EDIBLE OIL IMPORTS
S.KAMAL HAYDER KAZMI,
Research Analyst, PAGE
May 31 - June 6, 2010
Pakistan is one of the largest importers of edible oil in the world as only around 27 per cent of its requirement is met through domestic production. The remaining needs are met from imports of various edible oils. The ghee and cooking oil are the basic food items of human diet all over the world. A growing population, increasing rate of consumption and increasing per capita income are accelerating the demand for edible oil in Pakistan.
There are about 150 units of edible oil and oil extraction in Pakistan, involved in extraction and production of various types of cooking oil and ghee. However, the numbers of ghee manufacturers registered with PVMA at present are 95. The share of ghee and cooking oil in large scale manufacturing is 7.4 per cent. During the last seven years (FY01-07) the average annual growth for ghee/edible oil production is about 7 per cent.
PRODUCTION & CONSUMPTION
Palm oil, cotton seed oil, rapeseed and mustard oil, soybean oil, sunflower seeds oil and canola oil are the main edible oil consumed by Pakistani people. The Pakistani people consume mainly sunflower, canola and soybean whilst the others are utilized mainly as ghee, as hydrogenated solid vegetable oil. Nowadays in Pakistani cuisine ghee is utilized for frying and cooking whereas sunflower, canola soybean oil are usually used for cooking and seasoning.
NWFP people prefer ghee or animals facts whereas in Sindh traditional habits include a bigger consumption of vegetables oil. The supply of edible oils is constituted by imports, local production from imported oilseeds and from oilseeds produced in Pakistan.
The Sunflower seeds contain about 42 per cent high quality edible oil and this crop is grown in an area of over 260,000 hectares in Pakistan with a production of over 3,79,000 tonnes sunflower seed and 1420 kg per hectare yield. This is low as compared to major sunflower growing countries like China, United States and Argentina but in the country, per acre production is better than the developing countries.
GHEE & COOKING OIL PRICES
The prices of vegetable ghee/cooking oil are linked with International market prices of edible oils. The C&F price of imported RBD palm olein which was US $462 per ton in July, 2006 jumped to US $ 905 per ton in the middle of October, 2007 and further increased to $1,145 per ton as recorded on 17th January, 2008 and US $ 1,250.00 on 17th June 2008. The FED/Sales Tax and the withholding tax which are linked with the international prices of edible oil have also increased proportionately i.e. for the RBD Palm Olien were Rs7,087 per ton in July, 2006 which rose to Rs14,299/- per ton by 17th January, 2008.
AVERAGE PRICES OF GHEE & OIL
ITEMS UNIT UNIT 20.05.10 13.05.10 Vegetable Ghee (tin) 2.5 Kg 370.65 370.65 Cooking oil (tin) 2.5 Ltr. 370.65 370.65
EDIBLE OIL PRODUCTS
Pakistan's edible oil products import bill stood at $1.24 billion in 2009, which shows an increase of around 4.4 per cent compared to imports in 2008. The country imported around 1.9 million tonnes of edible oil products that catered about 76 per cent of the total country's edible oil consumption. The country's demand for palm oil usually increases around 6 per cent during October-January every year on higher demand due to cold weather and increase in use of palm oil products. The country consumes around 2.1 million tonnes edible oil every year out of which 0.59 million tonnes are contributed by the local growers while the remaining is imported to bridge the demand-supply. However, the huge amount of valued foreign exchange is spent on importing edible oil, which not only brings hardship for the people but also burdens the national economy.
IMPORT PAYMENTS (Ë000 US DOLLAR)
. APRIL MARCH (R) APRIL (P)
COMMODITY 2009 2010 2010 2008-09 2009-10 (P) Soybean Oil 1,639 0 3,980 38,859 8,195 Palm Oil 87,088 116,610 98,357 1,177,476 1,026,542
Recently, Pakistan has imported a total of 189,180 tonnes of palm oil from Malaysia in January, and about another 10,000 tonnes were bought from Indonesia.
There was some glut in the market. Because of the carryover stock and slow market, Pakistan had bought between 75,000 and 100,000 tonnes of palm oil in February and in March to between 125,000 tonnes and 140,000 tonnes.
Along with heavy palm oil purchases in January, Pakistan also bought a total of 400,000 tonnes of canola seed for the January-March quarter, with an oil component of 180,000 tonnes. Moreover, two cargoes of 35,000 tonnes each of canola oilseed from Australia have already arrived.
Presently, the Government of Pakistan has allowed the export of Vegetable Ghee and cooking oil to Afghanistan due to which the demand for edible Oil will increase along with production.
The government should also rationalize the customs duty and other taxes on imported edible oil. Due to higher import cost, the manufacturers of vegetable ghee and cooking oil were also unable to pass on the maximum benefit in case of any slight decline as they were facing multiple problems including power and gas load shedding and production loss. ITP duty should be increased or decreased in proportion to the changes in the price of imported edible oils in the international market.