Upsurge in import of oilseeds

The appetite for imports of oilseeds is growing rapidly in Pakistan. Soybean, Canola, Rapeseeds, Sunflower seeds, etc are continuously being imported by the shipload by traders and industries. Every now and then, they make projections of demand but then revisit their calculations because the figures keep moving higher and higher. Pakistan's balance of trade statistics are showing a widening gap despite efforts to control the galloping upward trajectory. A very prominent component of total imports is the oilseeds sector. At a base price of $400 per tonne, the annual bill for 2017 for soybean seeds would hit in excess of $800 million.
Soybean seeds, soybean oil, and soybean meal form the combined demand of solvent extractor mills and poultry feed industry. Canola and rapeseed used to be heavy imports but in the last couple of years, soybean has become the towering factor.
Soybean is an important oilseed crop that accounts for 57% of the world's oilseed production. It contains 40% protein with all essential amino acids and 20% oil. It is a short duration crop, needs only 10 kg N/acre at planting, and returns back 80 kg N/acre and 7.0 tons organic matter in soil at harvest. The dependence on imports is mostly due to the inability or the reluctance on the part of farmers to consider soybean as a crucial cash crop. The reliance on growing cash crops such as wheat, rice, and corn precludes looking at soybean as an alternative cash crop. The per acre cost of growing wheat is around Rs 47-48,000 per acre, rice is Rs 51-54,000, and corn upto a maximum of Rs 62,000. Soybean cost per acre is Rs 13,000. Despite the fact that over 350,000 hectares in Punjab, Sindh and KPK are ideal for growing soybean, the fact is that farmers are not adopting the cropping system that would enable them to alternate sowing of different crops.
The impact of climate change can be beneficial for sowing soybean. It mitigates the effect of prolonged summer on crop productivity, results in Improvement of soil to retain soil moisture, reduces soil erosion and degradation, allows increase in soil microbial activities, promotes crop diversification in existing cropping systems, and helps to reduce use of inorganic fertilizers.
The downside is that farmers are contented with focusing on wheat, rice, or corn rather than striving to achieve a comprehensive basket of crop choices. At present, there are no assurances that the farmers would get the seeds or guidance or even a subsidy to offset the higher cost of planting soybean. This is a justified apprehension and thus it is imperative that the Federal or Provincial governments promote the planting of soybean by providing a substantial subsidy for atleast five years in order to increase the acreage for soybean planting as well as sustaining the survival of the farmers.
The promotion of local production and revival of soybean depends on government policy guidelines to reduce import of soybean meal and structuring a vision to develop a mechanism for sustainable soybean production, marketing and processing. There should be a special allocation of bank loans at subsidized rate of markup so that financial resources are available for to the farmer. It is also advisable to develop and strengthen partnership linkages among stakeholders and, if need be, there should be a strong collaboration with International Agencies. India has established Soybean Processors Association of India (SOPA) under Government umbrella. In Pakistan, a similar organization should be established for the promotion of soybean cultivation on a long-term basis.
At the beginning of 2017, market intelligence forecasted that Pakistan's soybean imports would touch the two million tonnes threshold by end of the year. In 2015, soybean seeds imports were 595,000 tonnes while in 2016, the figure jumped to little less than 1,000,000 tonnes. In the first eleven months of 2017, soybean seeds imports were 1,900,000 tonnes. Pakistan used to import $500 million worth of soybean meal with 40% coming from India, mostly via Wagah. Today, about $100 million worth of soybean meal comes from the world while India's share is negligible.
The reason for the huge decline is the political influence of solvent extractors who have prevailed upon the government to discourage imports of soybean meal since they are producing meal from seeds in their own plants. The poultry industry vociferously protested the government policy but has resigned to procuring locally from the solvent extractors. This has also induced the solvent extractors to hurriedly go for modernization of their plants in order to develop economies of scale through higher production, better quality, and affordable prices. The big players in the poultry industry are also focusing on the reliability of their supply chain by setting up their own modern extractors to produce their demand for soybean meal.
The plantation of soybean strongly depends on convincing the extractors to source a better percentage of their seed requirement from the domestic market. Although it would take a few years for farmers to produce atleast 25% of the demand, it is important to facilitate the farmers so that they develop the critical mass to produce soybean efficiently and profitably. A lackadaisical approach by stakeholders would push the farmers back into their comfort zone of sowing wheat, rice, or corn. A transparent buy-back mechanism would boost the morale of the farmers and encourage them to make the real time paradigm shift towards prosperity and sustainability of their farms.
Pakistan has missed many opportunities of crop diversification manifesting in a massive dependence on imports whereas there should have been a pro-active support for the farming community. Pakistan's burgeoning population demonstrates the upsurge in edible oil demand. Hence, making Pakistan an import-dependent country, financed through knocking at doors of multilateral institutions for financial resources, can never be the recipe for prosperity. The slogan should be "Grow in Pakistan".