Business Desk, ETV Bharat: As the rise in edible oil prices is burning a hole in the pockets of buyers, agricultural economists are suggesting the government to take steps to reduce dependence on imports and augment domestic production.
Prices of all the major varieties of edible oils like groundnut, soybean, sunflower, palm oil, etc have gone up significantly in the last six months on the back of domestic as well as global factors.
As per an estimate, prices have risen by 40 to 50 per cent since last September and there was a sudden surge of up to 15 per cent in the last month.
Global Factors
Various estimates suggest that India meets her 70 per cent of edible oil requirements through imports. The South East Asian nations such as Malaysia and Indonesia are the major suppliers of edible oils which are widely used in food, cosmetics and biogas.
Hike in export tariffs in producing countries, and strong revival in demand from major consumers like China have pushed the prices in the last six months.
Besides, the Covid-19 pandemic has played spoilsport.
At a time when crops were in the final stage of harvesting, workers became unavailable due to the increased spread of COVID-19.
Domestic Factors
As per experts, high cost of production as well as low yields are hampering the domestic production of edible oils.
"India has massive production of all the oil seeds. But, since the cost of production is higher in the country than the cost of imports, India is dependent on other countries for edible oil," said Dr Parashram Patil, an agri-economist and consultant to Asian Development Bank (ADB).
“Besides high cost of production, low productivity is hampering the growth of this sector. For instance, the production of soybean stands at 1.13 tonnes per hectare in India while the global average is 2.41 per hectare,” he added.
Similarly, the production of groundnut is 1.21 tonnes per hectare in India as compared to 3.80 tonnes per hectare in America, Dr Parashram Patil said.
3-point formula to boost production
As per Dr Parashram Patil, the government should adopt a three-pronged strategy to boost domestic production of edible oils.
Unfortunately, not enough research was done in developing high yield oil seed varieties. The government must address this issue on a priority basis.
“As the second step, the government must provide oil seeds at subsidised prices and finally, the minimum support prices must go up to encourage farmers on this front,” he added.
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