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Simply vegetating

THE VEGETABLE oil industry and trade are going through turbulent times, increasingly buffeted by low level of domestic production trailing consumption demand by a large measure, and rising dependence on imports, the volumes of which are expanding in the wake of the long-drawn international bear market.

Edible oil imports have got so well entrenched in the last 4-5 years that quite apart from loss of employment, they cost annually a whopping sum of about Rs 8,000 crores in foreign exchange, while the level of self-sufficiency stands eroded to about 55 p er cent.

As per latest arrival data, edible oil imports into the country touched a new high of 48 lakh tons during the oil year ended October 2001, up from previous year's 45 lakh tons. Worse, domestic business conditions have deteriorated in recent years with po or harvests of oilseeds, spreading sickness among processing units and falling exports of extractions, even as the consumer gets short-changed because of suspected malpractice in both import and marketing of the essential commodity.

Far from being pro-active, the government has failed to address the fundamental issues afflicting the sector. On their part, the policy makers keep changing the rates of customs duty— they did so four times in the past 15 months. More often than not , changesare so ill-timed that they fail to deliver benefits that are perceptible or tangible to domestic producers. The latest change, a duty reduction, coincided with the domestic crop harvest and depressed prices further. The domestic industry is in a state of frustration as the requisite policy support is not forthcoming.

An important part of the country's food processing sector generating substantial revenue and employment, the vegetable oil industry is today adrift as it is clearly unable to withstand the pressures of globalisation. # Theindifference of the Centre is ap parent in its failure to evolve long-term policies for the country's vegetable oil sector with a view to making it globally competitive. Recommendations of an expert group formed a couple of years ago are gathering dust.

Earlier this year, it was announced that a Group of Ministers would come out with policy recommendations. It is nowhere in sight. The Ministries of Agriculture, Food and Finance are unable to evolve a consensual approach to addressing the issues of the v egetable oil sector. Domestic oilseeds production continues to fall considerably short of the annual target set by the government. Issues that deserve attention are the low productivity of oilseeds, the need to persuade grain farmers to shift to oilseeds , policies that restrict marketability of crops, processing inefficiencies and nutritional security of consumers. Globally, major producers (USA, Malaysia, Argentina and others) are rapidly moving ahead in both production and productivity, while India - despite being one of the largest producers - ends up as a ready market for all the excess oil the world is producing. The situation must change.