Rising dollar, demand up soybean oil imports

KATHMANDU, DEC 18 -

Imports of crude soybean oil jumped to Rs 7 billion in the first four months, up 94 percent year on year, said the Trade and Export Promotion Centre (TEPC).

Traders attributed the sharp rise to a stronger US dollar which has inflated import bills, and soaring demand from an increasingly health-conscious public. They said soybean oil ’s low cholesterol content had made it the new household favourite.

Nepal’s soybean oil imports stood at Rs 10.90 billion in the last fiscal year. Its wholesale price ranges from Rs 135 to Rs 140 per litre.  

Traders said that Nepal was totally dependent on imported soybean oil as the domestic production of soybeans is consumed as food. Traders said that imports of soybean oil had been climbing at the rate of 15-20 percent annually as farmers were not much interested in growing mustard and other traditional oil seeds due to their high production cost.  

“Since the last three years, imports of crude soybean oil has been increasing by 15-20 percent as Nepalis are becoming more health conscious due to their rising disposable income,” said Bikash Dugar, managing director of the KL Dugar Group, manufacturers of vegetable ghee and edible oil . “The market is shifting from mustard and other traditional oil s. Soybean oil now holds a 65 percent share of the market.” Argentina and Brazil are the major exporters of soybean oil to Nepal. Other exporting countries are Indonesia, Vietnam, India, Paraguay, Belize and Ukraine.

Edible oil has become the country’s sixth largest import. According to the Ministry of Agriculture Development, the surge in imports is due to a drop in domestic output with farmers turning away from oil seed crops due to high labour requirement and production cost.In 2012, Nepal produced 179,145 tonnes of oil seeds, up 1.67 percent from 2011. The production of oil seeds reached 135,494 tonnes and 149,625 tonnes in 2009 and 2010 respectively.

Mustard and oil seeds are grown on 213,706 hectares. Government officials said that domestic mustard production fulfils only 15 percent of the country’s requirement.

“As our production is unable to meet the market demand, soybean imports are rising with each passing year,” said Tek Prasad Luitel, senior agro economist at the Agriculture Ministry. “Besides, demand is increasing as it is relatively cheaper and it has a low cholesterol level.”

Traders said that imported edible oil was cheaper than domestic products due to the heavy subsidies provided by foreign governments.

Nepal’s climate is suitable for soybean and sunflower farming, and the government should bring policies to encourage farmers to grow these high-value crops, said Dugar. According to him, sunflower can be grown in the Eastern Region while the s oil in the Western and Central regions is very suitable for commercial soybean farming.

“If the government promotes commercial farming of these two high-value crops, it will be a major commodity to replace soaring imports. Farmers too will benefit tremendously from these crops as there is massive demand for them at the domestic and international levels.”

Source: The Kathmandu Post