From Import Substitution to Agro-Efficiency: Rethinking Pakistan’s Oilseed Strategy

Pakistan’s edible oil and oilseeds sector has long been defined by a heavy reliance on imports, with the country sourcing over 88% of its edible oil and more than 75% of its oilseeds from abroad to meet animal feed and food needs—amounting to an annual cost of approximately USD 5 billion. This import bill strains foreign exchange reserves and has prompted policymakers to pursue an import-substitution strategy, aiming to replace imported oils with domestically grown oilseeds.

However, an overemphasis on self-sufficiency can backfire; a singular focus on replacing imports often leads to inefficiencies and limited resilience in the food system. It is increasingly evident that Pakistan must rethink its approach – prioritizing efficiency-based crop selection and comparative advantage over simply trying to grow everything it imports.

The Limitations of an Import-Substitution Mindset

In theory, producing oilseeds at home sounds like a prudent way to save foreign exchange. In practice, not all crops are suited to Pakistan’s agro-climatic conditions or economic realities. An import-substitution mindset tends to favor whatever oilseed could replace imports (whether or not it is efficient to grow), rather than focusing on crops that yield the highest returns per acre or per drop of water. This has led to promotion of certain crops – such as traditional rapeseed-mustard and even oil palm – that face serious productivity or quality constraints in Pakistan’s context.

The result is often lower yields, inferior product quality, and poor competitiveness against imports. For example, policy experts in Malaysia have argued that an overemphasis on self-sufficiency in food production can actually reduce efficiency and resilience (ISIS Malaysia, Malaysia’s Long-Term FoodSecurity, March 13, 2024, https://www.isis.org.my/2024/03/13/malaysias-long-term-food-security).

In other words, if Pakistan allocates land and resources to relatively unproductive or unsuited crops solely to reduce imports, it may end up with higher costs and lower output than if those resources were invested in more efficient crops (even if that means importing some items that others grow better).

Rapeseed vs. Canola: A Case Study in Commercial Efficiency

One telling example is rapeseed (sarson/mustard) – historically promoted as a local oilseed to substitute for imported edible oils. Conventional rapeseed varieties in Pakistan (and South Asia) have major commercial limitations: their oil contains high levels of erucic acid, and their seed meal is rich in glucosinolates, both of which are considered anti-nutritional or even toxic for food use.

Canola grade rapeseed was developed to fix these issues – defined by oil with <2% erucicacid and meal with <30 µmol/g glucosinolates3 – and such “double-zero” canola varieties command a premium in global markets. By contrast, the prevalent local rapeseed cultivars can have 30–50% erucic acid in their oil and extremely high glucosinolate content in the meal, rendering them unsuitable for premium edible oil or quality feed especially for poultry. This quality gap already puts local rapeseed at a disadvantage.

Efficiency-based selection also highlights a stark yield and revenue gap between Pakistan’s rapeseed and the canola seed it imports for crushing. Imported canola seed typically yields about 42% oil, whereas the local rapeseed yields only around 33% oil, with a larger fraction ending up as meal. The table below compares the crush values (oil and meal yield and their market value) per ton of imported canola seed versus local rapeseed seed:

As shown above, each ton of local rapeseed yields about $172 less value (20% lower) than a ton of imported canola. The local seed’slower oil output and cheaper meal (due to its quality issues) mean that even if Pakistan grows rapeseed domestically, the economics are poor compared to importing canola. In essence, insisting on rapeseed as the primary oil seed crop sacrifices efficiency and valuefor the sake of import substitution. A more rational strategy would be to either improve local rapeseed to canola quality (a long-term breeding challenge) or pivot to other oil crops where Pakistan can be competitive.

The Palm Oil Paradox: Ambition vs. Climate Reality

Another example of import-substitution gone astray is the official enthusiasm for local palm oil cultivation. Pakistan imports massive quantities of palm oil each year, sogrowing oil palms domestically has beentouted as a solution to save foreign exchange.

For decades, government programs have promoted oil palm planting along coastalareas and even provided saplings and technical support. Yet oil palm is a humid tropical crop, thriving in the rain-soakedclimates of Malaysia and Indonesia.

Pakistan’s environment – characterized by low and erratic rainfall and, in much of the country, semi-arid conditions – is fundamentally unsupportive of oil palm on a commercial scale. Palm Oil’s water requirements are met naturally only in climates with frequent, year-round rainfall of around2,000-3,000mm annually. The crop’srequirements (abundant water, humidity,and tropical rains) simply do not align withPakistan’s dry climate and water realities.

Early trials of oil palm in Pakistan’scoastal belt (e.g. in Sindh and Balochistan)did show that the trees can grow and bearfruit, but the yields were marginal andseveral attempts ultimately failed. Agronomists point out that low precipitation, lowhumidity, and heat stress during peaksummer months hinder oil palm growth andproductivity in Pakistan. After years of pilotprojects, Pakistan still produces effectivelyno significant palm oil – reinforcing that thisimport substitution idea was impractical. Meanwhile, precious time and resourcescould have been invested in crops bettersuited to our soil and climate. The palm oilsaga serves as a cautionary tale: not allimports can (or should) be replaced by localproduction, especially if natural conditionsand infrastructure aren’t supportive.

Global Lessons: Prioritizing Comparative Advantage and Exports

Around the world, countries have achievedagricultural success by focusing on theircomparative advantages – growing cropsthat give the best yields or value in theirconditions – and by leveraging trade rather than attempting self-sufficiency ineverything. Brazil is a striking example. Ithas become an agricultural powerhouse andthe world’s leading exporter of soybeans,beef, sugar, coffee, and other commodities.

Yet Brazil does not force itself to grow every staple crop domestically; in fact, it remainsa major importer of wheat, mostly buyingfrom neighboring Argentina. Brazil’s farmersconcentrate on what they grow mostefficiently (soy, corn, livestock, etc.), exportthose for profit, and import wheat which isrelatively costly for them to produce – atextbook case of playing to strengths.

Similarly, other countries have adjusted theirpolicies to emphasize efficiency and sustainability. Saudi Arabia, after a costly 30-yearexperiment in wheat self-sufficiency, famously decided to abandon domesticwheat production to save water and importall its wheat by 2016. The desert kingdomrecognized that pumping fossil aquifers togrow water-intensive crops was anuntenable approach.

Today, Saudi Arabiasecures two-third of its wheat requirementfrom the world market (using its oil revenues)while investing in more viable agricultural and water management strategies.

The lesson is clear: forcing self-reliance in a crop that strains natural resources or economics can be worse than prudent import reliance. Even countries that are net food exporters structure their agriculture not to replace every import, but to maximize output in chosen areas.

Malaysia, for instance, built a globally competitive palm oil industry by concentrating on a crop well-suited to its tropical climate. It now exports 85–90% of its palm oil production, earning valuable foreign exchange and securing a strong position in world markets.

Malaysia still imports significant quantities of other foodstuffs (like wheat, dairy, or rice) which it doesn’t grow as efficiently, but its export earnings from efficient crops offset thoseimports. This strategy has positioned Malaysia as a net food-exporterin value terms, even if it isn’t self-sufficient in every commodity.

Incontrast, countries that cling to strict import substitution oftenremain stuck with high production costs and periodic shortages. The international trend suggests that Pakistan should pivot from adefensive import-substitution stance to a proactive export-orientedapproach. This doesn’t mean neglecting food security – rather, itmeans achieving food security through productivity and trade. Byfocusing on crops where Pakistan can excel (whether due to climate,soil, or farmer expertise) and possibly exporting surpluses, thecountry can earn the revenue to comfortably import those foods orinputs it lacks.

Such diversification and outward orientation typicallymake an agriculture sector more innovative and resilient than aprotectionist, inward looking model.

Toward an Efficiency-Focused Agriculture Policy

For industry stakeholders and policymakers, the implications aresignificant. Shifting to efficiency-based crop selection requiresrevisiting subsidies, research priorities, and investment strategies.

Resources should target crops that offer higher yields, better quality,and market value under Pakistan’s conditions – be it canola-qualityrapeseed, sunflower, soybean (to support the livestock feed industry),or other high-value cash crops such as sesame. Low-performingvarieties (e.g. old high-erucic rapeseed) should be phased out in favorof superior strains. Crucially, the goal should expand from “importsubstitution” to “import optimization”.

Not all imports are bad – ifPakistan can import a commodity cheaper than producing it, whileusing its land to produce a more valuable crop for export, that is anet gain.

The edible oil policy, for example, might incentivizedomestic crushing of imported canola seed (for quality oil and meal) while farmers grow exportable crops like cotton or rice in suitableareas, or oilseed crops for which Pakistan has a yield advantage in other areas.

In summary, a strategic pivot is needed. Pakistan’s agriculture must move beyond the old dogma of self-sufficiency at any cost. A modern, efficient agricultural strategy would seek a profitablebalance: reduce import dependence where feasible through higher productivity, but also embrace a role in the global market – exportingwhat we grow best and importing what others can produce more efficiently. This approach can improve rural incomes, strengthenthe agri-food industry, and still safeguard food security by makingit economically sustainable.

By learning from global examples andour own past missteps, Pakistan can transform its edible oil sector(and broader agriculture) from an “import trap” into a dynamic,efficient engine of growth. The time has come to base crop selectionon agro-climatic reality and economic efficiency, ensuring that everyacre planted is an acre that truly prospers.

Copyright Business Recorder, 2026