Indian Oilseeds Sacrificed For Cheap Imported Oils

If there is so much demand for oil, then what are the reasons for the farmer losing interest in growing oilseeds? Why are we depending on imports for our domestic consumption? Why are farmers not getting the right price for their crops? The answer lies in economics - palm oil is very cheap, even when imported. 80 per cent of the oils imported are palm oil.

Indian Oilseeds Sacrificed For Cheap Imported Oils

Glistening bottles, max size plastic jars and even multi-litre tin canisters of gleaming oils fight for your attention when you enter the oils aisle of your local supermarket. You are spoilt for choice - olive, canola, groundnut, mustard, rice-bran, palm - take your pick. One is extra virgin, the other is cold-pressed and the third comes with a baby-sized bottle free.

Seeing all this you would not believe that there is an oil shortage in the country. But the reality is that while Indians need 23 lakh tonnes of vanaspati oil, we are manufacturing only 8 lakh tonnes. The rest of our vegetable oil needs are met by imports.

Over the last decade, the cultivation of oilseeds like groundnuts, flax seeds, sunflower and others has come down dramatically. The result: the oils we are frying our puris in, tempering our dals with or sauteing our vegetables in are all imported. A whopping 15 lakh tonnes of it.

Here's a look at how this imported oil is eating into our foreign exchange reserves - In 2017-2018, we spent Rs 74,996 crore on vegetable oils. Compare this to how much we spent on importing pulses - a measly Rs 18, 748 crores.

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Oils top the list in terms of cost of agri-imports in India.

Apart from costing us money, these imported oils are also costing us our health. 80 per cent of the oils imported are palm oil. While everyone acknowledges that palm oil is not the healthiest of oils, we import and consume it because it is the cheapest - cheaper than healthier alternatives like mustard, groundnut or soybean.

If there is so much demand for oil, then what are the reasons for the farmer losing interest in growing oilseeds? Why are we depending on imports for our domestic consumption? Why are farmers not getting the right price for their crops?

The answer lies in economics - palm oil is very cheap, even when imported. It is available at Rs 60 a litre in every small village in India. "There is a lot of demand for palm oil because it is much cheaper compared to mustard or others. It makes sense for businessmen to import it as well. The WTO agreement forbids India from rejecting any imports. So when the government tries to control imports with duties, it is not a permanent solution," explains Dr Girish Jha, Chief Scientist of Indian Agricultural Research Institute, Delhi.

Uttar Pradesh oilseed farmers worst off

"What is the point of planting more mustard? While the cost of cultivation inputs are rising, the selling price is so low that we are not even able to recover our cost. The government announces a minimum support price but none of the middlemen pays that much," -Tejpal Singh, mustard farmer


Oilseeds are generally produced in areas where agriculture is monsoon dependent. Mathura is a hub for mustard cultivations.

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Tejpal Singh, a mustard farmer in Inayatgarh village here has sowed it in eight acres. "What is the point of planting more mustard? While the cost of cultivation inputs are rising, the selling price is so low that we are not even able to recover our cost. The government announces a minimum support price but none of the middlemen pays that much," he says.

Last year, the MSP for mustard was Rs 4,000 but farmers had to sell at Rs 3,000.

While mustard oil has been the traditional cooking medium in states like Uttar Pradesh, Bihar, Jharkhand, Uttarakhand, today most people in these states are cooking in Malaysian and Indonesian palm oil.

The story of soybean is similar. Despite suffering losses, farmers in Madhya Pradesh had to sell it for Rs 2,200 per quintal.

Scientists, bureaucrats and researchers in the field of oilseeds had come to Lucknow on 16 July 2018 for a conference which was also attended by industry representatives.

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MSP with risk incentive

While talking about how to make the cultivation of oilseeds more attractive for farmers, Dr Jha suggested, "If oilseed cultivation is risky, then the government should also add a risk incentive to the MSP. The government should also ensure that farmers get good quality of seeds and are also kept updated on latest developments. Today oilseeds are cultivated in approximately 26 million hectares and the production is also about 26 million tonnes. The average production is about one tonne per hectare which is very low. There is a need to increase this."

Who is to blame

There are several reasons for this low production. While the Green Revolution helped, liberalisation had a negative impact. The Oil Seed Promotion Mission was launched in 1986. In 1986-1987, the production was 11.3 million tonne. By 2014-15 this figure went up slightly to 26.68 million tonnes.

The government now wants to help farmers earn more through oilseeds. Thirty-three seed hubs have been created. SR Kaushal, Oil Seed Director, UP government, said, "We are working in an organised manner and have asked for suggestions from the farmers and industry. Based on these we will take things further."

Adviser to the UP Government Dr VK Raju said, "MSP is not the only answer. The industry also has to come forward and work in the interest of the farmers."

The lack of oilseed processing plants has been at the root of the oilseed farmer's suffering. For example, the sunflower cultivation in Punjab and Haryana is on the verge of collapse. A disinterested government and lack of industry support has created this situation.

What the farmer wants

-Better MSP for oilseeds

-Risk incentive to augment MSP

-Better quality seeds

-More seed hubs

-FPO to encourage youth to set up oil processing units

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