16/08/2013 (Daily Times) - Pakistan can save over $2 billion annually by encouraging domestic edible oil sector, an expert on extraction of edible oils said on Thursday.

Over 2.0 million tonnes of edible oil imports cost more than $2.5 billion annually making it the second largest import after petroleum products, which compromises balance of payments capacity, he added.

Proper farming, production, processing and marketing of oilseeds can not only reduce dependence on imports but also help earn foreign exchange as Pakistan is located in the food deficient region.

Also a member of Pakistan Vanaspati Manufacturer’s Association (PVMA) said reasons behind wide gap between production and consumption include lack of research and development initiatives, want of incentives, failure to attract investment, low price and high cost of production making these crops non-profitable to many farmers.

Per capita consumption of edible oil in Pakistan is declining due to increasing poverty, presently it is at 14-15 kilogrammes and promoting cultivation of oilseeds would also be a great remedial measure to help masses reeling under poverty.

Agriculture is the single largest sector of our economy, which accounts for 22 percent of gross domestic product (GDP) and employs half of the labour force but faces problems like low productivity and limited investment.

Focus on commercial farming of oilseeds, especially soya bean having high percentage of oil (22 percent) as compared to other varieties and high protein content (42 percent) can help the country.

Cottonseed with 3.63 million tonnes annual production has only 11 percent of oil.

India, the largest importer acquires nearly 50 percent of its demand from abroad while Islamabad buys around 75 percent of oil from international market.

Over the past decade the primary driver for edible oil price direction has been the strong demand while the faulty policy of extracting fuel from food is also to be blamed, he said.

PVMA is ready to assist Pakistan with area specific technologies to become self-sufficient in edible oils in the first phase and then start exporting to world markets, he concluded.

A member of Sindh Agriculture Forum (SAF) said Pakistan is the third largest importer of palm oil and other soft oils. Besides Pakistan imports one million tonne of oil seeds annually.

Pakistan Edible Oil Refiners Association (PEROA) governs all these contracts in collaboration with Federation of Oils, Seeds and Fats Association Limited (FOSFA).

PEORA, representing edible oil refineries in Pakistan, always takes an initiative to create awareness among its members and the industry.

The FOSFA is a professional international contract issuing and arbitral body concerned exclusively with the world trade in oilseeds, oils and fats with more than 975 members in 79 countries.

These members include producers and processors, shippers and dealers, traders, brokers and agents, superintendents, analysts, ship-owners and others providing services to traders.

FOSFA has an extensive range of standard forms of contracts covering goods shipped either CIF, C and F or FOB, for soybeans, sunflower seeds, rapeseed and others vegetable and marine oils and fats, refined oils and fats, from all origins worldwide for different methods of transportation and different terms of trade.

Internationally, 85 percent of the global trade in oils and fats is traded under FOSFA contracts.

The federation’s contracts incorporate a dispute procedure involving arbitration by experienced individuals from within the trade.