Cooking oil imports eat up $3.6b
Total demand for edible oil in the country is expected to grow to 5.9 million tons in 2025-26 from 4.7 million tons in FY21. Photo: reuters
Pakistan’s imports of cooking oil spiked to $3.56 billion in the first 11 months of the previous fiscal year that ended on June 30, 2022, which was equivalent to 60% of the three-year International Monetary Fund (IMF) loan programme of $6 billion.
The edible oil imports were 44% (or $1.1 billion) higher compared to $2.47 billion in the same 11 months of fiscal year 2020-21, according to latest data of the Pakistan Bureau of Statistics (PBS).
Besides, the price of cooking oil shot up close to Rs550 per litre in the domestic market compared to around Rs200 per litre in January 2019, according to the PBS.
“Pakistan’s reliance on imports of edible oil and oilseed meals to meet domestic demand has been increasing over the past two decades. Some 86% of domestic edible oil consumption in 2020 came from imports, up from 77% in 2000,” the State Bank of Pakistan (SBP) said in its latest quarterly report on the State of Pakistan’s Economy for the first quarter (Jul-Sept) of the just ended FY22.
The trend suggests imports are growing rapidly with the increase in the size of population and per capita income in Pakistan, while the pilot projects initiated for growing palm and soybean plants in the country failed to deliver
satisfactory results.
However, the latest pilot projects undertaken in Sindh to grow palm trees have shown promising results and studies suggest Balochistan also has the land and atmosphere to do so.
However, Punjab, Khyber-Pakhtunkhwa and Gilgit-Baltistan are among the regions suitable for soybean cultivation.
The central bank said in a research study that the pilot projects could go commercial if the government gave a policy and showed consistency as well.
“The key finding is that palm does not have much potential in Pakistan in the short to medium term, whereas soybean can be produced on a large scale in the medium term if policy support is provided.”
Edible oil consumption in Pakistan has increased significantly over the past few decades - from 0.7 to 4.7 million tons between 1981 and 2020. The main demand drivers are rising population, dietary preferences and increase in per capita income, the central bank said in a research study.
“Cultivation-related measures … are expected to yield another 2.8 million tons of edible oil. This is expected to reduce import bill of edible oil by $584 million.”
While in part this increase in imports stems from the rising international commodity prices, the rise in palm and soybean imports is not a new phenomenon.
The combined imports of palm and soybean have been growing noticeably over the last 20 years, rising to 7.1% of total imports in FY21 from 3.2% in FY01.
Currently, palm and soybean products are among the top 10 commodities imported by the country.
“Total demand for edible oil in the country is conservatively expected to grow to 5.9 million tons in 2025-26, from 4.7 million tons in FY21.”
Recent projects
Recent efforts to revive oil palm by the Sindh Coastal Development Authority (SCDA) show encouraging results, albeit the SCDA’s pilot project is on a much smaller scale of only
50 acres.
SCDA began the pilot project in 2017, and as of June 2021, the authority has rehabilitated palm plantations on 30 acres and replanted trees on 20 acres.
“Based on this pilot, the SCDA assesses oil palm as highly successful with fruiting at par with plantations in Malaysia, subject to fulfilment of certain conditions, such as good farm management, and sufficient irrigated water supply, which is a crucial factor in the assessment of palm potential in Pakistan.”
In addition to oil palm’s potential along the over 200-kilometer coastline in Sindh, up to 500 kilometers of coastline in Balochistan also offers potential for oil palm plantation subject to the availability of water through a canal system.
For local production of soybean, “the tested variety in these (Punjab) regions is a 120-day crop, as against 180-day crops in Brazil and the US,” the SBP research study said.
This is an important development because the previous locally developed varieties had longer duration and were difficult to fit into different
cropping patterns.
In addition to the pilots, the NARC has recently developed a short-duration variety (NARC-2020) that matures in 90 days with a production potential of up to 1,000 kg per acre. “If marketed successfully, it could also help increase soybean production in the country.”
Khyber Pakhtunkhwa and Gilgit-Baltistan can be potentially used for growing the currently available varieties of soybean in
the country.
Published in The Express Tribune, July 3rd, 2022.
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