April 7, 2003	Monday	Safar 4, 1424

There can be only two explanations of the edible oils scenario, worth over $304 million imports in the first seven months of the current year: (a) it represents massive incompetence; (b) it informs of colossal corruption. The later possibility seems more likely because no sector can be brought back to negative performance without wilful mismanagement.

Pakistan had brought down the edible’s imports by Rs1.2 billion in 1995-96 by extending cultivation of canola and sunflower to over 300,000 acres. Next year saw a steep decline in the acreage of the two crops, shrinking cultivation area to about 30,000 acres. An effort has been made this year to regain lands lost to the edible’s crops but the picture is murky and international forces are in play to heap frustration on farmers by lowering palm oil prices undermining the crop’s market and adding to the bill of edible’s imports.

The government has assured growers of guaranteed sale of their produce at a fair price but then the government is neither a customer nor has it come up with a support price. Public sector’s Pakistan Oilseed Development Board (PODB) simply announced that solvent extraction industry would purchase the crop at the rate of Rs630 per 40 kg.The PODB has no sway over the industry and there are policy wheels within wheels that would determine the decision making of extraction units.

Extraction industry has admittedly been supportive of the crops in the past but a positive response from it would depend on numerous factors, most of them beyond it. How poultry feed and soyabean oil is managed by the authorities would influence their response. The supply of 37,000 tons of soyabean oil worth $21 million can dig up the pitch for the solvent industry and force growers to play on a sticky wicket. There is no reason for the industry to concentrate on crushing seed when soyabean oil is available for refining.

The two developments comprising lowering of palm oil prices at the harvest time of edible oil crops and soyabean oil as grant could prove deadly stabs in the back of canola and sunflower growers, force them away from these crops and shift to more reliable cash produce. Looking at the pattern it is not difficult to predict that palm oil prices would start soaring once growers are removed from the importer’s path.

Pakistan consumes about 1.995 million tons of edible oils while local crop’s share is about 0.56 m tons, most of it- 77 per cent— coming from oil seed. Mustard provides another 12 per cent; sunflower (7 per cent), canola (2.5 per cent) and one per cent from other seeds make up the rest. The population’s requirements are met through imports. An unknown percentage of imports are also smuggled to Afghanistan and possibly to some other destinations through Afghanistan.

Officially, the use of edible oils increased by 1.3 per cent last year but the cost of imports skyrocketed in that period. Palm oil was imported at $299 per ton last year while the cost of the same quantity rose to $ 427. After fuel, edible oil is the most expensive import of Pakistan.

Edible oils have gradually taken hold of the market and the people. There were no imports of edible oil of any kind till 1960. Aid under PL 480 paved the way for reliance on imports. The worst part of the imports is their quality that has been the subject of dispatches of concern from the viewpoint of public health.

Even otherwise, palm oil contains 51 per cent saturated fats while canola’s content is just 7 per cent and that of sunflower 12 per cent. That clearly underlines the fact that use of palm oil is not the best component for cooking oil. Forex saving by developing edibles crops locally are an additional and, for a country like Pakistan, a vital advantage.

When an effort was undertaken in 1995-96 to increase domestic produce of canola and sunflower, an administrative reshuffle in the Ministry of Food, Agriculture and Livestock ensure that the programme is disbanded so that the importers free hand is not disturbed.

The previous set-up was briefed by ministers of commerce and agriculture that Pakistan could meet its needs from friendly countries; the President was so convinced— conned should be the more appropriate expression— that he declared that there was no future for canola in the country. He later realized what had happened and issued instructions for canola production. But the damage was done. Even worse: more damage is on the way.

Firm and strict measures need to be taken on urgent basis to encouraging local crops and obtaining edible oil from them. What has to be kept in mind is that the use and smuggling of edible oil’s products has increased from 1.1 million ton in 1994 to 1.45 m tons today. This is not a static line but a rising curve that represents not just the quantity of imports but also their cost in foreign exchange. Palm oil import was 70 per cent of local needs in 1985. It had gone up to 89 per cent in 2001.

Another unfortunate aspect of the imports is serving the ends of foreign countries and their farmers while our own farmers remain hand to mouth and are deprived of their just share due to the influence of a handful of importers. If any segment of the population has contributed more than its share to the national economy, it is the farming community. But it is generally held as a pawn by vested interest elements; the situation is nowhere as damaging to the national interests as in the edible oil sector.

The government of Punjab has earnestly tried to back these crops this year but it cannot fix a price for the produce. That is not a pleasant situation for growers. However, the government can try to ensure that the crop does not become a burden on the farmers. It should put its act together and find a solution by involving extraction industry and offering it whatever support the provincial set up can provide. The support would actually be for farmers and for the national economy as any help would be instrumental in cutting down the bill of imports of edible oils.