Deep Dive

EDIBLE OIL CRISIS

Why India is not self-sufficient in oilseed production

Radheshyam Jadhav Pune | Updated on September 13, 2021

Poor infrastructure and lack of cohesive government policy continue to haunt oil
seed and oil producers

The Centre’s decision to allow the import of 1.2 million tonnes (MT) of crushed and de-oiled
genetically modified (GM) soya cake or soyameal has landed Maharashtra’s soya producers in
trouble. Maharashtra, along with Madhya Pradesh, is one of the leading soya producing States.
Together, these States contribute an estimated 89 per cent of the total production in India.

Market experts draw attention to the fact that recently India exported about 19 lakh tonne soyameal
to other countries. This soyameal was non-GM and hence was in demand in the world market.
However, India’s poultry sector faced a shortage of soyameal and the government decided to import
GM soya cake. The result was immediate.

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The soya prices in the market came down and farmers who were expecting better returns had to sell
their produce at a lower price. So, India had to import GM soyameal because it exported non-GM
soyameal. Interestingly, against the requirement of 28.99 lakh quintal of soybean seeds for 2021
Kharif, the availability was 28.11 lakh quintals. This scenario explains lack of ecosystem and poor
planning in India’s oil seeds and oil production.

Micro-irrigation, quality seeds, marketing infrastructure and government policies are the four main
concerns for oil seed and oil producers in India. Policy goof-ups, as in the above paragraph add to
the woes of farmers.

When it comes to crop-wise coverage of irrigated area (2016-17) almost 70 per cent of cereals and
52 per cent of foodgrains are covered under irrigation. But when it comes oil seeds, the coverage of
the irrigated area is 27.8 per cent. From 5.16 MT in 1950-51 to 33. 42 MT in 2019-20, oil seed
production in India has witnessed growth at a slow pace. The average per hectare yield of major
oilseeds is over 50 per cent lower than average world yields in several crops.
 
The government admits that the production and domestic availability of oilseeds in India falls way
short of needs in domestic demand for edible oil. A big volume of edible oil has to be imported
every year. Changes in international prices of edible oil make an impact on its domestic Indian
price.

The major edible oils consumed in the country are mustard, soyabean, groundnut, sunflower sesame
oil, niger seed, safflower seed, castor, and linseed (primary source) and coconut, palm oil,
cottonseed, rice bran, solvent extracted oil, tree and forest origin oil.

Solvent Extractors Association of India (SEA) members have been demanding higher Minimum
Support Price (MSP) for oilseeds, so that more farmers are drawn towards oilseed cultivation. The
demand is also to link import duty on edible oils to MSP. Industry players say that India’s domestic
oilseed production needs to go up about 54 MT by 2025 to reduce edible oil imports by 10 MT
annually.

Dependency on imports

According to the Ministry of Consumer Affairs, Food, and Public Distribution the total domestic
demand of edible oils in the country is approximately 250 lakh metric tonnes per year. Interestingly,
around 60 per cent of the edible oils consumed in the country is met through imports. Palm oils
(crude + refined) import constitutes around 60 per cent of the total edible oil imported, out of which
54 per cent is imported from Indonesia and Malaysia.

“As the country has to depend heavily on imports to meet the gap between demand and supply, the
international prices have an impact on domestic prices of edible oils,” the Ministry stated in June
this year.
 
During 2019-20 the import of agri commodities was $19.91 billion and the import of vegetable oils
constituted the largest share – 48 per cent. In May this year, the Central government held a meeting
with all stakeholders to discuss the stability of edible oil prices.

This was the “first-of-its-kind” meeting where the government admitted that dependency of almost
60 per cent on imports is not appropriate to the growth of the edible oil industry in India. Food
inflation, including high prices of edible oils, has been a cause of concern for the consecutive
governments which depend on imports.

Need for a strategy

“As of now, there is no comprehensive strategy when it comes to the production of oil seeds.
Farmers cultivate as per the trends in the market rate. But when there is bumper production, the
government imports oils and other products which results in a fall in prices. It is high time that
government has a plan in place regarding cultivation, marketing and import-export. With the
ongoing ad-hoc strategy, nobody is going to benefit,” said agri market expert Deepak Chavan.
Maharashtra-based Shetkari Sanghatana (SS) has demanded that the government must approve GM
cultivation for oil seeds to increase production.

“If we can export GM oil and soyameal, then why not produce GM seeds in the country itself? If
our farmers are competing in the world market, they should be allowed to cultivate GM seeds,” said
SS President Anil Ghanwat.

The Solvent Extractors have been pushing the demand of allowing GM oilseed crops saying that
this would boost production by 15-20 per cent.

SB Wankhede, advisor of Seed Industry Association of Maharashtra, sharing his personal views on
the issue said, “Policy is the major problem when it comes to increasing seed oil production. For
years, farmers produced groundnuts and sunflower but with unseasonal rains and pests, they have
turned to soya. Thus, we must have a micro-level plan with technological support. The world has
accepted GM oilseed cultivation and now its high time India takes a call on this matter”.

Oil seed industry players are worried about the fake GM seeds coming into the market.

“Already, the industry has incurred heavy losses because of bogus GM cotton seeds in the market.
Now, fake soya GM seeds are in circulation. The government must crackdown on bogus GM seed
cartel,” said a senior seed industry player.
Government’s efforts

In an effort to achieve self-sufficiency in the production of oilseeds, the government of India

decided to distribute free high yielding varieties of seeds to the farmers for the kharif season 2021
in the form of mini-kits.

The government claims that the special kharif programme will bring an additional 6.37 lakh hectare
of area under oilseeds and is likely to produce 120.26 lakh quintals of oilseeds and edible oil
amounting to 24.36 lakh quintals.