Strongly criticizing the new oilseed policy, local edible oil industry has approached the Ministry of Finance/National Tariff Commission (NTC) and the Federal Board of Revenue (FBR) for imposition of anti-dumping duty on import of oilseeds, tariff rationalization on such imported oilseeds and withdrawal of concessions in duty/taxes on this imported item.
The domestic ghee and cooking oil industry has made a detailed presentation for the Finance Ministry/FBR seeking to differentiate between the imported oilseeds and edible oil and highlight undue advantages given to the imported oilseeds under the draft oilseed policy.
The industry has analyzed the new oilseed policy from different aspects and requested Finance Ministry/FBR, NTC and Commerce Ministry to intervene and modify the said policy. According to the analysis made by the local cooking oil industry, the oilseeds and edible oil are two different commodities and hence be treated separately for developing oilseed policy for Pakistan. For the purpose of extracting edible oil, Pakistan must promote cultivation of canola and sunflower oilseeds since they contain oil content up to 43% as against soybean, which has only 18% oil content. In the last five years, oil from indigenous oilseeds has shrunk from 573,000 MT in year 2014 to 503,000 MT in 2018, witnessing a bottom of only 462,000 MT in 2016.
Whereas in the corresponding years the huge surge in the import of oilseed has been witnessed, due to which the local oilseed crop cultivation has deteriorated to a alarming level. "Please note that in year 2012 only 716,365 M Tons of oilseeds were imported which rose to 3,140,467 M Tons in year 2018," it added.
Domestic ghee/cooking industry observed that the opportunists and elements with vested interests always make an endeavor to confuse and misguide the 'Decision Makers' by making a non-genuine correlation between Palm Oil products, which are mainly used in manufacturing of banaspati (vegetable ghee), which holds 70% share in total consumption and canola/sunflower/rape seed/soybean oils (extracted from local/imported oilseeds) which are primarily use in manufacturing of Cooking Oil to meet the demand of around 30%.
It is a well established fact that Oilseed Policy 2018 (draft) prepared by Pakistan Oilseed Development Board (PODB), Ministry of National Food Security & Research is biased and shall continue causing to drain the precious foreign exchange reserves and deteriorate further the already painful 'trade imbalance' at the cost and risk of the exchequer and of course end consumers, the industry observed.
Due to existing and revised policies the local cultivation acreage of oil seeds crops is gradually shrinking and according to flawed policy the burden of blame has been wrongly put on import of 'Edible Oils' instead of "Subsidized Imports of Oilseeds".
India, for instance, consumes around 24 Million Metric Tons of edible oil per annum. To meet the demand India imports 16 Million M Tons of edible oil out of which around 10 Million M Tons is Palm Oil followed by 3.6 Million M Tons of Soybean, 2.3 Million M Tons of Sunflower Oil and 0.2 Million M Tons of other oils. Additionally local grown oilseeds to the tune of 38 Million M Tons is crushed to obtain around 7.8 Million M Tons of edible oil.
In order to discourage the import of oilseeds and promote local oilseed crop, India has kept tariff structure equal/identical on import of Edible Oil and Oilseeds. Due to this successful model India has become net exporter of meals to the tune of 3 Million M. Tons with almost zero import of oilseeds. The Open Market Price vis-à-vis Minimum Support Price regime implemented by India is one of the major factors to achieve the target of self sufficiency in 'Meals' and size-able cum sustainable production of Edible from domestic oilseed crop.
Local oil seeds and imported oil seeds are in cost and price competition since replaceable to each-other and hence competitors in international trading arena.
Example: the US and the EU are exporters of oil-seeds and edible oil extracted from seeds, whereas imports Palm Oil to the tune of 1.5 MMT and 7-8 MMT per year so no nexus between Oilseeds and Edible Oil.
To improve local oil seed crops need to review duty/taxes on imported oil seeds and allocate subsidies to local crops instead of imported oil seeds/beans.
The industry said that all edible oils (whether soft or hard) have different applications and need/preference for manufacturing end products, which falls in the domain of Industry (PVMA) to choose the economical, available and most appropriate. The industry takes into consideration various aspects and limitations such as World Trade Organization (WTO) rulings, World Heath Organization (WHO) advisory, Codex Alimentation limits, Pakistan Standards & Quality Control Authority (PSQCA) laid down Standards, PTA/FTA commitments of Pakistan, Importing and Exporting Country Tax Structure, Local and International Market Choice, Preferences/Demands.
Other stake-holders for the purpose of developing Oil Seed policy included Ministry of Finance, Federal Board of Revenue (FBR), Ministry of Health, Ministry of Commerce - PTA/FTA, Trade Development Authority of Pakistan (TDAP), Trading Corporation of Pakistan (TCP), World Trade Organization (WTO), World Health Organization (WHO), Competition Commission of Pakistan (CCP), National Tariff Commission (NTC) and expert on Technical/Tariff Barriers rulings.
The Working Paper (Draft) of Oil-Seed Policy 2018 is devoid of following mandatory Statistical information: a) Quantity of OILSEED (sowing grade) imported in last 05 years b) Quantity of Oil-Seed (Crushing Grade) imported in last 05 years c) local oilseed harvesting costing and crushing in addition to trading and disappearance of edible oil extracted from local oilseed) Cost of edible oil extracted from local oil-seed and its trading price by Solvent Extraction e) Reduced rate of Duty/Taxes applicable on imported oilseeds and subsidy required for developing local oilseed crops.
The said information is essential and dictates the feasibility and amount of subsidy required/desired by domestic oilseed growers. The domestic industry recommended that the tariff rationalization of imported oil-seeds is required. At present incentive of Rs 24,000/M Ton is granted on oil extracted from imported oil seeds (Soybean) discouraging local oilseed crops (@ Rs 900/Maund).
The industry referred that Para 9 of draft Oil Seed Policy (Horizontal Increase Area Enhancement) will have negative impact on quality of end product and higher inputs against Public interest. It is contrary to Mandatory Pakistan Standards and internationally discouraged Trans Fatty Acid (TFA) limits, which has not been taken into account.
The National Tariff Commission (NTC) is required to impose anti-dumping duty on import of oilseeds to provide protection to local crops against material injury - Matter to be referred to National Tariff Commission, the industry requested. The manufacturing of banaspati/cooking oil sector is already well regulated and absorbing all local raw-material (edible oil), extracted from local oilseeds and only import the shortfall quantity. In case local crops increases by many folds the Industry is ready to accommodate the edible oil so extracted.
PTA/FTA play important role in balancing Trade deficit. No PTA/FTA with countries from where we are importing oilseeds, thus it is against National Interest and Agriculture policy frame-work to import oilseeds by granting concessions in duty/taxes. The expert document of the industry revealed that the subsidy (tax concession) granted to import of oilseeds can be diverted for promotion/subsidy of local crop and it further secures loss of foreign exchange reserves.
In Pakistan like all other commodities the purchase price of oilseeds is linked with identical commodity trading in international market. For obvious reasons at the time of harvesting the prices are bottom touched and, therefore, local crop cannot gain premium due to competition with imported oilseeds. The Trading Corporation of Pakistan (TCP) must intervene and announce support price for local crop at the time of sowing, so that farmers can conveniently shift from sugarcane, wheat and cotton crops to oilseeds. Quota regime to be enforced after calculating local oilseeds sown area for the purpose of import of oilseeds, the domestic industry added.
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