Problem with palm oil?

Earlier in October, Punjab Food Authority announced that it would ban the production and sales of banaspati ghee by FY20 in the province owing to the adverse effects of trans-fat and its contribution to cardiovascular diseases. At the same time, we have been witnessing a strong upward trend of imported palm oil which is often a component in the production of ghee. If banaspati ghee is banned nationwide, does this mean we will see a decline in palm oil imports? And will that curb overall edible oil imports? Let’s examine.

In dollar terms, palm oil imports grew by 35 percent in 4MFY18 year on year and volumetrically by 27 percent. The imports are coming from Malaysia and Indonesia with whom Pakistan has brokered trade preferential deals. Imports have skyrocketed since. Demand for edible oil consumption will only increase as population expands.

Palm oil has had a contentious history. Some claim it is a substitute for trans-fat or hydrogenated fats since it is highly saturated and becomes solid at room temperatures. These qualities make it good for frying. However, other studies negate this. In fact, a study conducted by the National Institute of Health argued that palm oil was not a safe substitute for trans-fatty products and had the same negative effects as many hydrogenated products.

In an interview with BR Research, Dr. Kalyana Sundram, CEO of Malaysian Palm Oil Council said that after conducting over 170 studies, they did not find “any harm to the populations with the continuous consumption of palm oil”. But it is still used in the production of Vanaspati which is unequivocally known to be bad for health.

Dr. Kalyana believes that a total liquid diet in Pakistan might not be realistic since the government will find it hard to change the entire culinary habit of a large section of the population. He argues that instead of banning Vanaspati, it can be reformulated such that the palm oil used will have zero trans-fatty acids, and yet will provide the characteristics and the texture of Vanaspati.
Undoubtedly, there is evidence of increasing health awareness in Pakistan which has shifted a lot of focus from consumption of unbranded ghee to cooking oils, that are monounsaturated (liquid at room temperature, begin solid when refrigerated) like olive oil or polyunsaturated (liquid at room temperature and refrigerated) like soybean, sunflower and canola oils. But these oils will have to be imported as well, so any ban on ghee could decrease palm oil imports but will subsequently increase imports of other edible oils that are more expensive than palm.

Some have argued that import substitution is the answer where Pakistan does not rely on vegetable oil imports but makes it home. In the case of palm oil, import bill has risen largely because it suffers from heavy price fluctuations.

However, that will be an uphill battle. Pakistan may not be able to grow many oilseeds (sunflower, soybean, canola etc.) because of limitations and clashes in climate and competition from High Yielding Varieties (HYV) of other crops in sowing and harvesting. There are also inefficiencies in oil extraction and a lack of technology. Ultimately it does not make it worthwhile for the farmer to grow many of the oilseed crops.

Ban on ghee is not bad news; and as Dr. Kalyana believes, there can be options to get ghee without its adverse effects. However, it is highly unlikely it would result in less pressure on edible oil imports unless heavy investment and incentives go into crop cultivation and other import substituting strategies.