Pakistan will import an estimated 3 million tons of edible oil and 3.5 million tons of oilseeds in the current year to meet its edible oil and animal feed requirements. At around USD 3.6 billion, this constitutes the third highest category in the country's import bill, after crude oil and machinery. This also means that only around 10 percent of the country's edible oil demand is being met through indigenous oilseed crops. For the sixth most populous nation in the world which is faced with some daunting challenges such as twin deficits and high risk of water scarcity, this situation demands a pertinent, sustainable and long-term policy.
Background
While it's encouraging to see the current government giving growth of local oilseed crops high priority in its agricultural policy, similar initiatives have also been undertaken by almost all governments in the past to increase the local oilseed crops, focusing primarily on sunflower and rapeseed. The greatest accomplishment in this regard has been the achievement of oilseed cultivation area of more than a million acres (excluding cottonseed), albeit for one or two seasons only. This should give any policy maker the confidence that the local market dynamics are receptive towards a substantial growth in oilseed crops.
Besides sunflower and rapeseed, many secondary programs have also been undertaken, such as olives, palm and even soybeans, but none have the potential to make a substantial contribution to the local edible oil demand.
Some of the factors which play a key role in the growth of oilseed crops include:
Oilseed Crop Economics
Wheat is the primary competing crop for oilseeds. Being a staple food item (and therefore having a high political sensitivity), wheat enjoys a hefty support price of Rs. 1350 per Maund, or around $243 per ton - which is significantly higher than the world market. In addition, the procurement program is financially burdensome for the government and prone to costly pilferages. In the recent history, some of the wheat had to be offloaded to export destinations in the end, but only after massive subsidies - as high as $180 and $105 per ton, or around 80% and 45% of the prevailing international commodity value, respectively.
Typical wheat yields are 45 Md/acre. At 1350, it gives the farmer an income of around Rs. 60,750 per acre. The challenge for oilseeds then becomes that with roughly comparable costs and half the yield, it has to fetch almost twice the price of wheat, or around Rs. 2,700 per Md. With the seed varieties being used, the oil yield is fairly low at around 36% for sunflower and 34% for rapeseed. This means that a support of Rs. 400-500 per Md is required to attract farmer interest towards planting oilseeds. Last year, the previous government had announced a support of Rs. 5,000 per acre for cultivating oilseeds which had limited impact. A sustainable and long-term strategy is needed to give the farmer the confidence in considering oilseeds seriously.
Inept Agricultural Policies
Pakistan's agriculture sector plays a central role in the economy as it contributes 18.9 percent to GDP and absorbs 42.3 percent of labour force (source: Pakistan Economic Survey 2017-18). Yet the agricultural landscape is marred with inefficiencies which adversely affect the crop yields as well as quality. Almost every area related to farming needs to be revamped; from seed quality to water efficiency to lack of mechanization. We also need to revisit the basic crop economics to make better decisions in crop selection to make better use of our arable land and precious water resources.
Meal Exports
Any pertinent oilseed development program will need appropriate support for meal exports as the country's meal consumption is largely poultry-based which limited provision for rapeseed and sunflower meals. Countries with larger aqua- and hog-feed production usually offer much better values for these meals.
Export of meal from Pakistan to China is banned since 2014 when the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) of the People's Republic of China revised its phytosanitary requirements and placed a ban on countries which failed to respond properly to its queries. Our rapeseed meal exports to China were touching USD 50m prior to that. A subsequent follow-up by the Department of Plant Protection (DPP) and APSEA resulted in lifting of the ban, but not before early 2017. Since then, DPP has placed a self-imposed ban on rapeseed meal exports to China due to fears of Interception at China due to the incorrect interpretation of the Pak-China protocol by the new DPP regime, and fears that GMO-positive rapeseed meal will have negative consequences for Pakistan exports.
Awareness about Biotechnology
The country is in dire need of addressing the GMO issue on purely scientific basis - not misconceptions.
Significant portion of the food we (and the rest of the world) are currently consuming is 'genetically modified' in one way or the other. Insulin - one of the most important drugs used today - is genetically engineered. If countries like EU-28 and China, our leading trading partners, are already importing GM grains like soybeans, why are we afraid to accept the same commodity? We have placed a self-imposed ban on rapeseed meal exports to China under the same pretext. Due to lack of proper research, our cotton crop is failing to adequately feed the textile industry which is the backbone of our exports.
In 2016, the prestigious National Academies of Science, Engineering and Medicine issued what is probably the most conclusive report ever produced by the scientific community on genetically engineered food and crops. After having examined hundreds of scientific papers written on the subject, sat through hours of live testimony from activists and considered hundreds more comments from the general public, the scientists wrote that they "found no substantiated evidence that foods from GE crops were less safe than foods from non-GE crops."
New research suggests that the type of yield gains made possible by genetic engineering (GE) will be needed to offset climate change impacts on agriculture.
Traditional varieties cannot compete with the GM varieties in quality and yields. For example, crushing a ton of canola (which has oil-content as high as 45%) yields a revenue of Rs. 82,000 in oil and meal sales, whereas local rapeseed (with an oil-content of around 36%) yields only Rs. 65,000, or 21% lower.
Conclusion
In the past two decades, barring a couple of exceptional years, the local oilseed crops have been yielding a total of 200 to 300-thousand metric tons of oilseeds. The local edible oil market has grown by almost two-and-a-half times during this period. We have failed to keep our agriculture abreast with the times - in terms of both technology and policy. We have been growing and storing commodities like wheat and sugar, in excess of our requirements, and in the process destroying it and making it more expensive for the common man. At the same time, we have been spending precious foreign exchange on imports of oilseeds for our oil and protein requirements. We have been focusing on water-intensive crops like rice and sugarcane despite being a country which is approaching the scarcity threshold for water.
Our agricultural policy needs a major revamp. With the market and processing capacity already in place, oilseeds may well be on the vanguard of the new agricultural policy.
An effective oilseed development program can only be made sustainable with feasible economics to give growers long-term confidence in these crops. Ad hoc incentives, with inefficient delivery mechanisms, have failed to encourage growers into changing age-old but 'safe' crop preferences. Besides making oilseed crops a priority based on economics, oilseed farmers need to be properly guided in the areas of seed, biotechnology, increased mechanization and water efficiency.