Oilseed Cultivation: A profitable business opportunity

India has always been known as an agrarian economy for obvious reasons. Agriculture contributes to 16.5% of India’s gross domestic product (GDP) and it is the primary source of livelihood for about 58% of India’s population. Interestingly,

=> India has the 10th largest arable land resource in the world

=> India contributes to 19% of world’s area under bamboo cultivation

=> India accounts for 21% of total coconut production in the world

=> 29.5% of agricultural GDP comes from horticulture

=> India was the 9th largest exporter of agricultural products and the total value of exported agricultural products stood at $ 37.4 billion

While agriculture sector in India has a glorious picture throughout India’s history, there are few sub-sectors that have a history of ups and downs. One such sub-sector is the edible oilseeds sector. At present, India imports 15 million tons of which constitutes nearly 70% of its annual edible oil requirement of 23 million tons.

Factors that impact the edible oil industry in India are:

1. Climatic conditions

2. Cropping pattern

3. Region specific cuisine

4. Regional preference for Indigenous edible oils

5. Import duty on edible oils

Palm oil is the single largest contributor to the Indian edible oil imports. India imports over 96% of its palm oil requirements mostly from Indonesia and Malaysia. Since 2001, palm oil which was hardly ever added in traditional cuisines has gone from accounting for 29% of edible oil consumption to nearly 65%.

Opportunity for Punjab in oilseed cultivation:

Punjab has always been the bread basket of India. The state holds leadership role in many areas. Punjab ranks 2nd in wheat and rice production with the highest yields in India, 2nd in Mandarin Orange (Kinnow) production in India, and 3rd in honey production in the country. Food processing holds 21% share in Punjab’s manufacturing GDP.

India has been enjoying a surplus yield of food grains and rather the challenge lies in managing this surplus. Cultivation of these food grains, especially rice and wheat, require a lot of water because of which many states in India are facing depleted ground water level. The main culprit of falling ground water levels is the rice crop. It is estimated that to produce one kilogram of rice, 3500 liters of water is consumed. Looking at the factors such as huge supply-demand gap in edible oil industry, depleting water level and excess food grain production, it would be beneficial for Punjab to go for crop diversification into cultivation of oilseeds.

The shift to oilseed crop cultivation would not only save the valuable foreign exchange going to other countries but also provide much needed raw material to the oilseeds industry/extraction industry which is currently operating at a capacity utilization of 35%. Since oilseeds crushing/extraction industry is a labor-intensive industry, so additional capacity utilization will provide job opportunities to a large number of populaces. Further, the increase in the production of oilseeds will ensure increased availability of de-oiled meal to the animal feed manufacturing industry at lower prices which in turn will cut down the input costs of dairy and poultry farming and thereby ensure the viability and growth of dairy and poultry farming in India.

Punjab’s initiatives and course of action:

Looking at the potential for future growth and employment generation, the Punjab government has declared Agri & Food processing industry as a thrust sector under which additional attractive incentives. Edible oil processing industry would also come under this sector. Both Punjab & the national government could provide policy support to the farmers to encourage oilseeds cultivation. Indian government could place necessary import duties on edible oils so that local production of oilseeds would be encouraged.

One other alternative can be if Punjab Agricultural University could identify or develop suitable varieties of oilseeds which could give better farm productivity. The state government could provide financial support to the Punjab Agricultural University for providing free of cost oilseeds. Punjab government in coordination with central government could ensure that state agencies procure oilseeds at the minimum support price.

An all-inclusive strategy including technological, institutional and policy changes would not only increase the oilseed production but also open new avenues for the food processing industry to invest in the state.

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