Oilseeds and edible oils are two of the most sensitive essential commodities. Increased demand from several applications and rising consumer demand for high-quality cooking and edible oils are driving the global market for cooking oils. Read here to know more about the edible oil economy.
India is one of the largest producers of oilseeds in the world and this sector occupies an important position in the agricultural economy.
India accounts for the estimated production of 36.56 million tons of nine cultivated oilseeds during the year 2020-21(November-October) as per the 3rd Advance Estimates released by the Ministry of Agriculture in 2021.
By boosting the production and productivity of oilseeds and oil palm and minimizing the import of edible oils, India expects to increase the availability of these oils, reaching self-sufficiency while conserving vital foreign exchange for other necessary imports.
The global edible oil market is expected to grow by 10.28% annually for the next 5 years. And, in a global comparison, most of this revenue is generated in India.
Edible oil economy of India
There are two major features, which have significantly contributed to the development of this sector.
One was the setting up of the Technology Mission on Oilseeds in 1986 which has been converted into a National Mission on Oilseeds and Oil Palm (NMOOP) in 2014.
- This gave a thrust to the Government’s efforts for augmenting the production of oilseeds.
- This is evident by the very impressive increase in the production of oilseeds from about 11.3 million tons in 1986-87 to 22 million tons in 2019-20.
- Most of the oilseeds are cultivated on marginal land and are dependent on rainfall and other climatic conditions.
The other dominant feature has been the program of liberalization.
- This has had a significant impact on the present status of the edible oilseeds/oil industry
- Under this, the Government’s economic policy improved allowing greater freedom to the open market and encouraging healthy competition and self-regulation rather than protection and control.
- Controls and regulations have been relaxed resulting in a highly competitive market dominated by both domestic and multinational players.
Types of Oils commonly in use in India
India is fortunate in having a wide range of oilseed crops grown in its different agro-climatic zones.
- Groundnut, mustard, rapeseed, sesame, safflower, linseed, nigerseed, and castor are the major traditionally cultivated oilseeds.
- Soybean and sunflower have also assumed importance in recent years.
- Coconut is the most important among the plantation crops.
- Efforts are being made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu, and North-Eastern parts of the country in addition to Kerala and Andaman & Nicobar Islands.
- Among the non-conventional oils, rice bran oil and cottonseed oil are the most important.
- In addition, oilseeds of tree and forest origin, which grow mostly in tribal inhabited areas, are also a significant source of oils.
Consumption Pattern of Edible Oils in India
India is a vast country and inhabitants of several of its regions have developed a specific preference for certain oils largely depending upon the oils available in the region.
- For example, people in the South and West prefer groundnut oil while those in the East and North use mustard and rapeseed oil.
- Likewise, several pockets in the South have a preference for coconut and sesame oil.
- Inhabitants of the northern plain are consumers of fats and therefore prefer Vanaspati, a term used to denote a partially hydrogenated edible oil mixture of oils like soybean, sunflower, rice bran, and cottonseed oils.
- Many new oils from oilseeds of tree and forest origin have found their way to the edible pool largely through the vanaspati route.
Through modern technological means such as physical refining, bleaching, and deodorization, all oils have been rendered practically colorless, odorless, and tasteless and therefore, have become easily interchangeable in the kitchen.
Oils such as soyabean oil, cottonseed oil, sunflower oil, rice bran oil, palm oil and its liquid fraction- palm olein which were earlier not known have now entered the kitchen.
- The share of raw oil, refined oil, and vanaspati in the total edible oil market is estimated roughly at 35%, 60%, and 5% respectively.
- About 56 % of the domestic demand for edible oils is met through imports out of which palm oil/palm olein constitutes about 54%.
- The consumption of refined palmolein (RBD palmolein) as well as its blending with other oils has increased substantially over the years and is used extensively in hotels, restaurants, and in the preparation of a wide variety of food products.
Export-Import Policy on Edible Oils
The country has to rely on imports to meet the gap between demand and supply. Import of edible oils is under Open General License (OGL).
To harmonize the interests of farmers, processors, and consumers, Government reviews the duty structure of edible oils from time to time.
- From 2018, the import duty on all crude and refined edible oils, except Palm oil and Olive oil was raised to 35% and 45% respectively while the import duty on Olive oil was increased to 40%.
- In 2020, the import duty on Crude and Refined Palm Oil was revised to 37.5% and 45% respectively.
- In 2020, the import policy of Refined Palm Oil is amended from ‘free’ to the ‘Restricted’ category.
- In 2020, the import duty on crude palm oil was revised from 37.5% to 27.5%.
Government initiatives
Yellow Revolution was launched to increase the production of Edible oilseeds in the country to meet domestic demand.
The government of India launched National Mission on Edible Oils-Oil Palm as a centrally-sponsored scheme, being implemented jointly by the central and state governments with a special focus on the northeast region and the Andaman and Nicobar Islands.
To improve and systemize the data management system in the vegetable oil sector, the Directorate of Sugar & Vegetable Oils under the Department of Food and Public Distribution has developed a web-based platform for the online submission of inputs by vegetable oil producers on monthly basis.
- This has helped the Government to take prompt and informed policy decisions for better management of the vegetable oil sector.
- The new system also provides transparency in the data management of the vegetable oil industry as well as the Government’s work.
- The portal also provides a window for online registration and submission of monthly production returns.
To achieve self-sufficiency in the production of oilseeds, the Ministry of Agriculture and Farmers Welfare has adopted a multi-pronged strategy.
- Under the strategy, the Government of India had approved an ambitious plan for the free distribution of high-yielding varieties of seeds to the farmers for the Kharif season 2021 in the form of mini-kits.
News about edible oil
- Recently, GM mustard was cleared by the Genetic Engineering Appraisal Committee for field trials and environmental release.
- The central government told the Supreme Court that the deployment of GM Mustard hybrids will contribute to India’s self-sustenance in the production of edible oil and shall go a long way in realizing the vision of “Atmanirbhar Bharat”.
- The government added that opposing it will hurt farmers, consumers, and industry.
Previous year question
Consider the following statements: (2018)
- The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.
- The Government does not impose any customs duty on all imported edible oils as a special case.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
-Article written by Swathi Satish
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