At present Pakistan is heavily dependent on imported edible oil



Nov 18 - 24, 2002


The Economic Coordination Committee of the Cabinet (ECC), in its meeting last week in Islamabad, approved the Action Plan for enhancing local oilseed production to meet at least 50 per cent of the country's required in the next 5 years from present about 30 per cent.

The plan which has been prepared by the Ministry of Agriculture as a crash programme, envisages vertical increase in oilseeds production and horizontal increase in area under oilseed cultivation. As per vertical increase plan existing sunflower and canola yield per acre would be increased from 600 to 900 kg and inducing farmers to bring more area under cultivation through various incentives including ensured marketing at a price guaranteeing a reasonable profit to the growers.

According to summary submitted to ECC, at present Pakistan is heavily dependent on imported edible oil. Yearly edible oil consumption in the country is around 1.9 million tons. About 70 per cent domestic requirement consumption is met through imports, which cost Rs.22 billion last year. The remaining 30 per cent comes from local production. The edible oils requirement is projected to rise to 2.2 million ton per year in the next five year at the present annual growth rate of 3 per cent.

During the Year 2001-2002, canola and sunflower were cultivated on 122,000 acres and 281,000 acres, respectively. The seed so harvested produced 108,000 tons of edible oil, thus saving foreign exchange of $35 million through import substitution.

Like Pakistan, India was also a edible oil importing country. In May 1986, Indian government decided to promote oilseeds on massive scale through establishing high-powered technology mission for oilseeds with full financial and administration support. Under this programme they launced two projects one at the cost of Rs.1.7 billion covering 180 districts in 17 states and the other at a cost of Rs.2.45 billion in 246 districts. By doing so this year they were able to double their oilseeds production from 11 million tons in 1985-86 to 22 million tons in 1992-93.

In Pakistan oilseed production can be enahanced in a short period through providing incentives to farmers in the shape of ensured marketing, reasonable price for their produce and subsidised inputs for producing oilseeds. With this approach, Pakistan Oil Seeds Development Board has prepared an action plan and strategy in the proposed plan. A medium term approach has been developed to bring a significant change within five to 8 years. The target of the action plan would be to meet the 50 per cent of our national requirement of edible oil through domestic production within the next five years.

Main elements of the action plan for enhancing indigenous edible oil production would be based on two prolonged strategy vertical increase in the oil seed productivity, and horizontal increasing area under oilseed crops, all supported with favourable policy environment.

Vertical increase would required enhancing per acre yield of sunflower and canola from existing 500-600 kilograms to 900 kilograms through improving production technology, developing and using better crop varieties and improving research and extension system for oilseed crops. This will increase local edible oil production of two crops by about 45 per cent.

Horizontal increase case would be achieved through replacing larger wheat (sown after 15 December) by sunflower and vacating some area from wheat crop for canola cultivation through increasing wheat production in next five years. Additional area can also be brought under canola crop by replacing traditional season crop. The target of horizontal increase in sunflower and canola within next five years is as.

Cultivation of sunflower on 1 million acres to produce 0.315 million tons of edible oil.

Cultivation of canola on 0.55 million acres will produce 0.154 million tons of edible oil. It will be about 1/3 of the total edible oil production under this plan.

Other elements of the action plan are:

The government may provide price incentives to farmers by ensuring a minimum price of Rs.600-650 per 40 kg for sunflower and canola through involvement of private sector. However, a parallel surety be made available for purchase of farmers produce by the government in case of market slump.

In order to ensure price stabilisation, duty structure for RBD oil palm and soybean oil needs to be linked with the fluctuation in international prices of edible oils and oilseeds in such a way that local producers may get a minimum of Rs.600 per 40 kg for canola or sunflower produce. For this purpose, the duty structure may be reviewed after every three months particularly at the time of harvesting of the oilseeds crop.

Implementation of 65:35 ratio of hard and soft oils in manufacturer of ghee may be ensured to create demand for locally produced soft oils maintained quality of ghee for safeguarding the health of end consumers.

Solvent extraction needs to be supported by livestock for disposal of their cottonseed meal. This will provide incentives to the industry for maximising processing of cottonseed for better oil recovery. A separate project needs to be launched to popularise the use of meal for cattle feed.

The plan will be viewed as a beginning of a long awaited, conscious effort to develop a neglected sector. It will certainly reduce our dependence on imported oil and thereby save million of dollars of precious foreign exchange. Of its overall strategy mention may specifically be made of the provision of price incentive to farmers. The minimum price envisaged for sunflower and canola has been placed at Rs.600 to Rs.650 per 40 kg, with emphasis on involvement of private sector. At the same time mention has been made of a parallel surety for purchases of the farm produce by government to ease the market slump. Again, to ensure price stability the duty structure for RBD oil palm and soybean oil has been marked for linkage with fluctuation in international prices. The idea behind this stipulation is to assure local producers of a minimum Rs.600 to 650 per 50 kg for canola or sunflower, through measures like the periodic review of duty structure. A significant feature of the plan is its focus on assurance of industrial consumption of oilseed in increasing quantities. For this purpose it seeks ensuring creation of demand for locally produced soft oils from strict implementation of 65:35 ratio of hard and soft oils in manufacture of ghee while also maintaining quality of ghee to safeguard the health of the consumers. The comprehensive nature of the plan may be seen reflected also in the concern it has expressed for the solvent extraction industry, focusing advisability of support from the livestock sector for disposal of its cottonseed meal, by way of incentive for maximissing processing of cottonseed for better oil recovery.