Edible Oil Deficit and Its Impact on Food Expenditure in Pakistan

Muhammad Ali, Syed Arifullah, Manzoor Hussain Memon


Pakistan, a developing country, is the sixth most populous in
the world [U. S. Census (2008)], whose demand is rising due to steady
economic growth. Agriculture contributes 23 percent of the GDP, 42
percent of the total work force is employed to the agriculture sector
and also contributes substantially to Pakistan’s export earnings [Alam
(2008)]. Agriculture Commodities and Textiles Products accounts for 62.6
percent of Pakistan's total exports [Memon (2008)]. Pakistan is the
ninth largest producer of wheat, 12th largest producer of rice, 5th
largest producer of sugarcane and 4rth largest producer of cotton among
the top producers in the world as per statistics of FY05 [Memon, et al.
(2008)]. Despite overwhelmingly an agrarian economy, Pakistan is unable
to produce edible oil sufficient for domestic requirements. Edible oil
is considered a necessity in Pakistan and hence its demand is relatively
inelastic. There are many reasons behind this shortcoming, for example,
lack of awareness of farmers, ignorance of policy makers regarding
oilseed crops, technological deficiency in oilseed production and
smuggling to neighbouring countries (Afghanistan in particular). The
major crop responsible for 57 percent of edible oil production is cotton
seed which is primarily a fiber crop. Indigenous production of edible
oil is below the consumption levels with a very wide gap between the
production and consumption. This gap is bridged through import of edible
oil worth more than Rs 45.0 billion1 annually. Presently the oilseed
production only meet about 30 percent2 of the domestic requirements and
the rest is covered with imports. The high dependency on imports not
only exerts the pressure on balance of payment but also develops a close
linkage between international price shocks and edible oil price in
Pakistan which is ultimately reflected in food expenditure. The common
Pakistani food includes a significant quantity of edible oil which is
the reason behind high consumption growth rates.

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DOI: https://doi.org/10.30541/v47i4IIpp.531-546


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