Edible oils deficiency

Farmers need stable policy environment for investment

The commerce ministry’s plea to the agriculture ministry to work out a plan for self-sufficiency in edible oils is based on sound economic reasoning and, therefore, merits urgent action. Purchases from abroad account for 65-70 per cent of the domestic requirements for cooking oil, making it the largest import item after crude oil and gold. Pricing policies and tariffs have turned oilseeds cultivation uneconomical vis-à-vis imports. They have also imperilled the viability of the domestic oilseeds-processing industry. A sizable part of the local vegetable oils-crushing capacity is lying idle or underutilised. Oil-meal exports, too, have been adversely hit.

It is, indeed, not for the first time that attention has been drawn to the need to shed such critical dependence on shipments from abroad for a mass-consumed essential item like a cooking medium. Union Finance Minister Nirmala Sitharaman, too, had called for attaining self-reliance in oilseeds in her Budget speech earlier this year. She had cited the example of pulses, where such a feat has recently been achieved. However, what is often not realised is that pulses and oilseeds are wholly different things, facing different challenges and requiring different strategies for breakthrough in production. Though both have been victims of imprudent policy regimes and misguided market interventions, their response to these irritants has been dissimilar. This is chiefly because of external factors, notably availability and price trends in the international market. While the domestic prices of pulses were not affected much by the frequent changes in import duties due to limited supplies in the global market, those of the abundantly available oilseeds tended to get depressed. This has served as the biggest disincentive for the farmers to raise oilseeds production.

Thankfully, the technology (read high-yielding crop varieties and improved agronomic techniques) to step up oilseeds output already exists. The huge gap in yields recorded at the research farms and the farmers’ fields is clear evidence of that. However, oilseeds growers are wary of investing in this technology because of uncertainties about the returns under the present pro-consumer but anti-producer policy regime. That the key to self-sufficiency in cooking oils is the remunerative prices for the produce was appreciated even in the past when high prices had transformed India from the world’s largest vegetable oil importers into a net exporter in the late 1980s and the early 1990s. The trigger for what was then hailed as the “yellow revolution” was the setting up of the Oilseed Technology Mission in 1986 with unbridled freedom to formulate and implement policies concerning the import, export, and domestic pricing of oilseeds. The Mission allowed oilseeds and edible oil prices to fluctuate freely within a stipulated band that guarded the interests of both producers and consumers. Market interventions were carried out only when the prices tended to breach the set limits. Unfortunately, this Mission was allowed to gradually degenerate by curbing its autonomy and expanding its workload in the mid-1990s, squandering the gains and pushing the country back to the cooking oil-deficit era. An avatar of the original technology mission, with the same kind of powers and following a similar remunerative prices-based strategy, is needed again to resurrect the yellow revolution and achieve self-sufficiency in edible oils.