Achieving Edible Oil Self-Sufficiency in India: NITI Aayog Report Insights
30Th August 2024
Report on Accelerating Growth in Edible Oils Towards Atmanirbharta
The recent release of the report “Pathways and Strategies for Accelerating Growth in Edible Oils Towards the Goal of Atmanirbharta” by NITI Aayog has shed light on the pressing issues faced by India in the edible oil sector. The report, unveiled by Vice-Chairman Shri Suman Bery in the presence of Prof. Ramesh Chand and other dignitaries, emphasizes the significant rise in per capita consumption of edible oil, reaching 19.7 kg/year. However, this surge in demand has surpassed domestic production, resulting in heavy reliance on imports to meet requirements.
The report underscores the challenges posed by the heavy reliance on imports, with India importing 16.5 million tonnes (MT) of edible oils in 2022-23, while domestic production only fulfills 40-45% of the country’s needs. This situation poses a major obstacle to India’s goal of achieving self-sufficiency in edible oils.
Furthermore, the report delves into the current state of the country’s edible oil sector and outlines a comprehensive roadmap to address existing challenges. It focuses on bridging the demand-supply gap and developing new approaches to attain self-sufficiency. Under a Business-As-Usual (BAU) scenario, the national supply of edible oil is projected to increase to 16 MT by 2030 and 26.7 MT by 2047, providing a strategic outlook for the sector’s future potential.
Additional Demand Forecasting Analysis
The report “Pathways and Strategies for Accelerating Growth in Edible Oils Towards the Goal of Atmanirbharta” offers a comprehensive analysis of demand forecasting for edible oils, considering three distinct approaches. First, the ‘Static/Household Approach’ utilizes population projections and baseline per capita consumption data to assume a short-term static pattern in consumption behavior. Second, the ‘Normative Approach’ is based on the recommended healthy intake levels established by the ICMR-National Institute of Nutrition (ICMR-NIN). Lastly, the ‘Behavioristic Approach’ recognizes the potential for behavioral shifts in food consumption patterns due to evolving lifestyles and dietary habits driven by increasing income levels and price fluctuations.
The report presents two scenarios under the ‘Behavioristic Approach’: Scenario I, where consumption is capped at 25.3 kg per capita, and Scenario II, with a higher consumption level of 40.3 kg per capita. These scenarios project the demand-supply gap to be 22.3 MT and 15.20 MT by 2030 and 29.5 MT and 40 MT by 2047, respectively. In contrast, the ‘Static/Household Approach’ forecasts a smaller demand-supply gap of 14.1 MT and 5.9 MT by 2030 and 2047, while following the ICMR-NIN recommendations indicates a surplus of 0.13 MT and 9.35 MT by 2030 and 2047, respectively.
Notably, under the high-income growth circumstance, the report anticipates even higher demand due to accelerated economic growth, with the country’s edible oil demand expected to reach Scenario I as early as 2025 and Scenario II by 2031. This highlights the significance of considering various demand forecasting approaches to gain a multifaceted understanding of future edible oil needs.
Strategic Interventions for Achieving Self-Sufficiency in Edible Oils
The strategic plan proposed in the report covers three key pillars:
- Crop Retention and Diversification: This pillar emphasizes retaining and diversifying crops to increase production. It includes utilizing rice fallow lands for high-yielding oilseed crops, transforming suitable wastelands through palm cultivation, and promoting efficient crop retention and diversification in potential regions. A cost-benefit analysis is recommended to assess production viability compared to alternative crops.
- Horizontal Expansion Strategy: This strategy aims to increase the cultivated area dedicated to edible oil crops, particularly specific oilseeds. The focus is on bringing more land under cultivation for oilseed production.
- Vertical Expansion Strategy: The focus here is on improving the yield of existing oilseed cultivation. This involves implementing improved farming practices, utilizing better-quality seeds, and incorporating advanced production technologies.
Additionally, the “state-wise quadrant approach” outlined in the report provides a valuable tool for achieving self-sufficiency in edible oils. By identifying state clusters using four quadrants based on cultivation area and yield, the report recommends tailored interventions for each cluster to maximize production potential and address near-term challenges posed by potential consumption increases.
Strategic Interventions for Achieving Self-Sufficiency in Edible Oils
The strategic interventions recommended in the report offer a vibrant path towards reducing import dependence. The report notes that by implementing the strategic interventions, the country has the potential to significantly increase the domestic edible oil production by 43.5 MT. This substantial increase has the potential to not only bridge the import gap but also position the country on a trajectory toward self-sufficiency in edible oils.
- Crop Retention and Diversification: Strategically retaining and diversifying oilseed crops and focusing on areas potentially lost to cereal cultivation could boost the country’s edible oil production by 20% in nine states, adding 7.36 MT of oilseed production and reducing import dependence by 2.1 MT.
- Horizontal Expansion Strategy: Rice fallow areas across the country reveal a promising opportunity for horizontal expansion in oilseed cultivation. Utilizing one-third of the rice fallow area in ten states for oilseed cultivation could increase oilseed production by 3.12 MT and reduce import reliance by 1.03 MT. Additionally, tactically utilizing two-thirds of the highly suitable areas of wastelands presents a significant opportunity for further horizontal expansion.
- Vertical Expansion Strategy: Bridging the yield gap from 12% in castor to 96% in sunflower through widespread adoption of improved technologies and effective management practices could increase the country’s domestic oilseed production by 17.4 MT, reducing edible oil imports by 3.7 MT. Palm oil alone, through targeted expansion, can potentially increase a staggering 34.4 MT of edible oil, making a substantial stride towards closing the existing demand-supply gap.
The proposed strategic interventions could achieve projected edible oil supplies of 36.2 MT and 70.2 MT by 2030 and 2047 respectively. The potential gain in edible oil production estimated from the proposed strategic interventions combined with the existing production level is anticipated to achieve self-sufficiency with the recent growth trend (CAGR of 3%) in all scenarios except for the most demanding scenario (i.e., Behavioristic Approach Scenario-II) in the near term. To meet the projected demand by the more immediate target of 2030 under this scenario, a CAGR of 5.2% would be required for the 2021-2030 period, representing a 2.2% increase from the recent growth situation. This targeted increase can be achieved through a more focused, rigorous implementation, and intensive approach.
Optimizing Seed Utilization and Processing for Edible Oil Self-Sufficiency
The report accentuates the critical importance of optimizing seed utilization and processing capabilities in achieving edible oil self-sufficiency. High-quality seeds, when combined with efficient management of agricultural inputs, have the potential to significantly increase production by 15-20%, and potentially up to 45%. However, the current Seed Replacement Ratio (SRR) falls short of the target range of 80-85%, hindered by varying percentages across different oilseed crops.
Furthermore, modernizing existing mills and strategic investments in processing infrastructure are identified as crucial steps to improve efficiency and minimize waste within the vegetable oil sector. With substantial excess capacity in many small-scale, low-technology plants, only 30% of the edible oil refining capacity is utilized.
To successfully navigate the path towards edible oil self-sufficiency, the report outlines recommendations and a strategic way forward based on insights gathered from a primary field survey encompassing 1,261 farmers across seven major oilseed-growing states. The report concludes with several key recommendations, including area retention of oilseeds, seed traceability and quality assurance, adoption of improved production technologies, value addition through processing and refining, effective marketing and market linkages, public-private partnerships, dynamic trade policy, broadening the scope of the National Mission on Edible Oils, public awareness on dietary guidelines, and incentivizing domestic oilseed consumption in the food industry.
Moreover, the report emphasizes the need for a data-driven approach and robust systems to bridge regional disparities in oilseed yields. It underscores the crucial role of investment in research and development to transform the edible oil sector, ensuring “Atmanirbharta” in the edible oil industry for national food security and economic stability.
