Pakistan's Biggest Food Import: Cooking Oil Worth $4.5 Billion Worsens Trade Deficit

Rising demand and soaring prices of cooking oil raised Pakistan's edible oil import bill to $4.5 billion in fiscal year 2021-22, according to government sources. Pakistan is the world's third largest importer of palm oil after India and China. Total cooking oil imports add up to 3.7 million tons while the total annual edible oil consumption is about 5 million tons. Pakistan's palm oil imports are the second biggest commodity import after more than $20 billion in energy imports, accounting for a significant chunk of Pakistan's growing trade and current account deficits.  

Sources of Palm Oil Imports in Pakistan. Source: Dawn

Pakistan Palm Oil Consumption Growth. Source: NationMaster

Pakistan's edible oil consumption has been rising over the years. It is now about 24 Kg per person which is among the highest in the world, according to analysts quoted by Dawn newspaper.  Combined with rising prices, the total imports of palm oil could exceed $6 billion next year. It could further worsen the country's balance of payments problems. Is Pakistan doing anything to try to grow oil palms in the country? Researchers at the Institute of Business Administration (IBA) in Karachi have studied it and reported the following: 

"Based on our research, visits and interviews it was determined that in Pakistan there are ample opportunities and favorable conditions for growing oil-palm trees. Report findings suggest that the coastal belt of Sindh has proven capability of growing oil-palm trees with a per acre yield comparable to that in major oil palm growing countries due to plenty of fertile land, irrigation water courses, supply of fertilizers, and skilled farmers available in this part of land".  

Pakistan Food Imports. Source: TDAP

Sindh Coastal Development Authority (CDA) has recently announced plans to plant 60,000 oil palm trees on an area of 1,000 acres in the current fiscal year.  An earlier project in 2020 showed that the oil content of palm fruit from Sindh's plantation in Thatta is 2% higher than the world average. 

Per Capita Wheat Consumption in Pakistan vs World. Source: Abdul Mo...

Southern Indian state of Telangana has launched a much more ambitious project to plant palm oil trees on 2 million acres of land in the next four years.  To achieve this goal, the state has plans to build large dams and irrigation canals and import millions of germinated sprouts.

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Comment by Riaz Haq on August 10, 2022 at 8:27am

Wheat Consumption Dynamics in
Selected Countries in Asia and Africa:
Implications for Wheat Supply by 2030 and 2050
Khondoker Abdul Mottaleb, Kai Sonder, Santiago López Ridaura and Ayman Frija

https://repository.cimmyt.org/bitstream/handle/10883/21871/64912.pd...

Wheat is the principal staple crop of Pakistan. In
TE2018, the country’s yearly per capita total wheat
consumption was 110 kg, supplying a daily per capita
calorie intake of 920 kcal and constituting 37% of the
total daily calorie intake per person. Since the 1990s,
yearly per capita wheat consumption in Pakistan has
been on a slight decline (Figure 1). While the country’s
wheat yield falls below the world average (Table 1),
Pakistan has been highly successful in achieving
wheat self-sufficiency, thanks to several strategic
imports (Figure 2). In 2019, the country produced
more than 24 million t of wheat with a yield of 2.8 t/ha
from 8.7 million ha of land. The output was enough to
meet 99% of Pakistan’s total wheat demand for 2019
-----------

For China, Rozelle and Huang (1998) projected that
considering low- and high-income growth, yearly
per capita wheat consumption in China would fall
between 80-83 kg by 2020. In 2018 however, actual
yearly per capita wheat consumption was 64 kg
(FAOSTAT, 2021a). For Pakistan, applying the AIDS
model estimation procedure and using the Household
Integrated Economic Survey 2007-08 datasets, Nazil
et al., (2012) forecasted that by 2019-20, yearly per
capita wheat consumption for Pakistan would fall
between 115-118 kg and the total demand for wheat
will be 24.2 million t. In 2018 however, actual yearly
per capita wheat consumption in Pakistan was 110
kg and the total wheat consumption was 23.3 million
t (FAOSTAT, 2021a). This demonstrates that the
majority of wheat consumption forecasts fall short
in reality and highlights the need for consumption
forecasting that uses innovative methods and models.

https://repository.cimmyt.org/bitstream/handle/10883/21871/64912.pd...

Comment by Riaz Haq on August 17, 2022 at 4:15pm

India’s poorest scald as cooking oil prices soar

https://asia.nikkei.com/Spotlight/Feeding-Asia/India-s-poorest-scal...


India’s #poor scald as #cooking #oil prices soar. #India’s poorest are paying the highest cost for a #food #crisis long in the making and now turbocharged by events ranging from the war in #Ukraine to policy changes in global #trade. #inflation #Modi #BJP

India consumes 16.5 kg of cooking oil per capita, significantly higher than 9.5 kg in China, and nearly double 8.4 kg in the United States.
The numbers, skewed by heavier use in urban areas, mean that the world’s second most populous nation is particularly hit by the record highs. (Pakistanis consume 24 Kg per capita, the highest in the world)

--------

On a muggy April afternoon, Kumud Sahu wipes his face with an oily turmeric-stained handkerchief. He gulps water from a dimpled plastic bottle as he haunches on a wooden bench. It’s the only place to sit at his roadside eatery in the bustling working-class neighborhood of Jawaharlal Nehru Road in the eastern Indian city of Kolkata.

“Life has always been tough,” says Sahu, scanning the swarming crowds oblivious to the slow unraveling of the stalls that serve their affordable lunches. “But I haven’t seen tougher days than these. Business has been extremely bad and I am not sure how I can continue to feed my family.”

As the world’s largest importer of cooking oil reels from a steep ascent in its price, India’s poorest are paying the highest cost for a crisis long in the making and now turbocharged by events ranging from the war in Ukraine to policy changes in global trade.

India is reliant not only on cooking oil but on imported cooking oil. The South Asian nation consumes nearly 25 million tonnes of cooking oil a year, but produces only about 11 million tonnes. The gap is met through imports.

That creates a big and growing problem for a country whose population is expected to surpass China's and hit 1.7 billion people in the next three decades.

And experts say India will be unable to wean itself off this dependence for at least another two decades, as demand in a country that uses oil for much of its cuisine continues to far outpace production.

It is among the most disturbing examples of how a worldwide spiral in food prices has spooked billions of people and their governments. A deadly storm of pressures including war, pandemic and global heating has dramatically increased the cost of household food baskets in countries rich and poor. It has raised fears of mass impoverishment and social unrest, like that seen in neighboring Sri Lanka.

Sahu looks enervated. It has been 12 hours since he began his day in a room no bigger than 11 sq. meters, where he lives with his wife and three children. They share a bathroom with three other families in a longstanding tenement. Just before sunrise, he sets out for his eatery, cycling about 10 km. There he sells cheap, tasty lunches, oily curries with enough calories to keep his customers full until the next meal.

“Prices have increased so much that we can't imagine what will happen to the business if this trend continues,” he says, squinting in the harsh Kolkata sunlight. “I am putting in money from my savings to keep the business afloat.”

Sahu has shied from passing on the costs to his price-sensitive clientele, many of whom are shopkeepers and small business owners themselves.

With snowballing costs and a determination to keep his children in a school that is inexpensive but not free, Sahu was forced to sell a piece of rural land that he had hoped to keep as an asset for the years to come. “It bought me some time,” he said.

Pulling in around 60% of its cooking grease from overseas, India was hurting even before the Ukraine war as shipping costs, energy inflation and labor shortages, along with extreme weather, kept thrusting food and oil prices higher.

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