How India destroyed its Oilseeds Revolution, and became world's 2nd biggest importer of edible oils.

Agriculture Minister Sharad Pawar has accused US companies for derailing India’s oilseeds production programme. On a visit to Vidharbha a few days back, the minister said: “In the US, the entire soybean production is done with genetically modified (GM) technology. You have adopted GM in your country but you don’t let that happen in India. This is not proper and it is alarming.” 

Chairman of the Commission for Agricultural Costs and Prices (CACP) Dr Ashok Gulati, too has been using the argument of growing edible oil imports to push in another environmentally-disastrous plantation crop -- palm oil. A few days later, Chairman of the Punjab Farmer’s Commission, Dr G S Kalkat , asked: “India imports edible oils and pulses. Why can’t Punjab produce these?” But in the very next sentence, he actually asked for a minimum support price and assured procurement for maize, and not for oilseeds and pulses. 

It is true that edible oil import bill has multiplied over the past three decades. For the year ending 2012 (edible oil year is from Nov 2011 to Oct 2012, for instance), the imports touched 9.01 million tonnes valued at Rs 56,295-crore. Between 2006-07 and 2011-12, edible oil imports have risen by a whopping 380 per cent. Therefore, there is definitely an urgent need to reduce the imports, and pass on a significant proportion of annual foreign exchange outgo of Rs 56,295-crore into the hands of Indian farmers. 

Instead of paying Indonesian, Malaysian, American and Brazilian farmers from where India imports edible oils, the effort should be to support the domestic farmers instead.

But is crop technology a problem? Is it because India does not have improved varieties of oilseeds that the production hasn’t picked up? Or are Sharad Pawar, Ashok Gulati and GS Kalkat deliberately harping on a wrong tree? After all, how come India, which was almost self-sufficient in edible oils in 1993-94, gradually emerged as world’s second biggest importer of edible oils?

Former Prime Minister Rajiv Gandhi too was baffled. I recall how in 1985 he had expressed concern at the rising import bill for edible oils, which then stood at Rs 1,500 crore. “I can understand why we import petrol and fertilisers, because we don’t produce enough; but why should we be importing edible oils when we can produce the same, “he once asked.And rightly so, he launched an Oilseeds Technology Mission to increase domestic oilseeds production and thereby reduce imports of edible oils.

His efforts bore fruits. In next 10 years, by 1993-94, India had become almost self-sufficient in edible oils production, producing 97per cent of the domestic needs. The quantum jump in oilseeds production was termed as ‘Yellow Revolution’. This was however not palatable to international financial institutions. It was then, and under pressure from the World Bank to restructure our economy, that India began to reduce the import tariffs on edible oils. Although under the WTO norms, India had bound its edible oil import duties at 300 per cent (except for soybean, which were reduced to 45 per cent to benefit the US interests), these duties were gradually reduced. Imports flowed in. Compared to 1.02 million tonnes edible oil imports in 1996-97, India’s imports doubled to 2.98 million tonnes in 1998-99, and then jumped to 5 million tonnes in 1999-2000.

Since oilseeds are dryland crops, the negative impact was felt by millions of farmers languishing in the harsh environment. What could have been a cash crop for these poor farmers, turned out to be a cash cow for the major exporting countries. Sharad Pawar has himself been responsible for reducing import duties. In 2004, import duty on edible oil was pegged at 75 per cent, with a quota system that allowed still cheaper imports of refined and crude edible oils. In 2010-11, import duties on crude edible oil have been brought down to zero, and refined edible oil to 7.5 per cent. No wonder, imports increased from 4.7 million tonnes in 2006 to 9.01 million tonnes in 2012.

Sharad Pawar therefore is very conveniently using the edible oil import surge to promote GM soybean. What he is not telling is that as per research conducted by the University of Purdue, University of Nebraska, University of Wisconsin, University of Iowa and University of Arkansas in the US, crop yields of GM soy have been found 4 to 20 per cent less than non-GM varieties. I therefore don’t understand his logic of promoting GM varieties of soybean which produce less than the existing improved varieties that are not genetically modified.

To say that producing oilseeds to meet the present requirements would require 30 per cent more land than what is under cultivation is also mischievous. Madhya Pradesh, Chhatisgarh, Rajasthan besides some parts of Maharashtra and Andhra Pradesh can be very conveniently shifted from wheat, rice and cotton to oilseeds, including mustard and soybean. This will reduce the burden on wheat and rice storage, and at the same time provide more income in the hands of dryland farmers. In addition, it will also mean reducing the groundwater usage since oilseeds water requirement is much less as compared.

Palm oil plantations on the other hand have been found to environmentally destructive. Worldwatch Institute has shown how palm oil monoculture adds to desertification, and also acerbates global warming by releasing 10 times more carbon dioxide into the atmosphere than tropical forest. 

In any case, as is clear from past experience, no effort to improve production can be fruitful till India restores the import duties to at least 130 to 150 per cent so as to stop cheaper imports. This has to be accompanied by a mission approach to provide assured procurement and assured prices to farmers. Madhya Pradesh, Chhatisgarh and Rajasthan can very easily become the edible oil supplier of the country provided a set of policy decisions are spelled out that can make oilseeds cultivation economically viable. Setting up of processing industries will also help create more employment. Why are we not doing it is the bigger question?