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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


10 April 2012

USDA GAIN: Pakistan Oilseeds and Products Annual 2012USDA GAIN: Pakistan Oilseeds and Products Annual 2012

Imports of soybean meal during MY 2012/13 are projected at 350,000 tons, largely sourced from India.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

MY 2012/13 oilseed production is forecast at a record 5.8 MMT, up 8 percent from the estimated 5.7 MMT harvested in MY 2011/12. Pakistan’s cottonseed production in MY 2011/12 increased by 15 percent estimated at 4.3 MMT. Imports of oilseeds are forecast at 1.0 MMT (80 percent rapeseed and 19 percent sunflower seed).

Commodities:

Oilseed, Cottonseed
Oilseed, Rapeseed
Oilseed, Sunflowerseed
Oilseed, Soybean

Production:

Pakistan’s major crop rotation in the existing cereal production system is wheat, cotton, rice, sugarcane and maize. However, some pockets for non conventional oilseed crops like sunflower and canola are emerging in all provinces.

Pakistan has been constantly and chronically deficient in edible oil production. At present, about 73 percent of domestic requirements are met through imports. Since 1970’s oilseed import has been on the increase and this trend is likely to continue with burgeoning population. Sporadic efforts were made to increase local oilseed production but so far, achieved little success to narrow the vast gap between production and requirement.

Total domestic oilseed production during MY 2012/13 (Oct-Sep) is forecast at 5.8 MMT, up 8 percent over MY 2011/12 production estimate due to an anticipated increase in cottonseed production. Production of cottonseed is forecast at 4.8 MMT, 10 percent higher than current year’s flood reduced production level. Sunflower seed production is forecast at 700,000 tons, down 7 percent from last year and rapeseed production is forecast at 340,000 tons, 3 percent higher than the previous year’s estimate of 330,000 tons.

Post’s estimate of Pakistan’s total oilseed production in MY 2011/12 was revised down 6 percent to 5.4 MMT, mainly due to decrease in cotton production. The decline in cotton production is attributed to last year’s excessive rains/floods in Sindh province, which caused an estimated loss of over 1.5 million cotton bales.

Cottonseed:

Cottonseed is the principal oilseed crop grown in Pakistan, accounting for about 80 percent of domestic oilseed production. Cotton is the country’s most important cash crop and is considered the backbone of the national economy. It is produced primarily for fiber, with oil and meal production of secondary importance. Seed cotton contains both lint and cottonseed.

MY 2012/13 cottonseed production is forecast at 4.8 million tons, 10 percent higher than current year’s flood reduced crop output. This increase in production is mainly attributed to an increase in cotton planted area substituted from sugarcane and sunflower crops.

Rapeseed:

Rapeseed-mustard is an important species of Brassica group grown as oilseed crops in Pakistan. It has remained one of the major sources of edible oil in the sub-continent for centuries. It is sometimes grown as a fodder in mixture with "berseem" (alfalfa/medics). Area under rapeseed-mustard has been fluctuating mainly depending on GOP’s policy for wheat crop and partly on the prevailing weather conditions.

Availability of moisture in marginal areas helped farmers to increase rapeseed/ canola planted acreage. MY 2012/13 rapeseed production is forecast at 340,000 tons, up 3 percent from last year’s estimated crop of 330,000 tons.

Sunflower seed:

In Pakistan commercial cultivation of sunflower began in the 1960’s. Sunflower production remained cyclical mainly due to its competition with major crops such as cotton and wheat and marketing issues.

MY 2012/13 sunflower seed production is forecast at 700,000 tons, 7 percent down from the current year’s estimate due to increased area planted to cotton.

Consumption:

Oilseed consumption will likely continue to be strong in ensuing years due to Pakistan’s high population growth rate and steady growth in poultry and livestock sectors. Pakistan is a growing market for oilseeds export from Canada, Australia and the Ukraine. Since 2005, the Government of Pakistan (GOP) has implemented liberalized import policies for oilseeds. The oilseed crushing industry, the main beneficiary of these policies improved its efficiency by overhauling older machinery and installing high-tech solvent extraction equipment.

Total oilseed crush in 2012/13 is anticipated to be 8 percent higher than in 2011/12 because of projected higher local production supplemented with imports. Almost 85 to 90 percent of total oilseed production is crushed for oil with the balance quantity used for food, feed, and seed purposes.

Trade:

Total imports of oilseeds for crushing are forecast at 1.0 MMT in MY 2012/13, up 13 percent over last year’s estimate. Increased demand for edible oil from the burgeoning population and oilseed meal for the growing livestock and poultry sectors have led to an increasing dependence on imported oilseeds. [For Table 1: Oilseed Import Statistics, please download the document]

The MY 2012/13 oilseed import forecast includes 850,000 tons of rapeseed/canola (mainly from Canada, Australia and the Ukraine), and 200,000 tons of sunflower seed from Australia. Since June 2005, under liberalized policy regime, the GOP has exempted oilseeds from import duty, central excise duty and federal excise duty. The following table presents the duty structure levied on imported edible oils and oilseeds. [For Table 2: Duty Structure on Edible Oil and Oilseeds, please download the document]

MY 2011/12 oilseed imports were estimated at 950,000 tons. Rapeseed/canola seed are typically sourced from Canada and Australia.

Policy:

In an attempt to ensure food security, Pakistan’s agriculture policy is largely focused on the enhancement of wheat production. Oilseed production typically receives less attention compared to crops like wheat, rice, cotton and sugarcane. In an effort to enhance oilseed production in the country, in 1995, Pakistan Oilseed Development Board (PODB) was established under the administrative control of federal Ministry of Food and Agriculture (MINFA). Upon the approval of the 18th constitutional amendment by Parliament in 2011, MINFA was devolved and its functions were delegated to provinces. The devolution of federal ministry also abandoned the functioning of PODB at the centre. So, at present, there is no central authority to promote domestic oilseeds and to provide a sound regulatory and policy framework to this sector.

There is no support price mechanism for oilseeds and the GOP does not procure oilseeds. The lack of availability of quality seed, poor coordination among research organizations, lack of suitable machinery for planting, harvesting and threshing operations, improper dissemination of site-specific production technologies and lack of research-based crop management are some of the major constraints being faced by the oilseed sector.

Given the poor quality of local oilseeds and logistical hurdles of transporting oilseeds to crushing facilities, the domestic crushing industry has focused more on importing quality oilseeds rather than providing incentives to local growers for increased domestic production. [For Production, Supply and Demand Data Statistics, please download the document]

Commodities:

Meal, Cottonseed
Meal, Rapeseed
Meal, Sunflowerseed
Meal, Soybean

Production:

MY 2012/13 oilseed meal production is forecast at 3.0 MMT, up 8 percent over MY 2011/12 due to the projected increase in local production of cottonseed and rapeseed. Post’s estimate of MY2011/12 oil meal production was revised downward to 2.7 MMT, mainly due to lower production of cotton crop affected by floods. The domestic crushing industry traditionally produces an oilseed meal ration comprised of 64 percent cottonseed, 22 percent rapeseed/canola and 14 percent sunflower seed.

Consumption:

Generally, total oil meal consumption follows the growth trend in the domestic poultry, livestock and aquaculture sectors. Pakistan’s poultry meat production is expected to grow by more than 10 percent per annum. The layer industry is also expanding to provide relatively cheap protein compared to other sources of protein to the burgeoning population.

The pace of dairy feed production is stepping up in commercial dairy units as the import of high milk yielding animals is on the rise. A few trained poultry feed manufacturers have started producing dairy feed on commercial lines encouraging demand for soybean meal for high yielding animals. MY 2012/13 meal requirements are forecast to increase to 3.4 MMT due to the anticipated expansion of the poultry, dairy and livestock sectors.

Traditional feed rations (cottonseed meal, rapeseed meal and sunflower seed meal) are inadequate and contain minimal protein. Feed millers are using increasing quantities of soybean meal to improve the meal quality. The growing demand for higher quality protein meal by livestock and poultry producers has increased the use of soybean meal from the traditional 5-7 percent to 10-15 percent.

Trade:

Virtually all of Pakistan’s meal imports are comprised of soybean meal imported from India. Imports in MY2012/13 are forecast at 350,000 tons, up 17 percent over MY 2011/12 estimate of 300,000 tons. Prospects for imports of U.S. soybean meal remains limited due to higher freight charges and time lag required relative to India. [For Production, Supply and Demand Data Statistics, please download the document]

Commodities:

Oil, Cottonseed
Oil, Rapeseed
Oil, Sunflowerseed
Oil, Soybean
Oil, Palm

Production:

Based on increased crush volume stemming from a larger cotton crop supplemented with increased imports of canola and sunflower seed, domestic production of vegetable oil in MY 2012/13 is forecast at 1.5 MMT, up 8 percent over the MY 2011/12 revised estimate.

Domestic oil production is sufficient to meet only about 27 percent of demand with the balance met through imports. A growing population and only a limited ability to expand domestic production means that larger imports will be needed in order to meet Pakistan’s increasing demand for edible oils.

MY 2011/12 edible oil production is estimated at 1.35 MMT, which includes 590,000 tons of cottonseed oil, 400, 000 tons of rapeseed oil and 360,000 tons of sunflower seed oil.

Consumption:

MY 2012/13 total oil consumption is forecast at 3.7 MMT, up 6 percent over last year’s estimates. The share of imported oil in total consumption is close to 75 percent. Palm oil is the dominant oil consumed in Pakistan. Demand for palm oil for both home consumers and food processors remains strong mainly because of its competitiveness to other oils. Blending palm oil with local oils and selling it as cooking oil is popular in Pakistan. For health reasons consumers are gradually shifting from hydrogenated oils towards soft oils. However, price remains the determining factor in most consumers purchasing decisions.

Trade:

Pakistan is among one of the world’s largest importers of vegetable oil. In MY 2012/13, palm oil imports are forecast at a record 2.26 MMT, up 5 percent from last year’s estimate of 2.1 MMT. Refined palm oil accounts for about 98 percent of Pakistan’s total edible oil imports. The United States exports only limited quantities of soybean oil to Pakistan in the form of food aid. [For Table 3: Edible Oil Import Statistics and Production, Supply and Demand Data Statistics, please download the document]

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