How India Distorts its Own Quest for Self-Reliance in Edible Oils

As edible oil prices rise in the country, it is critical to note that India depends on imports to meet up to 60% of its annual requirement. The latest government data says the annual consumption of edible oil is 25 million tonnes (MT), but of this only 10 MT is achieved from direct and indirect domestic production. And of the 15 MT which is imported, 9.5 MT is palm oil. The precise import dependence varies but estimates say India spends $10 billion in a typical year.

India is actually well-equipped to become self-reliant in edible oils. It has the suitable natural conditions to produce several nutritious oilseeds including groundnut, mustard, coconut, sesame, rapeseed, cottonseed, and others of great value, including some available in hilly and tribal regions. Indian farmers have special skills in growing oilseed crops, which mix well with other crops using traditional mixed farming systems and crop-rotation. The reservoirs of skills at the village-level reflects in its small-scale oilseed processing and extraction units which produce high-quality oil whose by-product is the nutritious oil-cakes used in local dairies.

Yet, with increasing concentration, from 1965 onwards, on the so-called green revolution strategies, monoculture became the norm. A narrow genetic base of wheat and rice, which are dependant on high doses of chemical fertilizer and pesticide, disrupted work on mixed-cropped farms on which oilseeds were cultivated.

Second, a policy of excessive import of lower quality and cheaply-priced edible oils dampened the prospects of domestic oilseed farmers, who could not get proper prices and so shifted to growing other crops. This trend accelerated after the signing of World Trade Organisation (WTO) agreements. While these became a source of profit for big businesses, oilseed farmers suffered. Third, due to involvement of business interests, non-traditional oilseeds were promoted over traditional crops.

A trend also caught on of converting healthy unsaturated fats found in natural oils to saturated fats—vanaspati ghee—using hydrogenation techniques. Hydrogenation of oil creates a product that is damaging to health, but it has allowed companies to use inexpensive imported oils (particularly palm oil, of which India accounts for 19% of world imports) and package them attractively, to be sold at lower prices than indigenous oils extracted from groundnut, coconut or mustard. Hence, oilseed farmers have found it more difficult to secure fair prices. The current disruptions in production of oilseeds, especially palm oil imported from Malaysia, is another aspect of how badly managed the oil industry policy in India is. Now that there is a fall in production overseas, the Indian prices of non-palm edible oils are rising.

These factors often mingle to create a situation in which the health of the consumers of oil suffers, the oilseed farmers suffers, domestic production of oilseeds remains lower than potential, and yet traders, importers and processors of edible oils make huge fortunes.

The oilseed and edible oil strategy pursued in recent times has increased the risk of exposure to GM food, which are considered very detrimental for human and animal health by many scientists. The more India imports oil, the greater the risk of exposure to GM edible oil (particularly GM soya bean oil), even though import of GM food is formally banned. Due to rapid spread of GM or Bt Cotton in India, the risks from consuming food (especially snacks) cooked in GM cottonseed oil has increased greatly. Aggressive efforts were made by the powerful GM lobby to get permission to introduce GM mustard, but there was widespread opposition which stopped them in their tracks.

Processing oilseeds has rapidly shifted to bigger and bigger units, and the valuable side product in the form of oil-cakes has been regularly diverted in huge quantities for feeding dairy animals of rich countries while there is an alarming and growing shortage of oil-cake meant for animal feed.

These distortions have proved very costly, especially for consumers who find prices dip and hike arbitrarily. To increase oilseeds production, as the government promises, it will have to curb all distorting trends from the past and check the forces responsible for them. Unfortunately, the policy options the government proposes signal more rather than distortions in India’s future. A leap in policy is being made, for example, in favour of palm plantations and palm oil, again at the cost of indigenous oilseeds. This is in tune with the preference of big agribusiness, which has interests in inexpensive and has more industrial uses (cosmetics, biofuels, etc) as well, besides being more suitable for large monoculture plantations than small farms.

The rapid spread of large plantations owned by big companies has been repeatedly opposed in several parts of the world because of the threats they pose to biodiversity and the ecology. Its low health value and clear unsuitability for water-stressed areas has been widely questioned. Water-guzzling palm plantations, pushed by official policy, will reduce water for other crops lower the water levels and adversely impact water quality. Palm cultivation generally involves higher use of chemical fertilizer and pesticide, which adversely impact the natural fertility of soil and pollute water. The government has announced exemptions and support for such plantations, including withdrawal of land ceiling limits, which will only make vanaspati ghee more widespread.

This official policy bias in favour of plantation-based oilseed cultivation leaves less room for small farmers and their oilseeds to prosper and grow. Big businesses are more likely to emphasize on non-traditional crops over the cost-effectiveness of palm oil plantation. The same powerful interests which earlier made their fortunes in importing unhealthy or less nutritious edible oils are now at the forefront of domestically producing unsustainable oils. India must carefully evaluate how it plans to meet the growing edible oil demand in a way that checks distorting trends and which is better for small farmers, the environment and sustainability.

The writer is freelance journalist who has been involved with various social movements. The views are personal.