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

[Riaz Haq]

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...

Per Capita Edible Oil Consumption in Pakistan. Source: Pakistan Gro...

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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[Riaz Haq]

Pakistan: Oilseeds and Products Annual | USDA Foreign Agricultural Service


https://www.fas.usda.gov/data/pakistan-oilseeds-and-products-annual-7

As of March 2023, Pakistani authorities still ban genetically engineered (GE) oilseed imports. While they have made some progress in developing a system to allow for GE oilseed imports, uncertainty regarding when that system will be operative clouds the outlook for oilseed imports. Similar uncertainty surrounds domestic meal and oil production forecasts. With expectations for better cottonseed production, total oilseed production in 2023/24 is projected to increase to 2.95 million tons, a 24 percent above than 2022/23. In line with population growth, edible oil demand is forecast to grow about 5 percent, and palm oil imports are forecast to grow accordingly, reaching 3.6 million tons in 2023/24.

[Riaz Haq]

The rise in global cotton production is led by the US, Pakistan, and India, with a drop in China's output due to cooler weather conditions.

https://www.fibre2fashion.com/news/textile-news/global-cotton-produ...

Global cotton production in FY24 is forecast to reach a four-year high of 116.7 million bales, up slightly from the previous year, as per USDA.
The rise is led by the US, Pakistan, and India, with a drop in China's output due to cooler weather conditions.
Australia's FY24 cotton production is projected at 5.8 million bales, 300,000 bales above FY23.


World cotton production is projected to reach a four-year high of 116.7 million bales in 2023-24 (FY24), according to the US Department of Agriculture (USDA). The expected growth in production represents a slight increase of 400,000 bales from the previous year.
The increase is predominantly driven by the major cotton-producing countries, with the US and Pakistan leading the charge. Both countries are projected to see a significant rise in production, each adding 2 million bales to the global yield. India is also expected to contribute to the surge, albeit on a lesser scale, with an additional half a million bales.

However, these gains will be partially offset by a reduction in output from China, the world's leading cotton producer. The Chinese crop is anticipated to shrink by 3.7 million bales in the 2023-24 season due to cooler than normal temperatures early in the growing season in China's Xinjiang region, which could limit yield potential. This decrease means China's contribution to global cotton production is expected to shrink from 26 per cent in 2022-23 to 23 per cent in 2023-24, as per USDA’s Cotton and Wool Outlook: June 2023 report.

Meanwhile, India is set to buck this trend with a projected 2-per cent increase in cotton production from the 2022-23 crop. This rise comes despite an expected reduction in harvested area, with alternative crops predicted to reduce cotton acreage to 12.4 million hectares. A rebound in yield is set to offset this, with the national yield forecast at 448 kg per hectare, the highest in three years. India's share in global cotton production is set to remain steady at approximately 22 per cent.

Outside of the US, other countries including Brazil, Pakistan, and Australia are also projected to see an increase in cotton production. Brazil's output is expected to hit 13.25 million bales, slightly above the 2022-23 figure and second only to 2019-20's record of nearly 13.8 million bales.

Pakistan's cotton production is set to rebound from the nearly four-decade low of 3.9 million bales recorded in 2022-23 due to flood damage. The forecast production of 5.9 million bales for 2023-24 will account for 5 per cent of global production.

Lastly, Australia's 2023-24 cotton production is projected at 5.8 million bales, 300,000 bales above 2022-23 and close to 2021-22’s record of 5.85 million bales, supported by above-average reservoir levels.

[Riaz Haq]

Oilseeds in Pakistan


https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFil...

Oilseed Production:
Following last year’s flood-damaged cottonseed crop, total oilseed production in 2023/24 is projected to
increase 24 percent to 2.9 million tons, driven by a rebound in cottonseed production. While cottonseed
production is forecast to recover, little change is expected for rapeseed and sunflower production as
returns for other crops hinders oilseed area expansion.
Both rapeseed and sunflower production in 2022/23 are forecast to increase, but their share in total
oilseed supplies will remain at only about 20 percent. The government offered a 12,500 rupees ($50) per
hectare subsidy for oilseed growers in Punjab, which is one reason for the increase in canola output.
Nonetheless, the government generally also offers a generous guaranteed price for wheat, which
competes directly with rapeseed for area. Because of the more profitable guaranteed price offered for
wheat, growers will favor planting wheat over oilseeds. As a result, no expansion in rapeseed nor
sunflower seed production is expected for 2023/24. Domestic soybean production is insignificant.
Cottonseed:
Cottonseed production in 2023/24 is projected at 2.3 million tons, a 34 percent increase over the 2022/23
output. This increase reflects expectations for a recovery in yield following the flood-damaged 2022/23
output. Cottonseed is the principal oilseed crop grown, accounting for more than 70 percent of domestic
oilseed production. Cottonseed production is driven by demand for cotton lint from the local textile
sector, which is Pakistan’s number one export-oriented manufacturing industry. Despite the textile
sector’s requests and government efforts to increase cotton production, cottonseed output has been
declining for several years.
Rapeseed:
Due to better returns from crops (mainly wheat) that compete with rapeseed for area, no increase in
rapeseed production in 2023/24 is expected. Output in 2022/23 is forecast to increase as government
subsidies resulted in an increase in planted area.
Sunflower Seed:
Sunflower seed area and production are expected to decline in 2023/24 due to better returns from other
crops.
Consumption:
In 2023/24, total oilseed use, almost all of which is for crushing, is forecast at 3.6 million tons, 17
percent higher than the 2022/23 estimated use. Total installed crushing capacity is around 8 million tons
and no additional capacity going to be added in system. This higher consumption forecast assumes the
government removes the ban on GE soybean imports, which will then result in increased crushing for
poultry feed.
As a result of the import ban, oilseed use in 2022/23 is estimated to decline at least 21 percent. The
lower oilseed crushing has resulted in a commensurate decline in poultry feed consumption and poultry
meat production. Since the government abruptly halted soybean imports in November 2022, poultry
meat output is off about 31 percent and poultry prices have more than doubled.

[Riaz Haq]

Pakistan aims to boost oilseed cultivation

https://tribune.com.pk/story/2430331/pakistan-aims-to-boost-oilseed...

The Chinese Academy of Agricultural Sciences (CAAS) has been instrumental in developing new rapeseed varieties, which have been adopted in some northern regions of China. The success of these efforts has enabled China to rotate rapeseed(Canola) crops with staple crops like rice and wheat, maximising land utilisation.

Pakistan is now tapping into this experience by collaborating with Chinese company Wuhan Qingfa-Hesheng and Pakistani firm Evyol Group. Together, they are providing high-quality hybrid rapeseeds (Canola) to Pakistani farmers. Ghazanfar Ali, head of marketing at Evyol Group, emphasised the suitability of their variety for local climate conditions. “It took us 10 years to produce a variety that is compatible with the local climate, produces a good yield and is good for human health,” he said, noting that farmers can achieve 1.5 tonnes of yield from 2 acres of land, surpassing current varieties available in Pakistan by over 10%.

Zhou Xusheng, director of the international business department at Wuhan Qingfa-Hesheng Seed company, outlined their ambitions. “This year we sold 11 tonnes of seeds across Pakistan, which will be cultivated on 20,000 acres, and our target for next year is 100 tonnes.” He also highlighted their intention to purchase the canola harvest from certain farmers and supply it to edible oil factories, thereby promoting the benefits of locally-produced oil.

[Riaz Haq]

Pakistan’s annual consumption of edible oil is around 5 million tons, but due to the low economic potential of oilseeds in the local market, they are not preferred by the farmers. The country has to import about 89 percent of oil to meet the demand, spending US$3.6 billion annually.

https://dailytimes.com.pk/1122982/chinese-company-to-help-pakistan-...

Pakistan’s iron brother, China, also has great demand for edible oil. Last year, China’s cooking oil consumption is about 13.44 million tons. China also suffered a short domestic supply of edible oil until the mid-1950s, when China began to promote brassica napus, also known as victory rapeseed. Brassica napus plants are tall, disease resistant, and more importantly, the yield is very high. The improvement of rapeseed varieties laid the foundation for China to greatly increase rapeseed production.

In recent years, the Chinese Academy of Agricultural Sciences (CAAS) has made a great breakthrough in breeding new varieties of rapeseed, which have been extended to some parts of northern China. Rapeseed now realized seasonal rotation with rice, wheat and other staple crops, which maximizes the utilization of arable land. Such Chinese experience and technologies can be a good reference for Pakistan, according to CEN.


Chinese company Wuhan Qingfa-Hesheng and a Pakistani company Evyol Group jointly provide high-quality hybrid rapeseeds to Pakistani farmers. “It took us 10 years to produce a variety that is compatible with the local climate, produces a good yield and is good for human health,” said Ghazanfar Ali, head of marketing in the Evyol group. “The crop provides an increased profit for the farmers. They can get 1.5 tons of yield out of 2 acres of land, which is over 10 percent more than the yield from other varieties currently available in Pakistan.”

“This year we sold 11 tons of seeds across Pakistan, which will be cultivated on 20,000 acres, and our target for next year is 100 tons,” said Zhou Xusheng, director of the international business department of Wuhan Qingfa-Hesheng Seed company.

The Chinese company will also buy back the canola harvest from some of the farmers and send it to the edible oil factories so that both farmer and the factory owners can realize the potential and health benefits of the oil.

[Riaz Haq]

Assessing Pakistan’s agriculture innovation system | Tropical Agriculture Platform (TAP) | FAO

https://www.fao.org/in-action/tropical-agriculture-platform/news/de...

A new FAO report presents the results of a 2022 assessment of the national agriculture innovation system in Pakistan, based on seven case studies covering product innovation, services innovation and digital transformation, respectively. For example, one product innovation case study described is the ‘Super Seeder’, a tractor-pulled machine used in the rice–wheat system to simultaneously slash rice stubble and sow wheat, thus reducing negative impacts of burning the rice stubble. The study was the first main activity of the TAP-AIS Pakistan project, one of nine similar country projects in Asia-Pacific, Africa and Latin America and the Caribbean, implemented by FAO Pakistan in collaboration with the Ministry of National Food Security and Research during 2022–2024. This report profiles the structure, capacity and enabling environment of Pakistan’s agriculture innovation system and identifies major challenges and constraints; several gaps in the innovation system are highlighted:

Innovation actors’ have limited ability to initiate collaboration and engage in networking with other stakeholders, for market formation and scaling of innovation.
Collaboration was not pursued at all stages of the innovation process, that is, from innovation development to innovation scaling.
A supply-driven approach tends to be used rather than a market-driven approach. This limited potential for scaling innovations.
The scope for market formation was limited, as most initiatives were limited to innovation development and pilot implementation.
The case studies had set budgets for the innovation initiative; implementation and scaling did not continue after the budget was spent. This restricted sustainable implementation of innovations.
The assessment advised TAP-AIS Pakistan in terms of needs and priorities for organizational capacity development and policy dialogue to strengthen the innovation system for low-cost agricultural machinery, the chosen thematic focus of the project.

[Riaz Haq]

China to establish special agricultural industrial park in Pakistan

https://www.pakistantoday.com.pk/2024/09/29/china-to-establish-spec...

China’s Anhui Annongda Agricultural Science and Technology Company will collaborate with Pakistan to establish a Special Agricultural Industrial Park.

In this connection, it inked a Memorandum of Understanding (MoU) with Pakistan Carium Healthcare Innovation Company, marking the beginning of a collaborative venture aimed at establishing the Park.

This is a move to bolster the essential oil sector in Pakistan. The partnership will focus on research and development in essential oil extraction, along with the cultivation of plants and herbs rich in essential oils and traditional medicinal properties, China Economic Net (CEN) reported.

The MoU underscores the shared commitment to harnessing Pakistan’s natural resources and fostering innovative practices that will elevate the Pakistan’s position in the global essential oil industry.

The collaboration aims for the production of high-quality, pure essential oils, catering to the burgeoning demand across sectors such as pharmaceuticals, cosmetics and wellness products.

As part of the initiative, they will cultivate stevia, Japanese mint and sweet potatoes, with the first batch of crops in the Park for the extraction of essential oils destined for the pharmaceutical industry.

Essential oils, renowned for their therapeutic properties, have witnessed a surge in popularity due to their diverse applications.

From aromatherapy and skincare to natural remedies, these oils have become an integral part of modern wellness routines.

Pakistan, with its diverse climatic conditions and soil, is ideal for growing herbs and plants that are rich in essential oils.

Under the partnership, Anhui Annongda will transfer state-of-the-art cultivation techniques to Pakistani farmers, which will not only enhance crop yields but also ensure sustainable and efficient production of high-quality essential oils.

The two companies also plan to establish a cutting-edge research laboratory specializing in advanced cell and tissue culture techniques.

The facility will serve as a hub for the propagation of new plant varieties, fruits and vegetables through cell and tissue culture, thereby increasing the diversity and quality of essential oil-producing plants and medicinal herbs.