DEVELOPING SELF-SUFFICIENCY IN EDIBLE OIL
TARIQ AHMED SAEEDI
Oct 11 - 17, 2010
Pakistan spends significant foreign exchange to import edible oil and oilseeds as domestic production of edible oils can hardly meet 30 per cent of local demand. The country produces oilseeds such as cotton, sunflower, and rapeseed locally. Imports meet rest of the local demand of edible oil, most of which is palm oil. Import of palm oil spurs over one billion dollar outflow from the country every year. For example, the country imported 1.2 billion dollar worth of palm oil during the last financial year ended on June 2010 while soyabean import amounted to 12.98 million dollar. According to a local research paper, the import bill of edible oil has staggeringly skyrocketed 108 times between 1959-60 to 2008-09.
Low yield of oilseed crops in the country is a biggest cause of widening gap between demand and supply of edible oil and limited local production. Total nine million acres were under cultivation of oilseeds during July-March 2009-10. Cottonseed was cultivated on 7.5 million acres, rapeseed/mustard on 486,000 acres, sunflower on 872,000 acres, and canola on 142,000 acres.
Ministry of agriculture tried to implement various plans to promote canola, olive, and palm oil cultivations, but the plan did not get to much success. Lack of funds for farmers, inappropriate support price, unattractive incentives, and improper market infrastructure are the reasons of low productivity. The government introduced relief packages for farmers in the form of tractor scheme for example to improve agriculture productivity. Outreach of such programmes should be expanded to cover a larger section of the farming society. Agriculture sector accounts for a quarter of Pakistan's economy with 70 per cent of its population depending on agriculture to earn livelihoods. Nearly 62 per cent of the country's total population live in rural areas and earn their livelihoods from agriculture sector. Inaccessibility of farmers to funds is the main barrier in the way of initiatives by the farming community.
EXTENDING CULTIVATION TO NON-TRADITIONAL OILSEEDS
There is a need to encourage cultivation of non-traditional oil seeds i.e. sunflower, safflower, canola, soyabean. Yet, persuading farmers to shift to non-traditional oilseed harvesting is not an easy task without pertinent incentives. Support price of major crops often becomes an upshot of apprehension to the farmers. Turning them to minor crops of olive or others will demand underpinning of transparent funding structure that ensures due shares of farmers in final outputs. Intermediary networks are very strong in the country and unjustifiably eat into profitability of crops due to its knowledge of and access to market mechanism.
At present, the major oilseed crops in Pakistan include cottonseed, rapeseed/mustard, sunflower and canola etc. According to the economic survey, local edible oil production during July-March 2009-10 was estimated at 0.680 million tonnes. From all sources, however, in nine month total 1.749 million tonnes were available. Local production of edible oil stood at 684,000 tonnes during 2008-09, 24 per cent of the total availability of 2.82 million tonnes in the country while the 76 percent was imported.
Rapeseed and mustard are two of the Rabi crops. Rabi's sowing season spreads over October-December. That means reclamation of flooded-lands should finish as quickly as possible to utilise maximum acreages for sowing of oilseeds. The floods in two months (July-August) have caused adverse loss to agriculture sector around the country, washing away standing Kharif crops, sowing season of which begins in April-June and harvesting during October-December. The World Bank and Asian Development Bank were tasked following the devastating floods to assess monetary damages. Initial estimates show that the floods caused around 300 billion rupees losses to the agriculture sector in the country, according to the ministry of food and agriculture. Actual production of sugarcane in this season would likely be 44.5 million tonnes as against the target of approximately 55 million tonnes, it said. This would result in a monetary loss of 26 billion rupees. Similarly, damages to paddy crops have caused 61 billion rupees losses to famers of especially Sindh and Southern Punjab. Other crops also suffered massive hits of flash floods triggered by high-level currents. Shortage of sugarcane in the country cannot be overruled. However, due to carryover stocks of wheat the country should not face crisis of this crop. According to the ministry, the country has nine million tonnes of buffer wheat stock. Wheat is also a major Rabi crop. Ministry of agriculture has already urged the importance of machineries to reclaim flooded lands beside significant volume of fertiliser to make better outturns.
It is a point of concern that production and consumption of edible oil in the country are increasing at disproportionate rates. While local edible oil production is growing 2.6 per cent, consumption is mounting 7.7 per cent per annum. According to Pakistan oilseed development board, there is a need for expansion in acreage for cultivation of oilseeds to enhance productivity. A suggestion by an agriculturist during a public gathering was also worth noting. He said oilseeds should be cultivated on some pastures allocated for wheat crop since the country is self-sufficient in wheat production and produces surplus for exports. If the country would produce 21 million tonnes instead of normal 22 million tonnes, then it might not be significant economic setback but that might add to local production of edible oil, he suggested.
Exemption of custom duty and sales tax on oilseeds imports encourages crushing industry in the country to improve their production capacity by overhauling of outdated machineries and replacing them with high-tech solvent extraction equipment. However, in a country where out of total household expenditures, 50 per cent is due to food expenditures, self-sufficiency in edible oil production is vital.