THE HINDU BUSINESS LINE
Financial Daily
from THE HINDU group of publications

Monday, October 01, 2001

• AGRI-BUSINESS
• COMMODITIES
• CORPORATE
• LETTERS
• LIFE
• MARKETS
• MENTOR
• NEWS
• OPINION
• INFO-TECH
• CATALYST
• INVESTMENT WORLD
• MONEY & BANKING
• LOGISTICS

• PAGE ONE
• INDEX
• HOME

Opinion | Next | Prev


India's oilseeds revolution

Devinder Sharma

INDIA recorded a spectacular increase both in area under oilseeds as well as its output, with production doubling from 11 million tonnes in 1986-87 to 22 million tonnes in 1994-95, thereby justifying the term ``yellow revolution''. The near self-sufficie ncy of edible oils was, however, not palatable to the economic pundits and the so-called market forces.

But this was not palatable to the World Bank. While acknowledging that oilseeds had demonstrated a rate of growth that exceeds the national trend, it actually called for discarding the policies that had brought about the positive change. The World Bank's argument was that India lacked a ``comparative advantage'' in oilseeds when compared with the production trend in the US and the European Union, and should, therefore, be importing edible oil.

What the World Bank, however, did not say was the selling price of India's oilseeds per tonne was equivalent to the production cost of one tonne of oilseeds in the US. Moreover, the production cost in the US would have been still higher if the massive am ounts of subsidies that it doles out to its farmers were to be withdrawn. In fact, it is the US which actually suffers from a ``comparative disadvantage'', given the fact that its subsidies distort the price. The US and, more important, the EU should, th erefore, be importing edible oil from India every year given its cheap cost of production.

Ignoring the ground realities and blindly following the World Bank's flawed prescription (under pressure since India was restructuring its economy as per the SAP), India started the process of phased liberalisation of edible oil imports from 1994-95. And this was at a time when edible oil exporting countries such as Malaysia, Indonesia and Brazil were preparing to flood the Indian market with palm- and soya-oil. Two years later, the negative consequences of liberalising the edible oil policy became clea rly visible. With the country's edible oil import bill soaring to nearly $1 billion in 1996-97, it was the Ministry of Agriculture which pressed the panic button.

While the wholesale prices of edible oils rose by an estimated 14 per cent, production slackened. The only beneficiary of the Government's `disastrous' policy was the private trade which imported sunflower oil and palmolein at about Rs 22,000 per tonne a nd, after blending with groundnut and mustard oils, sold it for Rs 38,000 per tonne. The free import regime neither benefitted the farmer nor the consumer.

But, then, the government is committed to protecting the economic interests of the oilseeds trade and industry. Else, how does one explain the decision to allow one million tonne of soyabean in 1998 at a time when the US was burdened with an unmanageable glut. Such was the government's desperation to import soyabean, and that too at a time of no apparent crisis, that it was willing to overlook the fact that the imported seed was coming with five exotic weeds and at least 11 viral diseases. Moreover, thi s would have been the first major consignment of genetically-engineered grain to be imported without any regard for health and environmental risks associated with the manipulated gene.

In a complete reversal of the objectives enshrined in the ongoing Technology Mission for Oilseeds, imports of vegetable oil between November 1998 and July 1999 have risen three-fold. Compared to 1.02 million tonnes in 1997-98, the imports multiplied to 2 .98 million tonnes. In 1999-2000, India bought five million tonnes of edible oil, once again emerging as one of the biggest importer.

Since oilseeds are dryland crops, the adverse impact is being felt by the millions of farmers languishing in harsh environs. With their economic livelihood lost to imports, it should come as no surprise if more oilseed growers commit suicide.

Comment on this article to BLFeedback@thehindu.co.in

Send this article to Friends by E-Mail


Next: Fallout from terrorism -- Bailing out the US airline industr...
Prev: WTO and Indian agriculture: Trading in food insecurity
Opinion

Agri-Business | Commodities | Corporate | Letters | Life | Markets | Mentor | News | Opinion | Info-Tech | Catalyst | Investment World | Money & Banking | Logistics |

Page One | Index | Home


Copyright © 2001 The Hindu Business Line.

Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line.