Unfortunately, today India imports nearly $10 billion worth of edible oil - nearly 70% of our annual edible oil requirement.
With the Indian economy taking a real beating during the current COVID-19 pandemic, a lot of the public discourse has shifted to the question of ‘Atmanirbhar Bharat’ or ‘Self-Reliant/Self-Sufficient India’. Although the government’s apparent push towards economic self-reliance is in its nascent stage, it could take a leaf out of Operation Golden Flow, a programme devised in 1988 which sought to make India self-reliant in edible oils.
Highlighted by the launch of Dhara edible oil brand, Operation Golden Flow brought together small-scale oilseed farmers and the National Dairy Development Board (NDDB), a public sector undertaking, to produce, collect, process and package homegrown edible oils. Operation Golden Flow sought to replicate for oil seeds what Operation Flood had managed to achieve for milk production in the 1970s highlighted by the emergence of Amul.
This push towards self-reliance in edible oils, a vital element of any Indian household consumption basket, went exceedingly well for a decade before cases of toxic adulteration, which industry insiders describe as a deliberate sabotage, and rising imports brought this process to an end. Today, India imports nearly $10 billion worth of edible oil amounting to 15 million tonnes, which constitutes nearly 70% of our annual edible oil requirement, according to this Reuters report.
Therefore, when you eat any snack made on the street, whether it’s samosas or chole bhature, chances are rather high that it’s made using oil which is not produced in India.
Events leading up to Operation Golden Flow
Considering that until the mid-1970s India enjoyed about 95% self-sufficiency in edible oil production—except during the war years when it fell to the early 90% range—it is tragic to think that most of our oil is imported. Everything ranging from climatic conditions, cuisine to cropping patterns had regionalised and localised preferences for different kinds of edible oils.
In the South, it was largely coconut oil, while North and East India saw the emergence of mustard oil. Households in the West, meanwhile, preferred their groundnut or cottonseed oils. This was a process that took centuries to realise.
By 1973-74, mustard, groundnut and cottonseed oil took up a staggering 96% share of the total edible oils consumption in India, according to this report in The Wire. The domestic production of these oils stood on the shoulders of small scale processing units and local procurement and distribution networks.
However, two major events threw a spanner in the works—the 1971 India-Pakistan War and severe drought the following year. These events resulted in a significant shortage of milk (consequently ghee) and edible oils as well.
Moreover, there was a concerted attempt on the part of private players like Hindustan Lever, now Hindustan Unilever Ltd, to market Vanaspati or hydrogenated vegetable oil as a healthier alternative to ghee to the Indian masses marked by the launch of Dalda.
Not only did the rising proliferation of Dalda reduce the availability of edible oils by nearly 20% through the ’70s and ’80s, but also influenced policymaking at the highest levels with the government banning groundnut and mustard oil and encouraging the import of palmolein, a key ingredient in manufacturing vanaspati.
With demand for domestic edible oils like mustard and groundnut floundering with the rising popularity of vanaspati, farmers began reconsidering the value of growing oilseed crops.
“India’s oilseeds production was stagnating at the level of 11 to 13 million tonnes (per annum) during the early 1980s. It was also not responding to the various price and other incentives due to economic, institutional, and technical constraints. Imports of edible oils average about Rs 1,000 crore per annum during the early 1980s which ranked the highest in our import bill after petroleum and fertilisers,” according to this 1995 paper published in the Economic and Political Weekly. This was a serious cause of concern for policymakers.
Operation Golden Flow
When the Janata Party took office in 1977, the then finance minister Hirubhai M. Patel requested Dr Verghese Kurien, the architect of Operation Flood, to develop a similar project for edible oils through a network of farmers cooperatives based on the Amul model.
Writing for The Wire, BM Vyas, the former MD of Gujarat Cooperative Milk Marketing Federation (GCMMF) Ltd, which manages Amul, and Manu Kaushik, claim:
The objective was self-reliance in edible oils through increased productivity, effective distribution and price stability through Market Intervention Operations (MIO) by NDDB, leading to improved farmer livelihoods. The intent of MIO was to handle 15% of the edible oil produced in the country to manage price fluctuations…Central to the operation was the brand ‘Dhara’, which was created to build a market for the Indian oilseed grower… Dhara pricing was kept low due to economies of scale and blending with the donated oil from CLUSA (Cooperative League of the USA), a strategy taken from the ‘pump priming’ of donated SMP [skimmed milk powder] and butter-oil during Operation Flood.
Launched on 23 August 1988, Dhara was priced at par with cheaper imported edible oil. In the following months, the NDDB and GCMMF worked together and launched a variety of refined and filtered edible oils such as mustard, cottonseed, groundnut and so on.
Production, procurement and the management of cooperatives were overseen by NDDB, while GCMMF took care of distribution. Standing on the back of the distribution network established by Amul, Dhara exploded on the Indian market. Within three to four years, Dhara had taken over half the organised market share in edible oils.
Meanwhile, the government also made concerted efforts to increase domestic production of oilseeds with the Central government establishing the Technology Mission on Oilseeds in 1986. Led by Sam Pitroda, they took significant steps to raise domestic oilseed production.
According to Vyas and Kuashik, “the area under oilseed cultivation which had stagnated between 15-18 million hectares between 1970-85 increased to 25 million hectares by 1991. Meanwhile, oilseed production which was stuck at around 10 million tonnes (1970-85) went up to 18 million tonnes in this timeframe.” By 1990-91, India was producing 98% of its edible oil requirements. The country had become truly self-reliant in this regard.
For the next five years, domestic production of edible oils grew from strength to strength. But by the mid 1990s, the tide began to turn in favour of imported oil seeds backed by events like a trade agreement signed with the World Trade Organisation (WTO) in 1994 and the controversial purchase of one million tonnes of soybean seeds consignment in 1998 from the United States.
However, the death knell was sounded by the Argmeone (weed seed contamination) adulteration Dropsy case of August 1998 in the national capital. The death toll was upto 60 while 3,000 got sick in Delhi after they consumed adulterated edible mustard oil.
As a result of this case, all domestic brands selling mustard oil suffered immensely, while the government issued a ban on loose mustard oil. The NDDB also had to put advertisements asking consumers not to buy their Dhara Mustard Oil.
Consumers then moved away from these oils and shifted to ‘cleaner’ or ‘purer’ edible oils we consume today. Many industry insiders believe this was a deliberate attempt by vested interests to discredit domestic and loose oils and promote imports.
Two decades after the incident, 70% of edible oil consumed in India was imported. Meanwhile, palm oil, which is not native to India, its cuisine or people and remains among the most unhealthy, makes up half of the edible oil consumed in India.
Dhara is back on the Indian market, but it isn’t the force of the early 1990s. Despite possessing the necessary amount of land, resources, farmers and a massive market, India continues to import vast amounts of edible oil. Maybe, the government could begin its move towards self-reliance by going back to reclaiming indigenous edible oil production.
(Edited by Yoshita Rao)