Almost half of the processing capacity of domestic solvent extraction

companies remains unused because of unavailability of locally grown oilseeds

and low prices of imported palm olein used to produce cheaper ghee in the
country.

Pakistan has an installed capacity of producing 1.2 million tonnes of soft

edible oils but is manufacturing roughly seven million tonnes of premium
sunflower, canola and soya oils in the organised sector.

Another 400,000 tonnes of cotton seed oil is expelled by the inefficient and
unorganised conventional expellers, according to the solvent extractors.

“Pakistan’s edible oil and ghee requirements are estimated to be 3.5 million
tonnes. Almost one-third of this requirement is met domestically by solvent
extraction plants and conventional expellers,” Shahzad Ali Khan, a former
chairman of the All Pakistan Solvent Extraction Association (APSEA), told
Dawn on Friday.

Roughly, one-fourth of the oilseeds — rapeseed, sunflower and soyabean —

processed by the local solvent extractors is supplied locally and the rest of is
imported.

The solvent extractors say the domestic production of oilseeds could easily be
increased from the present 0.5 million tonnes to two million tonnes if the
government supported the growers. This will help solvent extractors increase
their crushing capacity utilisation and reduce the oil import bill of the
government, they argue.

“Premium edible oil produced from sunflower, canola and soya is 20-25 per
cent more expensive than the one produced from palm olein worldwide. But
we have to match the price of cheaper palm oil/ghee in the local market to sell
our products because Pakistani consumers are more conscious about the
prices than the quality of a product,” Khan said.

The solvent extraction plants — almost three-fourth of the currently installed

capacity — were largely set up after the government allowed import of
premium oilseeds in the late 1990s.

Solvent extraction is widely seen as a profitable business, encouraging

addition of substantial processing capacity every year despite being heavily
import-dependence. “But the processors have suffered losses recently on their
imported oilseed inventories as the world commodity prices plunged on the
back of declining petroleum market,” Khan said.