Rising edible oil bill
THE total import of edible oil in fiscal 2012 was two million tonnes at a cost of $2.69 billion. Imports cater to 76 per cent of the country’s domestic needs.
According to the Pakistan Bureau of Statistics, forecast for 2013 is more or less the same as there is no expected significant change in the production of indigenous oilseeds.
The rise in prices of edible oil in the international market and the dollar-rupee parity has raised the import bill and prices at home. The growing population and the increase in spread of fast food industries consuming large quantity of cooking oil as well as higher industrial demand for crude palm oil (CPO) have boosted the imports.
Industrial demand for crude palm oil is expected to remain strong as, according to industry sources, a number of edible oil refineries are being set up in the country.
After the zero-income tax incentive on new equity-based investment, industrialists have set up several oil refineries and some others are in progress. A 300-ton-a-day crude palm oil refinery has also been set up at Port Qasim.Industry sources say, one of the reasons behind expanded import volumes of palm oil last year was that the oil and ghee industry not only catered to the domestic needs but a large
quantity of items was exported to Afghanistan.
“Earlier ghee and cooking oil used to be smuggled to Afghanistan through misuse of Afghanistan Transit Trade Agreement (ATTA), but lately, tightening of the ATTA rules has significantly minimised it,” claimed an industry official.
The country’s demand for edible oil is increasing at the rate of six to eight per cent per annum. This necessitates the increase in oilseed production as well as increasing indigenous extraction and refining capacity of oil.
In addition to boosting output of traditional oilseeds there is a need to focus on using coconut plantations in Sindh coastal areas and expansion of experimental plantation of olive in Khyber Pakhtunkhawa, Balochistan and Potohar regions. Cottonseed accounts for roughly 50 per cent of the domestic edible oil production, followed by sunflower (30 per cent), and the remaining 20 per cent is from canola, rapeseeds and mustard.
Per acre yield of all these oilseed crops ranges between 15-45 per cent of their potential, primarily due to water scarcity and lack of application of latest technology and farming techniques, agro scientists of the sector point out.
Besides, crop losses during harvesting and losses in oilseed stocks due to poor storage, preservation and processing during oil extraction also lowers the per unit output of oil extraction. Provincial governments will now have to address these losses and other structural issues to make the oil extraction industry efficient.
Pakistan can save over $2 billion annually by encouraging domestic edible oil sector, says Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Coordination Chairman Atif Ikram Sheikh.
Taking to the business community, he said that with a little effort and proper farming, production, processing and marketing of oilseeds, Pakistan can not only reduce dependence on imports but also help earn foreign exchange.
“Being an agrarian economy we should have attained autarky in edible oil production by now instead of being one of the world’s largest buyers of edible oil, consuming a big chunk of foreign exchange,” he said.
Reasons behind the wide gap between production and demand include lack of research and development, want of incentives, failure to attract investment, low price and high cost of production making these crops non-profitable for many farmers, said Sheikh, who is also senior vice-chairman of the Pakistan Vanaspati Manufacturer’s Association (PVMA).
He said that focus on commercial farming of oilseeds, especially soybean with high percentage of oil (22 per cent) — as compared to other varieties — and high protein content (42 per cent) can reduce imports. Cottonseed with 3.63 million tonnes annual production has only 11 per cent of oil, said Sheikh.
The ministry of food which should have by now accomplished the task of plantation of coconut trees in the coastal belt of Sindh, promotion of palm cultivation in suitable areas to reduce its dependence on palm oil imports from Malaysia and strengthened the base for growing olive in KPK, Balochistan and other eco-friendly areas, is still in the process of planning and considering the feasibility of the projects. Any practical steps taken have been weak and ineffective.
Pakistan Oilseed Development Board Managing Director Syed Nasir Ali Shah had recently held a meeting with the stakeholders to evolve a joint strategy to increase oilseed production. At the meeting among proposals, one of the measures proposed was plantation of palm oil trees along the coastal belt. One does not know when the country will come out of the cobweb of planning and proposals and change realities on the ground.