India's Edible Oil Security and the Potential of East Africa as a Strategic Partner

India's dependence on edible oil imports has been a significant challenge for its agricultural and economic sectors over the past decade. The country, which is the world's largest importer of edible oils, sources nearly two-thirds of its total consumption from overseas, predominantly from Indonesia, Malaysia, Argentina, Brazil, Russia, and Ukraine. This heavy reliance on imports has not only resulted in a ballooning import bill but has also left the country vulnerable to fluctuations in international markets, political uncertainties, and environmental issues in supplier countries.

The recent efforts by the Indian government, including a $1.2 billion program to double domestic edible oil production, have highlighted the urgency to achieve self-sufficiency in this crucial commodity. However, India cannot achieve edible oil security in isolation. To bridge the production gap, a promising opportunity lies in building strategic partnerships with East African nations, particularly in the cultivation of sunflower, a key oilseed crop with tremendous potential.

This concept note delves into the current scenario of India's edible oil industry, explores the role of East Africa in bolstering India's edible oil security, and suggests pathways for building a mutually beneficial partnership.

India's Edible Oil Landscape

India is the largest consumer of edible oils globally, with an annual consumption of around 24-25 million metric tons. However, domestic production falls short, meeting less than 50% of the requirement. For the 2023-2024 oil year, India's edible oil imports are expected to be around 15.5 million tons, similar to the previous year. The bulk of these imports consists of palm oil, soybean oil, and sunflower oil.

Palm Oil: India's palm oil imports are expected to be between 9-10 million metric tons in 2023-2024, primarily sourced from Indonesia and Malaysia. Palm oil accounts for the largest share of India's edible oil imports, which is concerning as the country becomes overly reliant on this single commodity.

Sunflower Oil: Imports of sunflower oil are expected to return to normal levels of around 3 million tons in 2023-2024, with Russia, Romania, Ukraine, and Argentina as the main suppliers. Sunflower oil has gained popularity in Indian households due to its nutritional benefits, but domestic production remains limited.

Soybean Oil: Imports of soybean oil are expected to remain around 3 million tons in 2023-2024, with Argentina and Brazil being the primary suppliers.

The high reliance on imports has led to a surge in the edible oil import bill, which grew from $2.2 billion in 2006-2007 to $15 billion in 2023-2024. During this period, India's edible oil imports increased from 4.37 million metric tons to 15.5 million metric tons, highlighting the growing consumption and limited domestic production.

To address this imbalance, the Indian government has launched a program to double domestic edible oil production to 25.45 million metric tons by 2030-31, thereby fulfilling around 72% of the country's projected domestic requirement. The program aims to increase oilseed productivity through the promotion of high-yielding varieties and advanced technologies, including genome editing for seed development.

Sunflower Oil: A Rising Opportunity

Sunflower oil, known for its light taste and health benefits, has gained traction among Indian consumers. However, the domestic production of sunflower seeds is insufficient to meet the rising demand. India's sunflower oil production remains a small fraction of the total edible oil consumption, and the country continues to depend heavily on imports.

In 2023-24, sunflower oil imports are expected to reach 3 million tons, accounting for a significant portion of the edible oil import basket. Despite the favorable agro-climatic conditions for sunflower cultivation in parts of India, the domestic production of sunflower has not seen a substantial rise, primarily due to competition with other more profitable crops and challenges in the supply chain.

The African Opportunity: East Africa as a Strategic Partner

Africa, particularly East Africa, presents a significant opportunity to address India's edible oil security. Countries like Tanzania, Zambia, and Kenya have the potential to become major producers of sunflower seeds, which can be cultivated in abundance due to favorable climatic conditions and vast tracts of cultivable land.

Africa possesses an estimated 600 million hectares of arable land, with around 200 million hectares currently under cultivation, representing approximately 40% of the continent's total arable land potential. Africa has increased its agricultural area by more than a third during the last two decades (2000-2019), accounting for 52% of the worldwide growth, or 102 million hectares. Countries like Angola, Ivory Coast, the Democratic Republic of the Congo (DRC), Mozambique, and Zambia have experienced exceptionally fast growth. In East Africa, only 45 million hectares are under cultivation out of 135 million hectares of arable land. This offers immense potential for expanding the cultivation of key crops, including sunflower, which is well-suited to the agro-climatic conditions of East Africa.

Sunflower Production Trends: Tanzania, Zambia, and Kenya have shown promising trends in sunflower cultivation. Tanzania, in particular, is one of the largest producers of sunflower seeds in Africa, with a growing focus on improving yields and expanding the area under cultivation. Zambia and Kenya are also focusing on sunflower production as part of their agricultural diversification strategies.

Potential for Collaboration: East African countries are well-positioned to collaborate with India in the production of sunflower oil. The availability of land, conducive climate, and growing interest in agricultural development make East Africa a natural partner for India in ensuring edible oil security.

A Win-Win Partnership: Benefits for Africa and India

A strategic partnership between India and East Africa in sunflower cultivation and edible oil production can be mutually beneficial. Here are some key advantages for both parties:

Benefits for East Africa

1. Economic Growth and Employment: The cultivation of sunflower on a large scale can create employment opportunities for local farmers and contribute to the economic growth of East African nations. Agriculture remains the backbone of most African economies, and a partnership with India can help these countries unlock the potential of their agricultural sector.

2. Access to Technology and Expertise: India, with its expertise in agricultural technology and innovations, can provide East African countries with the necessary knowledge and tools to improve agricultural productivity. This includes the introduction of high-yielding seed varieties, efficient irrigation systems, and post-harvest management techniques.

3. Market Access: India, as a major consumer of edible oils, provides a ready market for sunflower oil produced in East Africa. By securing a reliable export market, East African nations can increase their agricultural revenues and reduce their dependence on traditional export commodities.

4. Investment Opportunities: Indian companies can invest in the agricultural sector in East Africa, focusing on the entire value chain—from cultivation and processing to packaging and distribution. Such investments can lead to the development of infrastructure, including oil extraction plants, storage facilities, and transportation networks, further boosting the region's agricultural potential.

Benefits for India

1. Diversification of Edible Oil Sources: By partnering with East African countries, India can diversify its edible oil supply sources and reduce its dependence on palm oil, which currently dominates the import basket. This diversification will not only reduce vulnerability to supply chain disruptions but also promote the consumption of healthier edible oils.

2. Reduced Import Bill: Increasing sunflower oil imports from East Africa can contribute to a more balanced import bill, as it will reduce India's over-reliance on a few supplier countries. With increased competition and supply security, India may also benefit from more stable prices in the edible oil market.

3. Strategic Alliances and Geopolitical Influence: Strengthening ties with East African nations can enhance India's geopolitical influence in the region. As East Africa becomes an important partner in India's food security strategy, the bilateral relations between India and these nations will likely deepen, fostering cooperation in other sectors such as trade, infrastructure, and health.

4. Sustainable Agricultural Practices: Sunflower is a relatively environmentally friendly crop, requiring less water compared to other oilseed crops. By promoting sunflower cultivation in East Africa, India can also contribute to sustainable agricultural practices and help address environmental challenges in the region.

Challenges and Solutions

While the potential for a partnership between India and East Africa is immense, several challenges need to be addressed to ensure the success of this collaboration.

1. Infrastructure Development: The lack of adequate infrastructure, including roads, storage facilities, and processing units, is a significant challenge in East Africa. To address this, Indian investments can focus on developing the necessary infrastructure to support the entire value chain of sunflower production.

2. Access to Finance: Farmers in East Africa often face difficulties in accessing credit for agricultural activities. Collaboration between Indian financial institutions and African governments can help develop financing solutions tailored to the needs of smallholder farmers, enabling them to invest in quality seeds, fertilizers, and equipment.

3. Capacity Building and Training: Providing training to farmers on best agricultural practices is essential to improve productivity. India can play a crucial role in capacity building by organizing training programs, knowledge exchange initiatives, and workshops for farmers and agricultural workers in East Africa.

4. Policy and Regulatory Framework: A supportive policy and regulatory environment is crucial for the success of any international collaboration. Both India and East African countries need to work together to create an enabling environment that facilitates trade, reduces tariffs, and encourages foreign direct investment in the agricultural sector.

The Role of the Indian Government

The Indian government has already taken steps to promote agricultural collaboration with African countries. Initiatives such as the India-Africa Forum Summit have emphasized the importance of agricultural development and food security as key areas of cooperation. By extending support to East African nations through investments, technology transfer, and market access, the Indian government can play a pivotal role in nurturing this partnership.

Moreover, India's commitment to supporting Least Developed Countries (LDCs) aligns with the goal of enhancing agricultural productivity in East Africa. By providing technical assistance, sharing knowledge, and facilitating investments, India can help East African nations achieve economic development while ensuring its own edible oil security.

Conclusion

India's quest for edible oil security requires a multi-pronged approach that includes boosting domestic production, diversifying import sources, and forging international partnerships. East Africa, with its vast cultivable land, suitable climate, and growing interest in agricultural development, presents a valuable opportunity for India to secure its edible oil supply while contributing to the economic growth of African nations.

A strategic partnership between India and East Africa in sunflower cultivation and edible oil production can be a win-win situation for both parties. For East Africa, it offers economic growth, employment, and access to technology, while for India, it provides a reliable source of sunflower oil, reduces dependence on palm oil, and promotes food security.

The journey towards edible oil security is complex, but with the right policies, investments, and international collaborations, India can reduce its dependence on imports and ensure a stable supply of edible oils for its growing population. East Africa, as a strategic partner, holds the key to unlocking this potential, and it is up to both regions to work together to build a sustainable and secure future for edible oil production.

About the Author

Deepak Pareek is a visionary in the agriculture trade and policy domain, renowned for his unparalleled expertise as a serial entrepreneur, investor, and ecosystem builder. With a rich tapestry of 25 years of diverse experience spanning 34 countries. His accolades speak volumes about his impact and dedication. Honored as one of the Top 10 Agropreneurs of 2019 by Future Agro Challenge, Greece, and recognized as a Technology Pioneer in 2018 by the World Economic Forum, Switzerland, Deepak’s contributions are globally acknowledged. His advisory roles with various private, public, and multilateral organizations have driven significant advancements in agriculture and technology.