🤔 Can India Live Without Indonesian Oil?
Indonesia's ban on oil has raised an important question. Why aren't we growing our own oil?
Good news for all those trying to eat healthy and lose weight!
All the fried junk you have may soon become costlier: forcing you to change your diet.
But why will fried food get more expensive?
Because Indonesia has decided to stop oil exports.
Wondering what it has to do with our food in India?
ReadOn!
Living in Paradoxes 🧐
Indonesia, the world's biggest exporter of palm oil, is facing domestic shortages.
Sounds improbable, right?
But we are living in an impossible world.
You see, thanks to the Russia-Ukraine war (yes, we know we've been blaming everything on this but it indeed is the root cause of so many troubles), there is a worldwide shortage of sunflower oil.
Russia and Ukraine were the biggest suppliers of sunflower oil but the war and the trade sanctions on Russia have limited their trading ability.
Plus, soybean oil supplies have also gone down due to dry weather in South America.
So, palm oil (which is any way the world's most used oil) demand has gone up.
On top of that, Indonesia itself passed a law that required blending 30% palm oil with petrol and diesel (yes, cooking oils can be mixed with crude oil) to reduce its dependence on crude oil imports.
So, shortages were bound to happen.
Simple solution? Stop exports.
But this has jeopardised the whole world.
Living on Oil 👀
Take a minute and think about all your favourite food.
We bet that a lot of them must be fried or oil-based.
India loves oil.
And because of that, we are the biggest importers of edible oil.
We imported 13.13 million tonnes of edible oil in 2020-21, of which 8.32 million tonnes was just palm oil. And of this 60% of palm oil was just from Indonesia.
So, you realise how dependent we are on the country.
And this palm oil is not just used for cooking. It is used in shampoos, soaps, cosmetics, products like chocolate and even our precious Nutella.
Now because of the Indonesia ban, experts have predicted a 15%-20% increase in global oil prices.
But India probably won't bear the brunt of oil shortages.
We import two kinds of palm oil from Indonesia: refined and unrefined (or crude).
70% of the oil we import is unrefined oil.
So, the move is just going to give more business to our oil refineries (since all imported oil will now have to be refined here).
Furthermore, edible oil companies like Adani Wilmar and Ruchi Soya have claimed that they have enough stocks to last for a couple of months.
We will only face an issue if Indonesia's ban lasts more than 4-5 months.
But all of this raises an important question: If India loves oil so much, why aren't we producing it?
India's Oil Problem 🌾
The answer is simple: we just don't have the right climate to grow palm trees for palm oil. Palm trees can be grown only in very few areas in India.
But why do we only need palm oil? Why can't we use other oils?
Because palm oil is super cheap. You get 10 times more palm oil per hectare than soybean oil.
So, we will forever need palm oil, even though palm oil is bad for health and a leading cause of deforestation.
And the other oil seeds that India can grow are not too popular amongst farmers.
They need a lot of land, a lot of water and a lot of money to grow.
Not just that, often farmers cannot grow other crops along with these oilseeds.
This is exactly why we only have 0.5 million hectares of land producing oilseeds in India. And we produce less than half of the oil we consume.
But the government is trying to rectify this.
We have launched several initiatives like the Rashtriya Krishi Vikas Yojana which has raised the Minimum Support Price (the minimum amount that farmers can get when selling crops) of oilseeds by almost 50%.
Plus, the government has also announced an investment of over Rs. 11,000 crores to increase our production of edible oil.
All of this should incentivize farmers to grow oilseeds, especially the ones that can be easily grown in India.
But the government also needs to spur scientific and technological innovation in this sector, so that we can increase the yield of edible oil crops.
Will the government's schemes work out?
Only time will tell.
In a Line: The world's major oil supplier is shutting down exports which could majorly raise the prices of your snack, cosmetics and household items.
Food for Thought: Palm oil is associated with bad health, slave labour, deforestation and a lot of other issues. So should we continue using it just because it’s cheap?
Quick Question: Do you think India can become completely self-reliant in the edible oil space?
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But what about mustard, groundnut, seseme oil? Don't we use them for frying?