Market Diversification Can Manage Volatility in Edible Oil

As India intensifies its efforts to secure edible oil self-reliance, the National Mission on Edible Oils has come into sharp focus. The mission faces the formidable task of balancing domestic production, farmer incentives, and the shifting dynamics of global trade. In this exclusive interview, the architect behind the initiative shares an unvarnished view of the challenges, boosting oilseed productivity, stabilizing farmer markets, and managing the turbulence of international imports.

The conversation delves into strategies ranging from cultivating high-yield oilseed varieties to expanding sourcing beyond traditional partners. Together, these insights reveal the urgency of a comprehensive, market-savvy approach, one that harmonizes government policy, private enterprise, and consumer priorities to build a resilient edible oil ecosystem.

Speaking to The Interview World during the High-Level Policy Dialogue on “Navigating India’s Policy Landscape in the Edible Oil Sector,” organized by ASSOCHAM, Vidya Bhushan, Vice President of the Solvent Extractors’ Association of India and Director – Trading at Bunge India Pvt. Ltd., outlines his vision for the sector. He discusses the future of the National Mission on Edible Oils, proposes a pragmatic policy framework to tackle existing challenges, and identifies key strategies to strengthen India’s edible oil resilience. Above all, he underscores how market volatility continues to shape—and often test—the sector’s long-term stability.

Here are the key insights from his compelling conversation.

Q: Could you share your perspective on the National Mission on Edible Oils?

A: That’s exactly what I’ve been emphasizing — the need for a comprehensive mission. Too often, the focus remains narrowly fixed on raising productivity by adjusting import duties. But increasing output requires a broader strategy. If we truly want to boost the oil content, we must invest in high oil–yielding crops such as mustard and groundnut. Even with soybeans, which we must continue cultivating, we need to think beyond crushing the seeds. The critical question is: what do we do with the meal by-product?

Currently, India consumes about 5.5 to 6 million tonnes domestically. Once productivity rises, we’ll have a significant surplus. The next challenge, then, is competitiveness in the export market. Yet higher Minimum Support Prices (MSP) make it difficult to compete internationally. MSPs serve an important purpose, they motivate farmers to produce more, but they also create pricing challenges for exporters.

This is why we must adopt a balanced approach. The government cannot do everything alone. The private sector must play an active role, and it will naturally do so when export opportunities make it profitable. If private players can sell abroad, they will automatically pass better prices to farmers.

Experience from rice and wheat shows that farmers primarily seek price stability and a reliable market outlet. They know that if they grow wheat, they can sell it to the Food Corporation of India (FCI) without uncertainty. In contrast, oilseed growers lack that assurance. They’re unsure whether buyers will exist when their harvest is ready.

To build confidence and consistency in the edible oil sector, we must address this very gap—creating stability, reliable demand, and a seamless market for oilseed farmers.

Q: What policy framework would you propose to address this challenge?

A: We must design a policy framework that strategically raises import duties and channels part of the revenue into boosting productivity and supporting the edible oil ecosystem. At the same time, we need to strike a delicate balance between consumer affordability and farmer profitability.

Consumers, in reality, remain relatively comfortable. An average household of three consumes around five kilograms or litres of oil per month, not ten. Even if prices rise by ₹10 per litre, the monthly household budget increases by only about ₹50. That’s a manageable impact for consumers, but it can make a significant difference for farmers.

Redirecting this marginal cost toward incentivizing oilseed production would strengthen domestic cultivation, reduce import dependence, and ultimately create a more sustainable and self-reliant edible oil sector.

Q: Regarding edible oil imports, what strategies should India adopt to ensure resilience, and which countries beyond Malaysia and Indonesia could offer competitive sourcing options?

A: India now sources its edible oils from multiple global origins, marking a significant shift from the past. Earlier, palm oil imports were almost entirely dominated by Malaysia and Indonesia. Today, India also imports palm oil from Latin America and even Thailand, diversifying its supply base.

In addition, India has expanded its access to a wide range of soft oils. Soybean oil now arrives from Brazil, Argentina, and occasionally the United States, and soon, even China is emerging as a potential source. Similarly, countries like Egypt and Russia have become important suppliers of both soybean and sunflower oils, while Ukraine, Russia, and Argentina remain key exporters of sunflower oil.

This diversification has transformed India’s import basket. Once dominated by palm oil, it now stands evenly balanced, about 50% soft oils and 50% palm oil. In many ways, market dynamics and price movements have driven this rebalancing.

Moreover, Indonesia’s biodiesel policy has played a crucial role in reshaping trade flows. As palm oil prices rise due to higher domestic demand in Indonesia, soya and sunflower oils have become more competitively priced, prompting India to diversify further.

In essence, India’s edible oil strategy is evolving, guided by global price signals, shifting trade patterns, and a growing emphasis on supply security through multiple sourcing origins.

Q: What impact does market volatility have on the edible oil sector?

A: Volatility cuts both ways. For farmers and producers, it’s a serious challenge. But for traders, volatility often creates opportunity. I always say this: in most countries, businesses treat an asset as a value-adding resource. When they build refineries or processing units, their goal is to generate value addition.

In India, however, we tend to add “VAR” or Value at Risk instead of real value addition. Why? Because we depend on trading to keep our assets profitable. Elsewhere, companies run their assets to make money; here, we trade continuously to keep assets running. That’s the key difference, and it’s what tariff shifts and market volatility expose.

Consider what happens when the government increases import duties on a particular origin or type of oil. Prices immediately rise. But many importers already have cargoes in transit, forcing them to absorb higher costs. Conversely, when the government reduces duties, buyers instantly demand lower prices. Yet the impact is never one-to-one.

In a highly competitive market, every player is ambitious and eager to protect or expand market share. To stay in the game, companies often sacrifice margins and pass on benefits to consumers. However, when duties fall and prices drop sharply, many importers sit on 45 days of inventory purchased at earlier, higher prices. The result is pressure, defaults, and financial stress across the supply chain.

In essence, volatility rewards traders but punishes producers, distorting incentives across the edible oil ecosystem. What India needs is stability, not just in policy, but also in pricing, so that every participant, from farmer to processor, can operate with predictability and confidence.