Efficiency in Indian Edible Oilseed Sector: Analysis and Implications

Reversing the declining trend in productivity of oilseeds and improving the efficiency of oilseed processing is a major challenge to the policymakers and researchers. The present study has analyzed technical inefficiencies and factors responsible for inefficiencies in production and processing of four major edible oilseeds, viz. groundnut, rapeseed and mustard, soybean and sunflower. Both primary and secondary data have been used to estimate the inefficiencies. Analysis has revealed the presence of 1/4 to 1/3 technical inefficiencies in oilseed production at the average level and even more at the farm/ processing unit level along with allocative and scale inefficiencies. The combined technical inefficiencies in the oilseed sector have been found to be 1/2 to 2/3, which are enormous. If prevented/ minimized, the oil production in the country could nearly be doubled. Soil quality, seed replacement and education have been found as determinants of technical efficiency in oilseed production, whereas availability of adequate raw material and higher oil recovery determine the technical efficiency in oil production. Lack of assured market for oilseeds and lack of timely and assured supply of quality seeds and raw materials for processing are some of the important factors for the poor performance of the oilseeds industry. Study has reported that the marginal return to water is one of the highest in oilseeds. Therefore, cultivation of oilseeds in irrigated land if they really compete with other crops for profitability, needs to be given due consideration.