Jump in edible oil imports

Short of asking the food loving nation to stop consuming food, Pakistan’s edible oil imports are not going to stop increasing. Therefore, it comes as no surprise that palm oil imports rose by nearly 20 percent over 7MFY18 as compared to the same period last year. The real jump in edible oils imports however was registered in soya bean oil, which rose by 82 percent.

Part of the increase in palm oil imports is the currency impact. The Malaysian RM appreciated in the last quarter of FY17, while the Rupee depreciated this fiscal year driving up the dollar value. However, since quantity increased by over 200,000 MT, part of the increase in the import bill is volume driven as well.

While non-traditional segments such as demand by tea whiteners have pushed up palm oil imports, soya bean oil imports have risen due to its price falling by about 41 percent. Since soya bean oil is a substitute for other soft oils such as sunflower oil and canola oil, the decrease in price has allowed it to increase its share in imports.

Pakistan’s per capita edible oil consumption is about 17kgs. Total consumption of oil and fats was about 4.41 million tons in 2017.The Pakistan Edible Oil Conference (PEOC) held earlier this year also emphasized on the growth of palm oil consumption in Pakistan. From the import of 2.7 million tons in 2015, Pakistan edible oil imports rose to 3.05 million tons in 2017, which was marked as the highest volume of edible oil imports to date. Another indicator of the increase in consumption is the 128 percent increase of palm based packed products from Malaysia over the last 5 years.

Rising disposable incomes, shifting of consumer tastes from transitional at-home meals to dining out and the growth of fast food industry are all drivers of palm oil imports. With the demand for palm oil rising, and the national edible oil sector almost nonexistent, palm oil imports are going to continue rising and stressing the current account deficit.