EDIBLE OIL CRISIS IN INDIA IS A RESULT OF GROSS NEGLECT

Though oilseed crops are the second most important determinant of the agricultural economy, next only to
cereals within the segment of field crops, India has lost the self-sufficiency in oilseeds achieved during the “Yellow Revolution” in the early 1990s. Government’s neglect in terms of policy decisions encouraged imports and discouraged oilseed growing farmers, which accelerated the crisis. The latest NITI Aayog
document has now acknowledged that India’s heavy reliance on edible oil imports, currently accounting for
55-60% of its needs, presents a substantial challenge to its food security and economic stability.

The NITI Aayog’s document titled “Pathways & Strategy for Accelerating Growth in Edible Oil Towards Goal of Atmanirbharta” has noted that over the past decades, per capita consumption of edible oil has witnessed a dramatic rise, reaching 19.7 kilograms per year (kg/year). This surge has outpaced domestic production and has translated into a heavy reliance on imports to meet domestic demand and industrial needs. Consequently, the import volume of edible oils reached 16.5 MT in 2022-23, representing a rise of about 67%, highlighting a growing dependence on external sources. India currently fulfils only 40-45% of its edible oil requirements through domestic production, presenting a significant challenge to the nation’s ‘self- sufficiency’ goal.

The document presents a global perspective and India’s position, and presents a contrast, how India has also been faring well. The deception of the growth narrative is obvious when we compare it to the edible oil crisis in which India has fallen after losing its self-sufficiency achieved three decades ago.

NITI Aayog’s document says that India, the 5th largest economy globally, is a significant player in the global edible vegetable oil sector, ranking fourth behind the USA, China, and Brazil. It contributes a substantial global share, accounting for roughly 15- 20% of the global oilseed area,6- 7% of vegetable oil production, and 9-10% of total consumption. Despite these statistics, India still faces a shortfall in meeting its domestic demand, leading to substantial imports.

India is at the top in rice bran oil production (46.8% of global market share) and demonstrates clear dominance. Similarly, India is a leader in castor seed production with an impressive 88.48% global share. The country is second in cottonseed oil production (28.41% share), following China. For groundnut seeds and oil, India ranks second with shares of 18.69% and 16.34%, respectively, trailing China and the USA.

The country ranks third in coconut (in shells) and coconut (oil) production behind Indonesia and the Philippines and for sesame seed oil production behind China and Myanmar, contributing 22.46%, 14.2%, and 8.73% of the global market share, respectively. In rapeseed production, India has the third position (13.72%of the global share, behind Canada and China). In contrast, rapeseed or canola oil production ranks fourth (11.2% share, behind Canada, Germany and China), highlighting its significant role in rapeseed-mustard
cultivation.

India is the world’s fifth largest producer of soybean and soybean oil (behind Brazil, USA, Argentina and China), contributing 3.72% and 2.14% of the global market share, respectively.

Further, India ranks fifth in linseed production (3.18% share, behind Russia, Kazakhstan, Canada and China) and sixth in linseed oil production (5.03% share), with established players like China, Belgium, USA, Germany and Russia posing challenges in this segment.

Despite its strengths in various oilseed sectors, a critical gap exists in India’s palm and sunflower oil production. Less contribution to the global market for these oils hinders India’s overall competitiveness on
the international stage. India must prioritise strategies to boost domestic palm and sunflower oil production to achieve greater self sufficiency and enhance its position in the global edible oil market.

While India ranks among the largest global producers, a closer look reveals significant disparities in yield compared to other major producing countries. Nearly all edible oil crops have displayed lower yields in the last three decades than other global producers, except for castor.

India’s production of edible oils from secondary sources presents a picture of uneven performance. While being the second-largest producer of seed cotton (unginned) globally, India falls short in yield, highlighting a significant gap.

It is noteworthy that global producers achieve higher yields than Indian oilseed crops primarily due to the use of genetically modified (GM) herbicide-tolerant varieties. However, there is an opportunity for India to leverage its existing strengths in edible oil production and implement targeted strategies to close yield gaps.

It says that the global economy for edible vegetable oils has seen steady expansion over time, with forecasts for 2024-25 predicting a 2% rise in production, reaching 228 MT. This increase is anticipated to be fuelled by significant advancements in soybean, palm, and rapeseed oil production, alongside moderate sunflower seed oil production growth.

Global oilseed production has increased nearly tenfold since 1961, rising steadily from 57.02 MT. Although the cultivated area for oilseeds has expanded, production has grown much faster. The global oilseed yields also doubled from 5.7 t/ha in1961 to 13.16 t/ha in 2022-23, reflecting increasing efficiency in oilseed production.

The growth rate of vegetable oils has indeed been surpassing that of oilseeds over the past three decades due to the inclusion of palm oil, olive oil, coconut oil, and cottonseed oil, which are not traditionally classified under oilseeds and led to vegetable oils outpacing oilseeds in growth.

The report presents another surprise that the area, production, and yield of oilseeds experienced trend growth rates of 0.90%, 2.84%, and 1.91%, respectively, during 1980- 81 to 2022-23. Notably, in the most recent decade, production and yield displayed growth rates of 2.12 % and 1.53 %, respectively. The total
area under oilseeds showed a positive growth trend in all decades except during 1991-2000. The report says that India’s oilseed production reached a new high of 41.35 MT in 2022-23.

Despite all these attractive narratives, India is facing a grave edible oil crisis, which needs urgent redressal. NITI document has also presented strategy and roadmap for self-sufficiency in edible oil, but much depends on how these will ultimately be implemented.