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Business

February 9, 2018

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‘Lack of policy support makes Pakistan dependent on edible oil imports’

KARACHI: Lack of policy support and research as well as low acreage keep Pakistan dependent on edible oil import that annually erodes around two billion dollars of Pakistan’s foreign exchange reserves.

The State Bank of Pakistan (SBP), in a latest report, said the country’s dependence on imported edible oil continues unabated due to lack of any advances in domestic oilseed crop cultivation. “Oilseed crops, such as sunflower, have failed to take hold on a large-scale due to farming issues such as overlapping of the sowing period with that of major crops such as wheat and cotton,” the SBP added. “Moreover, technological handicap, lack of research orientation and absence of any meaningful policy support are other major impediments to import substitution.”

Import of soybean surged 76.2 percent to $102.16 million in the first half of the current fiscal year of 2017/18, while palm oil import increased 23 percent to $1.04 billion during the same period, Pakistan Bureau of Statistics (PBS) data showed. In quantity terms too, soybean import rose almost two-fold to 114,234 tons, while import of palm oil surged 17 percent to 1.42 million tons in the July-December 2017/18.

Edible oil imports accounted for 35 percent of food import bill of $3.24 billion in the first six months of the current fiscal year, according to PBS. “Within the food group, edible oil imports continued to grow,” the central bank said. “The edible oil imports, which have a causal relationship with domestic production (due to longer shelf life of vegetable oil and ghee), depict an anticipatory behaviour with regards to prices.”

SBP said stockpiles in drought-hit Southeast Asian producers remain lower than expected and “may lead to an increase in prices as the new calendar year begins”. Pakistan produced 533,525 tons of vegetable ghee and 157,276 tons of cooking oil in the July-November period of FY2018. The country’s annual edible oil/fats consumption is around 3.9 million tons. Local edible oil manufacturers said around 30 percent of edible oil import bill comprises of duties, which the SBP said is not promoting availability of import substitution. “Reliance on import duties, while failing to reform the real sector, only adds to the burden on the consumers, who face an inelastic demand,” it added.

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