The decision to import 100,000 tons of palm oil in December despite having inventory of 170,000 tons is a rational step taken by Pakistan Edible Oil Refiners Association. Palm oil prices have risen considerably over the recent months and look steadying further - tracking the rebound in global crude oil prices.
The price of palm oil is projected to rally by $80 to $150 per ton by April 2010, according to oil seed analysts at Hamburg-based commodity research institute Oil World. This is largely because palm moves in tandem with global crude as higher price of fossil fuel creates a demand for bio energy - including palm - while jacking up the cost of manufacturing and freight as well.
But while the proactive move by PEORA to import palm before it becomes pricier is commendable, it is just a short-term way out. What is needed is a more long-term solution for an industry that accounts for nearly 4 percent of total import bill to meet 70 percent of its consumption demand. And that solution is to prepare the land and its farmers for the cultivation of palm in order to tap the yet unexplored potential.
According to an earlier report by Pakistan Institute of Development Economics, various varieties of palm and coconut can be grown successfully in the coastal belt of Sindh and Balochistan without competing for land resources for other crops. Research shows that olive cultivation also has great prospects in the mountainous areas of Punjab, NWFP and Balochistan.
Yet despite this potential, growth in the sector has been slow, largely due to lack of emphasis on policymaking. Farmers, who are key contributors to agriculture growth, are largely deprived of resources and incentives such as long term price signals, satisfactory input resources and market infrastructure. Absence of adequate research and development and shyness of private and foreign investors in the industry are other areas of concern as well.
So, considering that projects to achieve self sufficiency in edible oil - of which palm has a lions share - require a long gestation period of about 10-15 years, the government must act today. With long term global crude oil seen bullish and the population growth at home, time is clearly running out.