India set to be a net importer of cooking oil for a decade

India, the world’s biggest buyer of edible oils, will have to rely on imports for almost a decade to cater to domestic demand.

Edible oils are indispensable to both traditional and contemporary Indian cooking. But local production trails demand in the sub-continent, which is also the second-largest consumer of vegetable oils.

With per capita consumption projected to grow 2.6% per year, averaging 14kg per person by 2030, imports are expected to rise 3.4% every year until 2030 as the only way to meet demand, according to official data.

What’s driving consumption?

The Indian administration’s most recent annual economic survey states factors such as migration, rapid urban development and shifting habits will amplify consumption going forwards.

“As urbanisation increases in developing countries, dietary habits and traditional meal patterns are expected to shift towards processed foods that have a high content of vegetable oil,” stated the government’s Agriculture and Food Management report, which is a part of the survey’s results that were published this week.

“Vegetable oil consumption in India is, therefore, expected to remain high due to high population growth and consequent urbanisation”, it added.

India hosts the second-largest urban population in the world, in absolute terms, after China. Therefore, household absorption apart, the food services industry, responsible for 38% of aggregate cooking oil consumption, according to data published in commodities major Adani Wilmar’s draft prospectus filed with the markets’ regulator, will also drive demand.

The food services industry comprises of hotels, quick service restaurants (QSRs) that dish out fast food from a limited menu, catering groups and food processing units that sell processed snacks and bakery products. Food services are expected to reach $95.75bn (£70.48bn) by 2025, growing at a compound annual rate of 10.3% over the forecast period, according to data published by Mordor Intelligence, necessitating imports.

Where do imports stand?

In its report, the government said oilseed farming has grown by almost 43% in the six years through March 2021. But cooking oil production trailed demand.

Deficient domestic production in the eight years through March 2020 – topping out at 7.9 million tonnes per annum – forced manufacturers to import unrefined soybean oil from Argentina and Brazil, and purchase unrefined sunflower oil from Ukraine and Russia. Meanwhile, palm oil, which doubles up as a natural preservative in packaged foods, was sourced from Indonesia and Malaysia.

And as a result, high, double-digit, imports peaked at 15.6 million tonnes per annum during that eight-year period, the report added.

Сapital.com

Tags: India, edible oil