Opinion

Why do edible oil woes persist?

A Narayanamoorthy | Updated on September 15, 2021

Apart from endemic policy concerns, the promotion of palm oil has downsides

The edible oilseed production has occupied centre-stage in the discourse on Indian agriculture after Prime Minister Narendra Modi’s recent announcement of the ₹11,040-crore National Mission on Edible Oil-Oil Palm (NMEO-OP), to have self-sufficiency in edible oils, particularly palm oil.

There are two reasons for this announcement. First, the recent skyrocketing of edible oil prices has irked the government. And, second, the government, understandably, does not want to spend foreign exchange worth ₹60,000-70,000 crore annually for importing edible oils.

Under this mission, the government has proposed to cover an additional 6.5 lakh hectares for oil palm till 2025-26 and, thereby, reach the target of 10 lakh hectares. Will this mission help address the country’s edible oil woes? Are there alternative ways for NMEO-OP to increase the production of oilseeds swiftly?

One of the biggest failures of the Green Revolution is oilseed production. Although the total area under oilseeds has increased from 1964-65, it has been almost stagnated post 1990-91.

The average area under oilseeds was 25.09 million hectares (mha) in 1990-93, and it is almost the same (25.45 mha) now in 2017-20. In fact, among the major oilseed crops, soyabean is the only one that witnessed a sharp increase in its area, from 3.18 mha to 11.18 mha, thanks to the contribution of Madhya Pradesh.

An important traditional oilseed crop is groundnut, which accounted for almost 50 per cent of India’s total oilseed area during the mid-1960s, but it registered a big reduction, by about 4 mha, between 1990-93 and 2017-20. Rapeseed and mustard are the other important crops which saw a big growth in area and production during 1980s and 1990s, but have not seen any increase in area over the last two decades; hovering at 6-7 mha. Sunflower was cultivated in close to 2 mha during 1990-93, which fell to just 0.26 mha in 2017-20. If not for soyabean, India may have registered a sharp reduction in its total area under oilseeds crop by now.

Unlike paddy and wheat, where productivity growth helped to augment their production significantly over time, most oilseed crops did not experience such productivity growth. The Technology Mission on Oilseeds launched in 1986 also did not help increase the area in a sustained manner.

Therefore, the reduction in oilseeds area has made an impact on their production. For instance, the total oilseed production has increased only marginally from 32.48 million tonnes in 2010-11 to 33.42 mt in 2019-20.

Reasons for debacle

The introduction of the Green Revolution has altered the cropping pattern substantially, allowing the farmers to allocate more area for profitable crops. Between 1964-65 and 2019-20, the area under coarse cereals (now it is renamed as nutri-cereals) declined from 44.35 mha to 24.02 mha. Coarse cereals are predominantly cultivated under rainfed condition, which is also highly suitable for cultivating oilseed crops.

Given this, it was expected that the major portion of this area would come to oilseeds. But this has not happened. Why are the coarse cereal farmers not willing to take up oilseed crops? There are two main reasons for this. First, attractive minimum support prices (MSPs) were not announced for these crops until 1990s. Second, the procurement of oilseed crops by state agencies was minimal.

To encourage the cultivation of oilseed crops, the government rightly started increasing the MSPs for almost all the major oilseed crops from 1990-91 onwards. Between 1990-91 and 2020-21, MSPs for oilseed crops were increased 8- 10 times. The per quintal MSP for groundnut increased from ₹580 to ₹5,275, for sunflower from ₹600 to ₹5,885, for soyabean from ₹350 to ₹3,880 and for rapeseed and mustard from ₹600 to ₹4,650.

Impressive prices were also announced for gingelly, safflower and milling copra. This massive increase in MSP was not announced even for paddy and wheat. Surprisingly, even after the massive increase of MSPs, no big improvement has taken place in the total area of oilseeds.

Again this happened due to price and procurement related-reasons. Although higher MSPs are announced for oilseeds, farmers were not able to avail themselves of the prices in most cases as the market prices were ruling below the MSP in most oilseed crops.

The price policy report of the Commission for Agricultural Costs and Prices (CACP) for 2020-21 underlines that the number of days market prices for groundnut ruling below MSP were quite high in Gujarat (93.7 per cent), Karnataka (88), Rajasthan (89.1) and Andhra Pradesh (79.5) during October 2019 to December 2020. The same situation was reported for all major oilseed crops over time.

Poor procurement of oilseeds by state agencies is the main reason for MSP ruling below the market prices. It means that the farmers are forced to sell their oilseeds crops in the private market below MSPs.

No doubt that the NMEO-OP will help increase the production of palm oil in the future. But, do we need to spend this much money to promote a crop that is not native to us? Moreover, since the gestation period of oil palm crop is long, will this mission attract small and marginal farmers?

Our traditional oilseed crops are rich in terms of nutrient content. Procurement and remunerative prices are the twin problems that oilseed farmers are facing for many years now. Therefore, arrangements are needed to procure at least 20-30 per cent of total oilseed production at MSP to have a win-win situation for both farmers and the government.

The writer is former full-time Member (Official), CACP. Views are personal

Published on September 15, 2021

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