Policy failure for the production of edible oil

Let alone the impoverished community living in downscale areas or in slums, even the so-called middle class segment of the society is perturbed with the ever-surging edible oil prices in Pakistan at this juncture. Paying around Rs1,650 vis-à-vis Rs1,150 a year ago for five liters of branded edible oil has left even the middle class somewhat vulnerable in the given circumstances. The skyrocketing inflation has become catastrophic for the monthly budget of every household in the country. Though the government has recently come up with certain incentives in terms of reduction in taxes, which might decelerate the prices of edible oil to some extent, it is too little too late.

Pakistan is an agrarian economy, however, spends over $2 billion dollars annually for the import of edible oil. Pakistan witnessed a spike in the import of palm and soybean oil amounting to $2.7 billion during the preceding fiscal which is one-third of the total food import bill. Industry experts claim that Pakistan spends between three to four billion dollars on the import of crude edible oils and oilseeds every year.

What must be done at the moment? Some of the suggestions floated are to give incentives to the cooking oil and ghee manufacturing companies, to restrain rampant smuggling of edible oil products from Pakistan to Afghanistan, to sign certain long term specific palm oil trade agreements with Malaysia and Indonesia which are the major producers of palm oil to have prices reduction impact down the line, to ensure spike in soybean production in Khyber Pakhtunkhwa since it the major producer of this crop, to incentivize the production of Safflower in Sindh and Baluchistan, to discern why Pakistan has not become self-reliant in edible oil since independence, to figure out why import has witnessed steady growth since 1969, to spur the cultivation of canola robustly all over the country etc.

Pakistan’s rickety economy can’t afford monumental merchandise trade deficit every year as it has experienced particularly over the period of preceding couple of years as it was $37.6 billion in 2017-18, $31.8 billion in 2018-19, $23.2 billion in 2019-20 and $31.1 billion in 2020-21. Import of food items in the vicinity of $8 billion with a food deficit of $4 billion needs to be tackled to address the economic glitches.

Pakistan is blessed with agrarian land and there are ample opportunities to hike production of edible oil in the country. The farmers of Sindh and Balochistan need to incentivized to inflate production of Safflower which might come in handy to address the demand of edible oil by the burgeoning population of the country. Soybean is quite popular in Hazara, Azad Kashmir, Swat, Dir and Kurram Agency. The farmers of these areas could help in terms of deceleration in import bill. The only thing they need is the right prices besides the availability of technological advancement to have spike in the yield. The relevant authorities need to take the farmers in confidence to cope with the conundrums. Smuggling has been an issue in many sectors of the economy such as auto parts, crude oil, vehicle tyres to name a few. Smuggling of edible oil from Pakistan to a neighboring country could compound the snags being encountered by the populace.

Progressive farmers must be sent to Malaysia, Indonesia, China, etc. to assimilate the way the production is being carried out. Transfer of technology could be rather vital in the given circumstances. Production of edible oil has not grown in Pakistan commensurate with the surge in population. Import of edible oil has been soaring since 1970 in the wake of diminishing local production and the spike in population. It is high time that we identify our strengths and turn them into productivity so that we become self-reliant and move away from the stigma of a food-deficient country.

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