Haq's Musings: palm oil

Thursday, August 4, 2022

Pakistan's Biggest Food Import: Edible 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 Mottaleb et al

Per Capita Edible Oil Consumption in Pakistan. Source: Pakistan Growth Story

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.