Drop In Prices Of Edible Oils

Context:

A body of oil millers and oil seek traders in Gujarat has appealed to the central government to take measures to arrest the slide to protect Indian oilseeds producers.

Relevance:

GS-III: Agriculture (Agricultural Resources, Food Security), GS-II: Governance (Government Policies & Interventions)

Dimensions of the Article:

1. Key points
2. What are its effects?
3. About India’s Oilseeds Production and Imports
4. Government Scheme- National Mission on Edible Oil-Oil Palm (NMEO-OP)

Key points:

• The retail prices of most edible oils has been softening in the recent months vis-à-vis the corresponding period last year.
• Gujarat State Edible Oils and Oil Seeds Association (GSEOOSA) urging the central government to take steps to stop prices from going further down.
• The price of  mustard oil has declined by 10% while the palmolein oil and refined soybean oil price are down by 41 per cent.
• The highest drop, 45.95 per cent, has been reported in the price of refined sunflower oil.

What are its effects?

• This can impact the Indian oilseeds producers and increase the country’s dependence on the imports of the commodity.
• All those involved in edible oils trade – from importers, producers, packers, to wholesalers and retailers can incur huge loss.
• This can also impact the sowing of oil seeds considerably in the upcoming kharif season.
• Measures  such as raising import duty, introduce quantitative import restrictions etc to stop the slide of edible oil prices.

About India’s Oilseeds Production and Imports

• India’s vegetable oil economy is world’s fourth largest after USA, China & Brazil.
• India is also third largest cultivator of oilseeds in the world and paradoxically meets into more than 50% requirement through imports.
• Major Oilseeds Producing Areas in India are: Rajasthan, Gujarat, Tamil Nadu, Madhya Pradesh, Haryana, Maharashtra, Karnataka, Andhra Pradesh.
• Due to diverse agro-climatic conditions and geographical locations, farmers are able to grow all the nine annual oilseeds viz. groundnut, rapeseed, soybean, sunflower, sesame, safflower, niger, castor and linseed.
• In India, oilseeds are second most important crop after cereals sharing 14% of the country’s gross cropped area and accounting for nearly 3% of GDP.
• Oilseed accounts for 13% of the Gross Cropped Area, 3% of the Gross National Product and 10% value of all agricultural commodities.
• India needs a threefold increase in the oilseeds production in the next 35 years as – like pulses, oilseeds face severe challenges in terms of climatic stresses and unfavourable farming conditions.
• Oilseed cultivation is mainly undertaken on marginal land by resource poor farmers who are generally reluctant to provide necessary inputs for increasing the productivity.
• Nearly 82% of the oilseeds area fall under rainfed farming where climatic vagaries cause severe damage to crops.
• Out of the total requirement, 10.50 million tonnes are produced domestically from primary (Soybean, Rapeseed & Mustard, Groundnut, Sunflower, Safflower & Niger) and secondary sources (Oil palm, Coconut, Rice Bran, Cotton seeds & Tree Borne Oilseeds) and remaining 60%, is met through import.
• Despite the oilseed production of the country growing impressively, there exists a gap between the demand and supply of oilseeds, which has necessitated sizeable quantities of imports.
• Import of Edible oils:
  • India’s edible oil import bill in FY 2022 has crossed $19 billion for more than 14 million metric tonnes of imports.
  • Its import dependence on edible oil stands at 55-60% of the total consumption. Indian agriculture is largely competitive – but its biggest Agri-import item, edible oils account for 59% of the total agri-imports. This is despite the very high import duties on its imports. Of edible oil imports, more than  half is palm oil, followed by soyabean & sunflower.

Government Scheme-National Mission on Edible Oil-Oil Palm (NMEO-OP)

• National Mission on Oilseeds and Oil Palm (NMOOP) was implemented during the 12th Five Year Plan, to expand the oil palm areas and increase the production of edible oils.
• It was later merged with the National Food Security Mission.
• NMEO-OP aims resolve to allow India to be independent or self-reliant in edible oil production.
• Through this mission, more than ₹11,000 crore will be invested in the edible oil ecosystem.
• The government will ensure that farmers get all needed facilities, from quality seeds to technology.
• Along with promoting the cultivation of oil palm, this mission will also expand the cultivation of our other traditional oilseed crops.

Need for NMEO-OP

• During the last few years, the domestic consumption of edible oils has increased substantially and has touched the level of 18.90 million tonnes in 2011-12 and is likely to increase further.
• A substantial portion of our requirement of edible oil is met through import of palm oil from Indonesia and Malaysia.
• It is, therefore, necessary to exploit domestic resources to maximize production to ensure edible oil security for the country.

-Source: The Indian Express