Sunday, April 29, 2007

Oily crises

Containing the oilseed crisis can save up to Rs 12,000 crore

India is facing two crises pertaining to oil. The crisis of crude oil has been tightening the noose around India’s neck for sometime, and now the rapidly dwindling domestic and international oilseed production is adding to its woes. Oilseed, one of the most important ingredients of cooked food, is facing a crisis of gargantuan proportions.

The oilseed production in India has dropped drastically by a staggering 17% from the previous year. The production has been 23m tons, which is below what we used to produce a decade ago (in 1996-97, it was at 24.4m tons). As a result, our dependence on imports has been increasing steadily: from a miniscule 3% to above 40% this fiscal (which would meet almost 60% of our domestic needs), with an approximate import bill close to Rs 12,000 crore. No doubt, this impending crisis is looming large over our economy, but what is astonishing is that our planners remain all but oblivious to the same.

This decline in production has been a culmination of oilseed increasingly losing lucre as a profitable crop in comparison to other alternate crops. Cultivated mostly in the arid areas (areas which received rainfall below 110 mm; ICAR), less than 25% of oilseed cultivated areas have access to regular irrigation. Rajasthan, Madhya Pradesh and Gujarat top overall oilseed production and produce the crop as lucrative alternate exists for the farmers.

The much hyped Green Revolution that depended on ‘high yielding variety of seeds’ failed to touch oilseed production. As a result, the desired technological breakthrough in oilseeds has failed to take off completely. Compounding this, most of the oilseed producing regions are susceptible to drought, salinity and pestilence, and the so-called improved variety of oilseed has not adapted to such environmental stress.

The first tangible steps were taken by the Edible Oil Technology Mission initiated by Rajiv Gandhi, which had ensured self-sufficiency by 1993, (but lack of foresight has ensured depleting production and increased dependence on imports). The irony is while the minimum support price for wheat has seen a hike close to Rs 200 a quintal, it has almost remained the same during the decade for oilseed.

There seems to be a tangible shift among the major global producers towards production of bio-fuels. Soyabean is being diverted for the same in the US, rapeseed is being utilised by the Europeans. Even the largest oilseed exporters to India, that is Argentina and Malaysia, are diverting their palm oil production for the same.

The solutions then lie in a combination of technology and incentives for oilseed producers in the country. Verily like the petroleum products, where Indian planners have utilised a combination of domestic and international co-operation, India needs to explore the option of augmenting oilseed production in the country. The Rs 12,000 crore, that is the average import bill of edible oil, can be saved definitely if some advance planning is conducted and implemented.


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