The economics of oil seeds
The annual consumption of edible oil in india is 20MT which include the variety of oil derived from- Palm, soyabean, sunflower, rapeseed, rice barn and cotton seed. At home production of the oilseed suffice only the 8MT demand, while the remaining 12 MT demand is met by the imports. This import costs around $8.5billion or 53000 crore in FY15 at current prices. The major edible oils so imported by India are- palm, soyabean, sunflower and canola with 70% palm oil. With increasing GDP, improving purchase power parity and changing life-style the consumption of edible oilseeds is set to increase by 1 MT annually, which means around $14 billion or 88000 crore of import bill by 2020.
Reasons for such escalation
Easy import options turned a supply demand mismatch. The import duties are charged in a way that it exploits the local industry. The prices of the oil locally produced is greater than the imported ones. The consumer is now a days demanding superior variety of oil form beans, canola, and sunflower seeds crushed from the Genetically Modified (GM) seeds. The increasing GDP and purchasing power of the people and the changing life-style led to an increased demand.
World is heading towards increasing yield of the crops through improving productivity. In India there are still doubts and confusion prevails regarding approval to GM crops. Lab tests are pending and many trials undergoing. The growing protest against the GM crops keeping the agriculture bereft form the benefit of GM.
Road ahead
It is imperative for government to take measures to improve the yield of the oil seeds. It could be done, if we make use of efficiency of the bio-technology revolution for increasing the productivity. Paradoxically the Indians use the imported edible-oil which contains the crushed GM seeds but excludes the same from their own agriculture.
Importing, instead Soya seeds and producing oil for the domestic consumption through a network of seed crushing plants and processing units. It would happen if we liberalise the import of oilseeds-GM or otherwise. The industry this way would produce the oil for domestic consumption and de-oil seeds cake for exports and domestic use. There would be net saving if we import equivalent oil seeds. Also rationalizing the Import duties, preventing the local industry under the WTO morms would be good move in this direction.
It could be seen similar to the sugar mills processing raw sugar to refined sugar. In the same way setting the port based crushing plants, exporting cakes and selling oil domestically not only would decrease the import bill but also generate the employment and assets to the country.
