State of Play – Edible Oil Consumption, Production, and Imports

Last Updated on Sep 16, 2022 by Aradhana Gotur

India’s edible oil imports have risen 35% y-oy to 1.3 mn tonnes (MT) in August against 1.01 MT in the same month last year. In July, India imported 1.2 MT of the commodity. Edible oils include oils from coconuts, cottonseeds, olives, palm, peanuts, rapeseed, soybeans, and sunflowers that are used for cooking.

The import of edible oil rose as Russia and Argentina emerged as significant sunflower oil exporters to India. The country bought ~1,35,000 tonnes of sunflower oil in August, of which 72,780 tonnes were from Russia and 30,600 tonnes from Argentina.

Ever wondered why an agricultural country like India is importing such huge quantities of this essential commodity?

Table of Contents

Second-largest consumer

India is the world’s largest importer of vegetable oil and the second-largest consumer of the commodity. China and the US are the next biggest importers according to the Ministry of Agriculture. Oilseeds and edible oils are extremely price-sensitive.

India consumed approximately 23 MT of vegetable oils in FY 2021. To put this in context, the worldwide consumption in 2021 was over 205 MT.
India meets 55-60% of its needs through imports, and although oilseed production in India has risen over the years, the total output is not keeping pace with consumption.
According to the Solvent Extractors’ Association of India, India imported edible oil worth Rs. 1.17 lakh cr. during the 2020-21 marketing year ending October.
In 2019-20, India produced 10.66 MT of edible oil and imported 13.42 MT to meet the local demand.

Import sources

Palm oil (crude + refined) constitutes roughly around 62% of the total edible oils imported. Indonesia and Malaysia are the main suppliers.
Soyabean oil (22%) is imported from Argentina and Brazil.
Sunflower oil (15%) is imported from Ukraine and Russia.

Why India cannot produce more oilseeds

Nearly 72% of the oilseed area is restricted to rainfed farming done by small farmers, leading to poor productivity.
Low quality of seeds results in lower yields and high production and marketing costs.
Farmers opt to grow other crops that need lesser input costs to cultivate.

Government initiatives to raise oilseeds

In the Budget 2022-23, the government earmarked Rs. 1,500 cr. to develop the oilseed industry. Out of this, Rs. 900 cr. have been allocated towards the edible oil palm programme and the remaining Rs. 600 cr. to the oilseed programme.
National Mission on Edible Oils aims to promote oil palm cultivation in the North Eastern States and Andaman & Nicobar by raising the area under oil palm cultivation.

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