04/06/2008 (The News - International, Pakistan), Karachi - Pakistan’s import of palm oil will decrease by 5 to 10 per cent this year, as high price mars edible oil demand and an economic slowdown hits industrial production, a top importer said on Tuesday.

The import trend is also seeing a paradigm shift to crude palm oil from RBD palm olein as more refineries come online in the country, Rasheed Janmohammad, Vice Chairman of Pakistan Edible Oil Refiners Association told a palm oil workshop here.

“The government must revisit tariffs and should give some incentive on import of crude palm oil,” he said, adding that this will help localise refining of edible oils and generate by-products used by soap manufacturers.

Import of RBD (refined, bleached and deodorised) palm olein has been declining gradually as last year 1.1 million tonnes were imported, compared to 1.3 million tonnes in 2006. Consequently, crude palm oil consumption jumped to 482,599 tonnes compared to 427,955 tonnes in the previous year. This year, 142,162 tonnes have been imported till April.

Last year, Pakistan spent $2.4 billion on the import of palm oil and oil seeds to meet its domestic consumption of 3 million tonnes. Yield from local seeds is only 0.6-0.8 million tonnes.

A fixed customs duty of around Rs9,000 per tonne is levied on the import of palm oil, besides other duties and warehouse surcharge. The duty structure for RBD palm olein and crude palm oil is the same.

Janmohammad said a substantial amount of foreign exchange could be saved through the replacement of RBD palm olein imports with crude palm oil. However, he said that prices of by-products like stearin are negative and the government ought to ensure better returns.

“Despite the fact that Pakistan has historically been an agricultural country, we still rely on imports for the supply of edible oils,” he said. “This is because we give priority to other crops over edible oil.”

He said a better support price for farmers cultivating edible oil seeds could ensure higher production as witnessed this year by sunflower seeds. “Low import tariff on soybean and canola seeds discourages local production. This tariff should be increased.”

As many as 10 refineries are importing crude palm oil to produce edible oils and other by-products. Five more refineries, including those coming as foreign joint ventures, are in the pipeline.

Different quarters have been propagating an increase in the production of edible oil seeds within the country, since the price of palm oil started climbing earlier this year.

Pakistan Oilseed Development Board (PODB) has already started work on a pilot project to cultivate palm trees in Balochistan, to see if Pakistan’s reliance on imported edible oil can be reduced.

Waris Sheikh, Project Director at PODB, also insisted that domestic production of edible oil seeds can be increased if the government gives monetary incentive to farmers. “Cultivated area under sunflower has increased to 550,000 acres from 43,000 acres in the last five years,” he said, adding that this happened after the government increased taxes on imported sunflower seeds, increasing demand for local produce.

The government-fixed support price for sunflower seeds has been taken up to Rs1600 per 40kg for 2008 crop, against Rs300 that farmers were getting in 2002. However, he said that there is a shortage of hybrid seeds.