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ISLAMABAD: A major policy shift is needed to build up local edible oil reserves/ stocks and motivate farmers for cultivating oil-seed crops to avoid shortage of ghee and cooking oil in the country.

Talking to Business Recorder, Abdul Waheed, former chairman of Pakistan Vanaspati Manufacturers Association (PVMA) and former vice president Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said that the domestic oil-seed crop consisting of sunflower, rape-seed and canola seed hardly meets five percent of the total requirement of edible oil in Pakistan.

Therefore, to fill the gap of demand and supply, Pakistan imports edible oil and oil-seeds to the tune of almost 3.0million M.T each. Due to increase in international market price of commodities the import bill of these two commodities has touched US$4.5 billion in the current calendar year.

It is a need of hour to domestically cultivate import-substitute commodities, trimming down the ever-increasing import bill and further reducing the end consumer price of staple food items - banaspati ghee and cooking oil, alongside soy meal consumed in manufacturing of animal and poultry feed, being protein rich.

He said in this perspective, it is important to note that during first eight months, i.e., up to August 2021, Pakistan has imported 2.7 million M Tons of soybean and canola oil-seed to augment the local oil-seed crop of hardly 0.6 million M Ton produced in year 2020-21.

Abdul Waheed stated that during his tenure of PVMA chairmanship, he had been stressing the government to pay attention and divert resources in increasing the area under cultivation of oil-seed crop reducing our dependency on imported edible oil and oil-seed.

It was evident that once the Covid-19 pandemic will subside the demand will recur, resulting into increase in import bill and end product prices in global and domestic markets. Due to extraordinary increase in demand, disrupted supply chain/logistics and speculations coupled with its diversion towards bio-fuel, we are witnessing the international prices hovering in the bracket of US$1,350-1,450/M Ton, he said.

This phenomenon is most likely to carry on in year 2022, as well, since prices are forecasted to prevail in the range of USD 1,200-1,300/M Ton.

He suggested that it was a high time for government to take short, medium and long-term measures concurrently to harness the food inflation by building up local edible oil reserves/ stocks and motivating farmers towards cultivating oil-seed crops.

The recently announced targeted financial support or subsidy by the prime minister to the tune of 30 percent apparently may not be able to brace the market sentiments and tame the element of filling demand-supply gap.

“It is unfortunate to learn that ghee and cooking oil prices are ranging between Rs350-450 per kg and litre in an agriculture-based country. Moreover, if urgent measures are not taken, the prices may further escalate, following the same footprints as what we have witnessed in the case of sugar, since the factor of shortages and increasing supply-demand gap is not addressed timely and appropriately,” Abdul Waheed cautioned.

He advised government to take the FPCCI, the PVMA, the APSEA, the PEORA, the PPA, and the other stakeholder associations on board in formulating national industrial/trade policy on edible oil and oil-seeds, sustainable enough to offset the aftershocks of persistent increase in international market prices-cum-speculations and countering the element of shortages in the near future.

Copyright Business Recorder, 2021

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