India seen importing 70% of edible oil needs by 2020

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Kuala Lumpur: India may have to import 70% of its vegetable oil needs by 2020 if steps are not taken to boost domestic oilseed yields and re-impose import taxes on palm oil, a government official said on Tuesday.

India, which became the world’s largest vegetable oil importer this year as dry weather hit crops, buys 40 to 50% of its needs from overseas. The bulk of the imports are palm oil that have not been taxed since last year.

The South Asian country’s annual consumption stands at 13 million to 14 million tonne and has been on the rise, fuelled by the growth of its middle class and a preference for cheaper palm oil sourced from Indonesia and Malaysia.

We have good oilseed varieties but the farmers are disheartened with the cheaper vegetable oil imports and the bad monsoon, M S Punia, executive director of the National Oilseeds and Vegetable Oils Development Board, told Reuters.

India’s oilseed acreage has doubled to 27 million hectares from a decade ago because the government raised its minimum price support levels for vegetable oils but yields only stand at 1 tonne per hectare, Punia said in an interview.

The South Asian country grows nine oilseeds including soyabean, rapeseed and groundnut. Oils crushed from these crops stand at 8.2 million to 8.5 million tonne annually.

Oilseed productivity has worsened this year thanks to scanty rains during the monsoon season, which is usually a lifeline to most Indian farmers, who have limited access irrigation.

Punia said only 20% of the groundnut crop had access to irrigation facilities while soyabeans and rapseed crops hardly get any coverage.

The government is trying to put up more irrigation facilities but it is a costly and time-consuming affair, Punia said on the sidelines of a palm oil meeting in the Malaysian capital. While we put up this infrastructure, we need to put back these import taxes, it may help us with the capital costs.

India scrapped import taxes on crude vegetable oil last year when food prices soared, triggering a flood of imports. But food prices remain high this year and analysts say it is unlikely that the duties will be re-imposed. One way to plug India’s vegetable oils deficit would be to plant more tree-borne oilseeds, including oil palms, across the subcontinent’s 63 million hectares of wasteland, Punia said.