$4.49 billion in 2011-12. Growth in population and in the fast food business led
to the increasing intake of oily food items
and higher industrial demand for crude
palm oil, thus leading to a boost in import
volume. A surge in international prices
was also responsible for a big jump in the
import bill.
The countrys demand for palm oil
usually increases around 6% to 7% in the
two to three months before Ramazan.
The country consumes around 2.3 million
tonnes of edible oil per annum, out of
which 0.63 million tonnes is contributed
by the local growers while the remaining
is imported to bridge the gap between
demand and supply.
Pakistan imports around 8% of its
total edible oil imports from Indonesia.
After linking of the imports with the composite rates of dollar, the unabated
increase in edible oil prices has already hit
the masses severely as the price of palm
oil in local markets.
Vegetable ghee and cooking oil industry is one of the largest manufacturing
sectors in the country and has grown
since the countrys independence in 1947.
The production was 835 thousand tonnes
in 2000-01, reached 1,180 thousand
tonnes in 2006-07 and fell to 1,070 thousand tonnes in 2011-12.
This industry was nationalized in
1972; however, since 1988, the private
sector has been allowed to run this industry. At present, the industry has 160 small
and medium sized vegetable oil and ghee
units that are contributing a huge amount
to the national exchequer, in the form of
duties and taxes.
Out of the total units, about 87 firms
are members of PVMA, and have produced products of about 1.07 million
30

tonnes during 2011-12. There are a large

number of unregistered firms who are filling the gap between demand and supply.
Annual consumption of edible oil has
reached 2.3 million tonnes, of which 20%
of the supply is from domestic sources
and the remaining quantity is imported.
The import during the year 2009-10 of
edible oil (Soybean & Palm Oil) was
$1,979 million that rose to $2,426 million
in 2011-12, showing an average increase
of 7% per annum. Imports are made
under Malaysian Palm Oil Concessionary
Trade Agreement (MPOCTA), like Free
Trade Agreement (FTA).
Pakistan was the third largest importer
of Malaysian palm oil in 2009 as its
import has reached over 1.73 million
tonnes. The EU is the second largest
importer of palm oil with 1.89 million
tonnes. China remained the largest
importer of palm oil with an annual
import of 4.03 million tonnes.
Pakistans edible oil industry has 10
refining units, which import crude palm
oil. When crude oil is refined, it is used by
the manufacturing units of the refineries
or sold in the local market to other manu-

Table 1:Import of Vegetable Oil

(Quantity: 000 Tonnes)
Value: US $ Million
2009-10 2010-11 2011-12
Palm Oil
Quantity

1,702

2,375

2,109

Value

1,951

2,021

2,375

Soybean Oil
Quantity

27

Value

28

66

39

67

51

Total
Quantity

1,729

2,441

2,148

Value

1,979

2,088

2,426

Source: Federal Bureau of Statistics,

Government of Pakistan.

Table 2: Production of Vegetable

Products
Year

Units

Production
(000 Tonnes)

2000-01

84

835

2001-02

87

797

2002-03

87

771

2003-04

87

888

2004-05

87

1,048

2005-06

87

1,052

2006-07

87

1,180

2007-08

87

1,137

2008-09

87

1,062

2009-10

87

1,076

2010-11

87

1,070

Source: Federal Bureau of Statistics,

Government of Pakistan.

facturers. Import volume of vegetable oil

in Pakistan is given in Table-1.
As substantial foreign exchange is
spent on the import of edible oils, the
government has encouraged private
investment for commercial edible oil seed
farming, production of edible oils, processing and marketing of edible oils. The
main domestic source of edible oil is cottonseed, rapeseed, mustard seed, canola
and sunflower. About 64 solvent extraction plants are producing 0.63 million
tonnes, 20% of local demand.
The product market can be classified
into two categories; vanaspati and cooking oil. Cooking oil is purified fat of plant
origin. Alternatively, when the process of
hydrogenation is applied to vegetable oils
and fats, it results in the conversion of
liquid vegetable oil to solid or semi-solid
fats, which have different melting points.
This hydrogenated oil is called Vanaspati
ghee in Pakistan. Statistics pertaining to

Exclusive on Edible Oil

the production of vegetable products are

listed in Table-2.
The main edible oils consumed by
Pakistani consumers are as follows:
 Palm oil
 Cotton seeds oil
 Rapeseed and Mustard oil
 Soybean oil
 Sunflower seeds oil
 Canola oil
The Pakistani people mainly consume
sunflower, canola and soybean oil whilst
the others are utilised mainly as ghee, a
hydrogenated solid vegetable oil.
Nowadays, in Pakistani cuisine, ghee
is utilised for frying and cooking, whereas
sunflower, canola and soybean oils are
usually used for cooking and seasoning.
Traditional cuisine varies in Pakistan: in
NWFP people prefer ghee or animal fats.
In Sindh, traditional habits include a
higher consumption of vegetable oils.
Raw materials: The country has two
main sources of edible oils, cotton seed,
which is a by-product of the cotton ginning industry, and rapeseed or mustard
seed which is traditionally grown on rainfed marginal lands. The country also
grows sesame and groundnuts but their
production is very limited and the cost is
too high to yield competitively-priced oils.
The former are cultivated traditionally
and include cottonseed, rapeseed, mustard, sesame and groundnut. Sunflower,
safflower and soybean are more non-conventional introduced in the 60s in the
backdrop of the Green Revolution.
The contribution of cottonseed and
rapeseed in total domestic requirements is
80%. Sesame and corn oil contribute 3%.
On the other hand, the contribution of
non-conventional crops is only 17%.
During the course of history, several
governments have tried to increase its
production. Efforts were made to increase
the area under non-conventional crops.
Neither area nor production could
increase to a greater extent. Production is
lower than the potential. In the same
way, the yield of oil crops per unit area is
lower than other counties.
A number of factors are contributing
to this situation. Sunflower is an important crop that has the potential to
become a major oil seed crop. However,
July - August 2012

Table 3: Production of Edible Oil Seeds

Rapeseed &
Mustard
(000 Tonnes)

Sunflower
(000 Tonnes)

soybean
(Tonnes)

Ground Nut
(000 Tonnes)

2005-06

180.8

348.3

421

69.1

2006-07

221.0

407.2

32

73.9

2007-08

198.9

603.9

29

83.4

2008-09

162.9

420.5

31

85.5

2009-10

162.2

325.5

51

53.2

2010-11

165.0

329.0

50

50.0

Year

Source: Federal Bureau of Statistics, Government of Pakistan.

its sowing season overlaps the sowing

season of wheat. Owing to better support
prices and marketing system available for
wheat, farmers are bound to prefer growing wheat.
In the cotton zone, farmers are reluctant to grow sunflower because its maturity period overlaps the sowing season of
cotton and thus causes delay in the
sowing of the latter. This delay results in
significant reduction of lint yield.
Sunflower is an exhaustive crop. It consumes a large amount of nutrients essential for growth and depletes the soil from
the nutrients. Farmers add huge amount
of fertilizers to get good yield of cotton.
After harvesting the sunflower, the likelihood of attacks from insects, pests and
diseases on cotton crop increases further.
Non-availability of modern technology for sunflower and canola is an
impediment to the increasing of the area
under these crops. Cultivation practices
are not standardized and varieties for different climatic zones are not evolved.
Average yields are very low. The
yields of rapeseed, cottonseed, sunflower,
soybean and canola are 852, 1244, 1271,
573 and 1246 kilograms per hectares,
respectively. The non-availability of
hybrid seeds, high cost of foreign
imported hybrid seed, high cost of storage, lack of drying facilities, lack of
modern production technology, use of
marginal lands, non-availability of short
duration varieties, lack of rhizobium
inoculum, low prices of farmers' produce
and high harvesting cost are factors hindering the farmers to adopt non-conventional oilseed crops in crop rotation. It is

high time that this situation was improved

to meet domestic demand.
It is important to popularize the cultivation of sunflower among the farming
community. Evolution of early maturing
varieties, stabilization of support prices
and strengthening of the marketing
system are incentives that may prove
helpful in this direction. Statistics regarding the production of edible oil seeds are
given in Table-3.
The Pakistani market for edible oils is
changing. A shift to oils, rich in unsaturated fats, has been taking place, which
has been approved by the stakeholders.
This shift is led by the wealthier and more
educated part of the population that can
afford this change in their consumption
behaviors. The shift requires time because
it involves two main aspects: change in
eating habits (that are linked to health
awareness but also to traditional behaviors) and competition in foreign edible oils
markets. Vanaspati Ghee and cooking oils
are widely used in different forms of
cooking, baking, sauteing and deep frying
and are also used at domestic and commercial levels.
Dietary habits all over the world,
including those in Pakistan, are changing
fast. Low fat, low cholesterol cooking oils
are replacing ghee as cooking items.
Besides health awareness, increase in per
capita income is contributing to the
increase in the use of cooking oil. Almost
5% consumers in urban areas of Pakistan
are shifting to cooking oil from vanaspati
ghee. However, in rural areas, ghee is still
given preference, as it is considered more
nutritious. 
31