S.Kamal Hayder Kazmi,
Research Analyst
Sep 6 - 12, 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 while 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 number of ghee manufacturer's registered with PVMA at present are 95. The share of ghee and cooking oil in large scale manufacturing is 7.4 per cent.



JULY-JUNE JULY 2009 JUNE (R) 2010 JULY (P) 2010
2008-09 2009-10
Soybean Oil 48,702 12,987 3,548 4,237 1,497
Palm Oil 1,342,483 1,239,365 99,962 109,756 147,250

Total edible oil production in marketing year (MY) 2010/11 (May/April) is forecast at 1.4 MMT, up 12 per cent over the MY2009/10 due to an anticipated increased availability of oilseeds and larger crush.

Domestic oil production is sufficient to meet only about 20 per cent of demand with the balance met through imports. A growing population and only a limited ability to expand domestic production means that larger imports will be needed in order to meet Pakistan's increasing demand for edible oils.

Edible oil production is estimated at 1.27 MMT during MY2009/10, which includes 576,000 tons of cottonseed oil, 416,000 tons of rapeseed oil and 280,000 tons of sunflower seed oil.

However, during MY2010/11 oil consumption is forecast at 3.9 MMT up about 12 per cent over last year's estimate due to increasing population. The share of imported oil in total consumption is anticipated close to 80 per cent.

Palm oil continues to be the largest consumed edible oil. For health reasons consumers are gradually shifting from hydrogenated oils towards soft oils. However, price remains the determining factor in most consumers purchasing decisions.

Furthermore, in MY2010/11 palm oil imports are forecast at a record 2.4 MMT, up nine per cent from last year's estimate of 2.2 MMT. Refined palm oil accounts for about 83 per cent of Pakistan's total edible oil imports. The United States exports only limited quantities of soybean oil to Pakistan in the form of food aid.


Cottonseed is the major oilseed crop grown in Pakistan, accounting for about 90 per cent of domestic oilseed production. It is produced primarily for fiber with oil and meal production of secondary importance. Cottonseed contains both lint and cottonseed. Lint is the basic input for the domestic textile industry and a major contributor to Pakistan's exports.

MY2010/11 cottonseed production is forecast at 4.6 million tons, up seven per cent over the previous year's output mainly due to higher cotton prices.


Domestic rapeseed/canola production has gradually decreased since 2008 and accounts for about six per cent of total oilseed production in Pakistan. Efforts to replace rapeseed with higher-yielding canola varieties have not met with much success due to competition from the wheat crop and problems associated with availability of quality seeds and other agronomic practices. MY2010/11 rapeseed production is forecast at 180,000 tons down four per cent from last year's estimated crop of 187,000 tons.


Sunflower production in Pakistan has fluctuated over the years mainly due to the government policy of supporting competing crops like wheat, rice, sugarcane. Total area planted to sunflower has gradually decreased since 2007/08 and Pakistani farmers have reduced their planted acreage due to its uncompetitiveness relative to other competing crops (cotton, rice, sugarcane).

Handling and marketing issues have also adversely affected sunflower production. MY2010/11 sunflower seed production is forecast at 350,000 tons, down 13 per cent from last year's estimate of 400,000 tons.


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 US$1,145 per ton as recorded on January 2008 and US$1,250.00 on June 2008. The FED/Sales Tax and the withholding tax which are linked with the international prices of edible oil have also increased proportionately.


Vegetable Ghee (tin) 2.5 Kg 373 373
Vegetable. Ghee loose Kg 116.82 118.09
Cooking oil (tin) 2.5 Ltr 373 373


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 rationalise 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.