Revitalizing the Oilseeds Sector

Context: 

Burdened by massive import of vegetable oil amounting to 13-14 million tonnes and valued at over $14 billion to meet chronic domestic shortage, the government is keen to boost domestic production and reduce the dependence on imports.

Requirement to be self-sufficient:

• The country’s domestic production of oilseeds has not kept pace with this demand, leading to a heavy dependence on imports. 
• The present import policy, while advancing consumer interest, has failed to protect the interests of domestic oilseed growers.

Why is India not Self-Sufficient in Oilseed Production?

• Land Fragmentation: Small landholdings make it difficult to adopt modern farming techniques, machinery and technology.
• Low Productivity: Poor seed quality, lack of irrigation facilities, inadequate use of fertilizers and insufficient research and development efforts are reasons for low production.
• Climate Variability: India has witnessed significant changes in rainfall patterns, which have adversely affected oilseed production.
• Lack of Storage and Distribution Infrastructure: This discourages farmers from producing oilseeds.
• Dependence on Imports: Low import tariffs and high domestic taxes have also made imported oil cheaper than domestically produced oil.
• Lack of Government Support: It is in terms of research and development, extension services and financial support and also there is not so much private sector investment.

Related Initiatives of the Government to boost Oil Production:

• National Mission on Edible Oil-Oil Palm (NMEO-OP)
• Oil Palm Area Expansion under Rastriya Krishi Vikas Yojana
• Pradhan Mantri Fasal Bima Yojana (PMFBY)
• Technology Mission on Oilseeds
• Paramparagat Krishi Vikas Yojana (PKVY)

How can India boost Domestic Production?

• Enforce area expansion through incentivised crop rotation in high-input grain mono-cropping regions of Punjab, Haryana and western Uttar Pradesh; 

• adopt multiple technologies including infotech, satellite tech, nuclear agri-tech and nanotechnology; 

•  Work towards a breakthrough in seed technology; 

•  Implement a robust nationwide procurement system; 

• Tap the huge potential of non-conventional oil sources like cottonseed, rice-bran and tree-borne oilseeds; and
• Invest in improving crushing/extraction efficiency.

Other important considerations:

• Regulate & Monitor: A simple administrative system of ‘Import Contract Registration’ and monitoring is the need.
• Cutting down Credit Period to 45 days: It will automatically slow the pace of import and make the importer more responsible and accountable.
• Bring Cooking Oil under PDS: It will support vulnerable sections of consumers.
• Co-existence: Public Distribution System and private trade supplies can co-exist and help advance consumer interest.
• Creating Processing Industry Modernisation Fund: A modernized industry will capture greater value and create potential to attract foreign direct investment.

Way Forward:

• Each one of these is doable and positive effects will be visible over time. But there is also a need for some ‘quick wins’ for which six policy actions are recommended.
• Policymakers must demonstrate strong ‘political will’ to creatively disrupt the debilitating status quo. The country’s oilseeds sector deserves policy, investment and research support.

News Source: The Hindu Business