Informist, Thursday, Feb 22, 2024

--SEA Mehta: Self-sufficiency in edible oil by 2029-30 unlikely

--CONTEXT: SEA Executive Director B.V. Mehta speaks to Informist

--SEA Mehta: Must aim to cut edible oil imports to 40% in 5 years

--CONTEXT: India now imports over 60% of edible oil requirement

--SEA Mehta: Need 50 bln rupee/yr for edible oil sufficiency by 2030

--SEA Mehta: Discussed strategy with govt to achieve oil sufficiency

--SEA Mehta: Edible oil sufficiency likely only by targeted approach

--SEA Mehta: Need a champion to spearhead edible oil mission

--SEA Mehta: Crop diversification can bring down edible oil imports

--SEA Mehta: India must diversify to oilseeds from wheat, rice

--SEA Mehta: Mustard can be game-changer in raising oil output

--SEA Mehta: Groundnut can also be game-changer in raising oil output

--SEA Mehta: Soybean is better as protein source than oil source

--SEA Mehta: Must aim for 18.8 mln tn edible oil output by 2030

--CONTEXT: India's edible oil output was 9.8 mln tn in 2022-23

--SEA Mehta: India was edible oil self-sufficient briefly in 1990s

--SEA Mehta: Import duty changes needed to boost oilseed output

--SEA Mehta: Govt must recalibrate MSP to boost oilseed output

--SEA Mehta: Futures trade helpful to discover oilseed prices

--SEA Mehta: Hope govt will allow more futures trading next year

By Afra Abubacker, Anjali Lavania, and Romeo M. Raj

MUMBAI – India needs a big plan and proper execution to achieve self-sufficiency in edible oils, B.V. Mehta, executive director, The Solvent Extractors' Association, said. The programme needs an investment of at least 50 bln rupees a year till 2030, and a "champion" with decisive authority must be appointed to spearhead the mission, Mehta told Informist in an interview.

"We did it (under the leadership of) M.V. Rao... why don't we repeat history," Mehta said. During the early 1990s, India was self-sufficient in edible oils for a brief period as the government appointed agricultural scientist M.V. Rao to head the Prime Minister's Technology Mission on Oilseeds, popularly called the Yellow Revolution. "In just five years, oilseed production jumped from 12 mln tn to 22 mln tn,” Mehta said.

But over the years, India's edible oil demand has increased with a burgeoning population, income growth, and urbanisation. Last year, India saw record edible oil imports of 16.5 mln tn against the annual demand of 24-25 mln tn. Finance Minister Nirmala Sitharaman, in her Interim Budget for 2024-25 (Apr-Mar), spoke of becoming ‘atmanirbhar' (self-sufficient) in edible oils by focusing on mustard, groundnut, sesame, soybean, and sunflower.

Three years ago, the Centre rolled out the National Mission on Edible Oils, but it focused on oil palm. As per the mission, around 1 mln ha was targeted to be under oil palm cultivation by 2025-26 (Nov-Oct). Mehta says the target is unlikely to be achieved by then, and the country might only reach 500,000 ha. Oil palm acreage across India is around 350,000 ha, he added.

Last week, an SEA delegation met government officials and brainstormed strategies to achieve self-sufficiency in edible oils. Though India is unlikely to achieve self-sufficiency in edible oils in the next five years, the association suggests bringing down imports to 8.5-9.0 mln tn by 2029-30 (Nov-Oct) from 16.5 mln tn through crop diversification.

"India is producing far too much wheat and rice, which strains our storage systems and increases food subsidy bills," the association said in its presentation to the government. India exports substantial quantities of rice, but imports a lot more edible oil. Hence, the association has suggested that the government must incentivise farmers to shift to oilseed cultivation from wheat and rice.

Without ensuring security in fats, food security is not complete, Mehta said. On diversification, SEA proposes some shuffle in the oilseed basket, too. Mustard and groundnut are high oil-bearing seeds with 48% oil content, and "can be the game-changer", he said. 

The country will have to set oilseed-specific targets, or else the diversity in oilseed will dilute progress. "What I mean (is that), if you focus on all 9-10 seeds, your attention gets diluted," Mehta said.

As per the SEA proposal, in the next five years, mustard acreage needs to grow to 12 mln ha from 9.8 mln ha to ramp up mustard seed production to 20 mln tn from 11.4 mln tn in 2022-23. The association estimates that 20 mln tn mustard seed will yield 7.5 mln tn mustard oil. This will be a two-fold jump from 3.6 mln tn of oil produced in 2022-23.

For groundnut, the association has proposed a target of 7.0 mln ha under cultivation, up from 5.1 mln ha, to achieve an output of 17.5 mln tn, up sharply from 7.9 mln tn in 2022-23. This should enable an oil output of 3.0 mln tn in five years, as opposed to the current production of 900,000 tn.

However, only a small portion of the groundnut output makes it to oil mills for processing. Of the 4.5 mln tn grown, just 1 mln tn is used for crushing. Some 2 mln tn is accounted for by direct consumption, 1 mln tn is retained as seed for sowing the next crop, and 500,000 tn is exported. "I sometimes feel we underestimate the direct consumption of groundnuts... as snacks (particularly alongside alcohol), chikki, and chutney," he said.

Meanwhile, the association suggests the target for soybean production should be 18 mln tn by 2029-30 from the current 12 mln tn, with no increase in the acreage of 12 mln ha. The association estimates 18 mln tn soybean will yield 2.8 mln tn soyoil. This will be a 55% increase in production from 1.8 mln tn in 2022-23.

With only 18% oil content, soybean should be relied on more to meet protein requirements and less for oil, Mehta said. For other oils, such as palm, rice bran, and cottonseed, SEA has not recommended any acreage targets to the government. The combined output target for these oils is 5.5 mln tn by 2029-30, up from 3.5 mln tn in 2022-23.

If these targets are achieved by 2029-30, India is likely to produce 18.8 mln tn edible oil, almost double the 9.8 mln tn it produced in 2022-23. India's annual cooking oil demand is pegged at 25 mln tn in 2022-23 and is seen growing 3% annually to reach 30 mln tn by 2029-30. This would imply imports of 11.2 mln tn, down from 16.5 mln tn, or a reduction in imports to 38% of total demand from 66% last year.

Though edible oil demand is seen growing over the years, Mehta believes India can substantially reduce import dependency with a slew of policy interventions. On the minimum support price system, he says the government must recalibrate and use minimum support prices to incentivise as well as disincentivise production.

Similarly, from time to time, import duty needs to be revised. According to SEA, lower duties have transformed India into a prime destination for excess edible oil supplies. Further, the association has been urging the government to increase the duty difference between crude and refined oils to 15.0% from 8.2%, to protect the domestic refining industry. In December, the Centre extended the current duty of 13.7% on refined oils and 5.5% on crude oils by a year till March 2025.

On improving productivity, Mehta said the Indian oilseed sector is woefully low on productivity and needs a serious technological push, including genetically modified seeds. “We are supporting GM, it increases productivity,” Mehta said. India imports soyoil made from genetically modified soybean. The modified characteristics of the oilseeds do not pass over to oil and remain only in the oil meal, he said. 

Mehta also vouches for intercropping and vertical cropping amid limited land availability. SEA has tried intercropping groundnut with castor and says farmers' incomes grew substantially. Further, permitting futures trading in oilseeds and other agricultural commodities will help farmers discover prices, he said.

“So, it (futures) is necessary, but the government’s view is that futures trading leads to inflation," he said. He believes the government will revisit the ban on futures trading of commodities after the General Election. He is hopeful that the ban on futures trading in at least some commodities could be lifted next year.

Currently, derivatives trading in mustard seed and its derivatives, soybean and its derivatives, and crude palm oil has been suspended till December. Futures trading in these commodities was last allowed in 2021.  End

Edited by Rajeev Pai

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