Edible oils have a strong bearing on the national economy as their import bill constitutes about 5 percent of total imports (around 207 billion rupees in 2014). Of the country's estimated 3.6 million metric ton vegetable oil demand, less than a third is produced locally.
In 1990, the country produced about 228,000 MT of rapeseed, the major oilseed crop, whereas in 2014, the crop was a disappointing 183,000 MT, implying a negative growth of 20 percent in a span of 25 years. For comparison, oilseed crops in India have nearly quadrupled in the same period.
On the nutrition side, an estimated two-thirds of the population still consumes banaspati (vs cooking oil), which contains highly saturated as well as trans fats and is produced largely from a process called partial hydrogenation which is considered unsafe for health. In November 2013, the US Food and Drug Administration (FDA) made a preliminary determination that partially hydrogenated oils are no longer Generally Recognised as Safe (GRAS) in human food. In a study done in Oxford, UK, a 2% increase in trans-fatty acid intake increases the risk of coronary heart disease by approximately 25%. A comprehensive, long-term edible oil policy needs to be devised if improvement is sought in the above scenario and addressing the key issues which include:
Growth in local crops Local rapeseed and sunflower crops must be supported through:
-- Organising farmer education programs
-- Ensuring availability of good quality sowing seed
-- Supporting export of Pakistani rapeseed meal which is recognised internationally for its superior quality for genetic as well as unique processing technique
-- Rationalising support price for commodities, such as for wheat, to ensure equitable incentive for growing oilseed crops. Excessive support price for wheat has only resulted in disrupting the natural balance of crop selection and the consumer has ended up buying wheat products at prices substantially higher than those in the international market
-- Supporting growth in alternate oil crops, such as Olives which has prospects for production in NWFP, Potohar and Balochtstan, through cultivation of orchards on cultivable wastelands and grafting/budding on existing wild trees
Tariff Rationalisation
All import tariffs must be rationalised based on the product's position in the supply chain and grouped with its replacement products. Tariff structure should broadly encourage import of raw material rather than the finished product in order to keep a check on the import bill and generate local employment. Tariff for crude palm oil, for instance, which is the raw material for producing RBD Palm Oil, should be discounted enough compared to RBD Palm Oil which is the finished product. Pakistan has a large refinery base to process the same which is currently lying idle and can provide a product of higher quality than its imported counterpart, as quality deteriorates due to long unavoidable delays between the time of production and consumption. Similarly, Customs Duty on Crude Degummed Soybean Oil is Rs 9,050, whereas it is 15,000 on Canola or Sunflower oils which are its replacements.
Enhancing Edible Oil Nutritional Value
The primary reason for the high intake of banaspati versus cooking oil in the country is its availability at a lower cost. Palm oil, which is the major constituent of banaspati, is tradedat a substantial discount compared with soft oils such as canola and sunflowerin the international market, thereby finding its way into more than two-thirds of the total vegetable oil demand in the country. All measures must be taken to bring soft oil prices competitive to palm oil in order to stimulate growth in the intake of the healthier cooking oil.
Meal - Crucial for the local Poultry Industry, Potential for Exports
Pakistan is a major poultry producing country, and local availability of high-quality and low-cost feed ingredients have for long played their role in keeping poultry prices at affordable levels for a developing nation. As per the Food and Agriculture Organisation of the United Nations (FAO), prevalence in undernutritionin Pakistan has reduced from 24 percent in 1999-01 to 20 percent in 2010-12.This supports the need to undertake measures to ensure continued supply of protein meals, such as canola and soybean meal, which are by-products of solvent industry and are crucial ingredients for poultry feed. At the same time, Pakistani meals have great export potential. As mentioned above, Pakistani rapeseed meal already attracts significant price premiums in the international market for its quality. Recently, Soybean meal, which is a new product for the local industry, has also made some quick inroads in the premium international market. Collectively, the two products can fetch $250 million through exports if properly focused and supported.
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