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Question:  The price of vegetable oil is rising continuously in recent times. Explain the reason for sharp hike in prices. What are the challenges in making India self-sufficient in vegetable oil production?


Answer:  The last couple of months have seen the price rise in major oils such as mustard, palm, soya bean, sunflower and vanaspati.  This price rise has been creating stress on livelihoods that has been already affected by the pandemic.

Reasons for price hike

  • Rise in future contracts
    The price of oil that traders will buy in near future at a particular rate is termed as future contracts. The decline in output has created speculation of availability, resulting in rise of contracts.
  • Decline in production
    Major oil producing countries such as Malaysia, Indonesia, Brazil and Argentina have witnessed decline in output of oil crops due to La Nina effect. This has created shortage.
  • Diversion for biofuel
    The rise in petroleum prices as well as climate goals has forced many countries such as US to use vegetable oil for biofuel. This has created a shortage in supply chain.

Challenges in making India self-sufficient

  • Setting up extraction infrastructure
    Oil seeds have to be harvested and sent to units for extracting oil. These units are not present everywhere and farmers have to sell their produce to far places, affecting their business.
  • Promotion of genetically modified varieties
    Higher oil content can be ensured by planting genetically modified varieties of oil seeds. There is a need to develop and promotes such varieties across India.
  • Increasing more seeds in MSP
    The MSP regime must be expanded to include more oil seeds. The MSP should also be increased so that farmers are encouraged to move to oil seed crops.

Thus, India should become self-sufficient in oil seed production if our dependence on external sources has to be cut. This will also benefit local farmers.

Updated on 15 Jun 2021 |   Added on .01 Jun 2021  |  by admin