Long Way To Go For Oilseeds Production As Import Dependence For Edible Oils Remains High
According to ICRA, India occupies a prominent position in the world oilseeds industry with contribution of around 10 per cent in worldwide production. But the demand of edible oils (extracted from oilseeds in addition to palm oil) is significantly higher than the domestic production, leading to dependence on imports (60 per cent of requirement).
In FY2016 India’s total edible oil demand stood at 24 million tonnes out of which 9 million tonnes was met from domestic production and 15 million tonnes met from imports. The latter valued at around Rs 65,000 crore, constituted around 2.5 per cent of India’s total import bill.
Says Sachin Sachdeva, Associate Head & AVP – Corporate Ratings, ICRA, “Over the last ten years, the oilseeds production in the country has increased to around 34 million tonnes in FY2017 from 24 million tonnes in FY2007. Considering the importance of oilseeds, and the high level of imports, various oilseeds development schemes have been funded by the Government of India (GoI) to encourage cultivation of oilseeds and palm.”
“There has been some progress in increasing the area under cultivation and improving yields, but the growth has been slow. Average yield of various oilseeds crops in India, though improved, is lower than world average and significantly lower than other major oilseeds producing nations.”
As area under oilseeds has been almost stagnant during the last decade, there is little scope for extension of area given the competing demands. Thus yield rates need to be stepped up significantly in order to increase the production of oilseeds.
The GoI is currently running ‘National Mission on Oilseeds and Oil Palm (NMOOP)’ to encourage the adoption of newly released varieties and improved agro-techniques in oilseed crops. The mission targets increasing production of oilseeds to 42 million tonnes by FY2022 from estimated 34 million tonnes in FY2017.
ICRA estimates that this can help lower the proportion of imports in total edible oil consumption in the country to around 55 per cent in FY2022 from around 60 per cent in FY2017, translating into saving of around Rs 6,500 crore of foreign exchange.
The key constraints limiting the growth in production of oilseeds include lack of suitable varieties, high-costs of cultivation, lack of timely availability of inputs, and low & fluctuating prices. As the majority of the area under oilseeds cultivation is still rain fed (around 75 per cent), there is significant impact of vagaries of monsoon on the overall productivity of oilseeds crops.