India’s poorest scald as cooking oil prices soar
War in Ukraine, limits on palm oil from Indonesia and Malaysia, add fuel to fire
On a muggy April afternoon, Kumud Sahu wipes his face with an oily turmeric-stained handkerchief. He gulps water from a dimpled plastic bottle as he haunches on a wooden bench. It’s the only place to sit at his roadside eatery in the bustling working-class neighborhood of Jawaharlal Nehru Road in the eastern Indian city of Kolkata.
“Life has always been tough,” says Sahu, scanning the swarming crowds oblivious to the slow unraveling of the stalls that serve their affordable lunches. “But I haven’t seen tougher days than these. Business has been extremely bad and I am not sure how I can continue to feed my family.”
As the world’s largest importer of cooking oil reels from a steep ascent in its price, India’s poorest are paying the highest cost for a crisis long in the making and now turbocharged by events ranging from the war in Ukraine to policy changes in global trade.
The South Asian nation consumes nearly 25 million tonnes of cooking oil a year, but produces only about 11 million tonnes. The gap is met through imports.
That creates a big and growing problem for a country whose population is expected to surpass China's and hit 1.7 billion people in the next three decades.
Experts say India will be unable to wean itself off this dependence for at least another two decades, as demand in a country that uses oil for much of its cuisine continues to far outpace production.
It is among the most disturbing examples of how a worldwide spiral in food prices has spooked billions of people and their governments. A deadly storm of pressures including war, pandemic and global heating has dramatically increased the cost of household food baskets in countries rich and poor. It has raised fears of mass impoverishment and social unrest, like that seen in neighboring Sri Lanka.
Street vendor Kumud Sahu and his wife prepare flatbreads to serve with rich, filling curries. Kolkata, India. (Photo by Uddalak Sardar)
Street vendor Kumud Sahu and his wife prepare flatbreads to serve with rich, filling curries. Kolkata, India. (Photo by Uddalak Sardar)
More than 5 million entrepreneurial street food vendors have become iconic elements of the country’s cityscapes. Mostly concentrated in the cities of New Delhi, Mumbai, Kolkata and Ahmedabad, many are migrants who work 12-hour days.
The FAO’s Vegetable Oil Price Index surged to an all-time high in March this year and despite a brief reprieve, remains close to its record. Driven by sunflower, palm, soy and rapeseed oils, the index jumped more than 30% in the last 12 months alone.
India consumes 16.5 kg of cooking oil per capita, significantly higher than 9.5 kg in China, and nearly double 8.4 kg in the United States.
The numbers, skewed by heavier use in urban areas, mean that the world’s second most populous nation is particularly hit by the record highs.
These international economic storms have overwhelmed India’s vast army of street food cart owners.
Sahu looks enervated. It has been 12 hours since he began his day in a room no bigger than 11 sq. meters, where he lives with his wife and three children. They share a bathroom with three other families in a longstanding tenement. Just before sunrise, he sets out for his eatery, cycling about 10 km. There he sells cheap, tasty lunches, oily curries with enough calories to keep his customers full until the next meal.
“Prices have increased so much that we can't imagine what will happen to the business if this trend continues,” he says, squinting in the harsh Kolkata sunlight. “I am putting in money from my savings to keep the business afloat.”
Sahu has shied from passing on the costs to his price-sensitive clientele, many of whom are shopkeepers and small business owners themselves.
With snowballing costs and a determination to keep his children in a school that is inexpensive but not free, Sahu was forced to sell a piece of rural land that he had hoped to keep as an asset for the years to come. “It bought me some time,” he said.
Pulling in around 60% of its cooking grease from overseas, India was hurting even before the Ukraine war as shipping costs, energy inflation and labor shortages, along with extreme weather, kept thrusting food and oil prices higher.
Then the invasion of Ukraine, which along with Russia provides India with 15% of its sunflower oil; a tariff increase by Indonesia, which supplies about 50% of India’s palm oil needs; and droughts in Argentina, which together with Brazil sends India 22% of its soybean oil; led to continued increases across the board.
In an attempt to keep its domestic oil prices in check, Indonesia in May briefly implemented a blanket ban on exports of its palm oil. The world's top palm oil producer resumed exports, but regulatory hurdles and restrictions on monthly export volumes remain.
Indians are paying far more for several types of oil. The average price of refined palm oil, refined soy oil and mustard oil, accounting for roughly 70% of India’s oil consumption, doubled in the last five years, according to ratings agency Crisil.
Indians reliant on cooking oil, from homemakers to street food vendors, are smarting from the price rise.
From the everyday dish that needs a teaspoon of oil for the tempering of aromatics such as cumin seeds or curry leaf, to the puffy breads and sweets that are delightfully drenched in it, thousands of recipes in urban India employ oil.
The cooking oil price crisis could have a profound impact on India’s way of life. It has triggered calls for change in the country’s social, agricultural and health policies. It also poses a fundamental question relevant to every person on the planet: How do we eat, and do we need to change?
“Oil consumption by Indians is expected to keep increasing, especially because many of us also dine out a lot nowadays,” Duru Arun Kumar, an associate professor of sociology at Netaji Subhas University of Technology, told Nikkei Asia.
“Whether you are eating out or cooking at home, there is a perception here that oil enhances the taste of food.”
India’s urban street food vendors have been battered by two of the world’s strictest pandemic lockdowns that brought their businesses to a standstill and forced an exodus of millions back to their villages.
India’s street food vendors now face an upsurge in oil prices that threatens their very survival.
The new price increases also come on the heels of two years of a nutrition crisis in India, accelerated as the poor cut back on protein during the lockdowns and deepened by a longstanding distribution problem that often keeps India’s grains from reaching its poorest.
The buzzing office crowds flock to Sahu’s stall, where he sells inexpensive lunch options for as low as 30 rupees (40 cents). His brother-in-law started the business in 1989, and it thrived until the lockdowns of 2020 and 2021.
Sahu would use mustard oil to fry his food, but as the pungent oil that characterizes dishes from eastern and northern India began to climb to record highs, he, like many other street vendors, pivoted to palm oil. At the time, it seemed like a cheaper option.
In Kolkata’s Dalhousie Square, Niranjan Shee sells “egg rolls” – flaky fried flatbread coated in egg and rolled up with piquant onion salad. In a country where poverty is a matter of relativity, he briefly considered a 13-cent increase per roll before shying away from the hike.
“People’s purchasing power has reduced. Many of them lost their livelihoods or saw their incomes dip during the pandemic,” says Shee, for whom the eatery has been a lifeline for 34 years.
“It’s a Catch-22 situation for us. If we increase the price of food, we risk upsetting customers who are value-conscious. And if we don’t, our survival is at stake.”
To make ends meet, Shee, his wife and two young children have made what many Bengalis consider the ultimate sacrifice. They have cut down their consumption of fish, a daily staple in West Bengal.
Shee and many other vendors have also switched from cigarettes to bidis, a tobacco product that is significantly cheaper than a regular cigarette but contains three to five times the amount of nicotine. That raises the risk of oral, lung, stomach and esophageal cancer, according to the CDC. “You have to adjust with the changing times, what is life but a struggle,” Shee ruminates.
Households are also suffering.
Neetu works as a housekeeper in New Delhi, and lives in a slum with her husband, four children, brother-in-law’s family of five and mother-in-law.
Neetu says her household consumes about 10 liters of edible oil a month, which has meant a 20% jump in their cooking oil expenses.
“We mostly use mustard oil for routine cooking and refined rapeseed oil when frying puris and samosas,” she says, adding that her mother-in-law manages the kitchen budget.
“My mother-in-law has been saying for some time that (oil prices) have been rising and that we should curtail its use. But kids want to eat fried stuff and that requires a lot of oil.”
As with many households in Neetu’s neighborhood, she and her gardener husband together earn 22,000 rupees ($278) a month. Her brother-in-law contributes another 15,000 rupees ($190) to run a household of a dozen. “Already, we are just managing to run our household somehow, and the price increase of any commodity is a matter of grave concern for us.”
The cooking oil crisis has also raised questions about government policy. India’s dependence on imported oil has made the country captive to geo-political events. This was not the case three decades ago, when India was self-sufficient in edible oil production and was importing only 300,000 tonnes of cooking oil a year.
As India opened up its economy, consumption levels rose along with income, while oilseed production stagnated. This created a massive imbalance in supply and demand.
“A notion gained popularity among decision makers that we should concentrate only on producing things we are good at, like wheat and rice grains, and import the rest as our foreign exchange position was good,” said Atul Chaturvedi, president of The Solvent Extractors' Association of India.
“Years of low commodity prices also lulled decision makers into complacency.”
India's 2019 bill for imported edible oil came in at around $8.5 billion for 15 million tonnes. It is estimated to have swelled to nearly $19.7 billion - for only 13 million tonnes - in the financial year that ended in March.
“In other words, our bill has skyrocketed even with the significant drop of two million tonnes in imports,” Chaturvedi said. “The exporting countries are able to take advantage of India’s fragile edible oil situation and jack up prices.”
While escalating prices are disastrous for many consumers, they have turned out to be a bonanza for some producers.
One is Puran Singh, a farmer in the northwestern arid state of Rajasthan, who grows mustard on 25 acres of his own land.
“The mustard seed is currently selling for around 7,000 rupees ($89) per 100 kg in the mandis (government-regulated wholesale markets),” Singh told Nikkei Asia. That is considerably higher than the 5,000 rupees ($63) determined by the government as the minimum support price, which sets a floor for the price for produce sold at wholesale markets.
“However, I’ve stored 10,000 kg of the harvested crop this year, and will sell in October or November when the price is expected to go up to 10,000 rupees ($127) per 100 kg,” said Singh. He has already built large storage rooms to keep the harvest safe for months.
The outlook is bleaker for farmers who can’t afford to invest in storage. Deepak Kumar grows mustard on a five-acre plot in the northern state of Haryana, but lacks Singh’s resources and is unable to stock the mustard seeds.
“I cannot wait for months to sell my produce," Kumar told Nikkei Asia.
“I urge the government to help small farmers by increasing the minimum support price for crops and arranging storage facilities for us.”
Swami Ramdev at a press conference at Constitution Club of India in New Delhi. (Photo by Getty Images)
Swami Ramdev at a press conference at Constitution Club of India in New Delhi. (Photo by Getty Images)
The urge to cut India's import dependence has thrown the spotlight on the domestic cooking oil industry. Yoga superstar and Ayurveda entrepreneur Swami Ramdev also serves as the face and non-executive director of Ruchi Soya Industries, India’s second largest producer of cooking oil.
Ramdev habitually wears saffron, a color long worn by Hindu sages and associated with abstinence and soul-searching, and more recently linked to Prime Minister Narendra Modi and Hindu nationalism. In either meaning, it is on brand for Ramdev’s calls to pare India's dependence on cooking oil imports.
“We are planning to invest in our own plantations for cultivating palm oil in India and we expect to entirely substitute imports with our own products in the next five to seven years,” Ramdev said in an interview to Nikkei Asia.
“As palm oil plantations will take some time to grow, I am expecting within 10 years, India’s cooking oil imports will be zero with active support from the Narendra Modi government,” said Ramdev, who is believed to have close ties with the prime minister and the ruling Bharatiya Janata Party.
“The Indian government is already taking a lot of steps in this direction,” Ramdev told Nikkei Asia.
In the last 20 years, palm oil consumption in India has grown more than 150% to nearly 9 million tonnes a year, according to data gathered from the U.S. Department of Agriculture and compiled by data portal IndexMundi.
It has replaced more expensive regional rations such as groundnut oil in western India, coconut and sesame oils in the south, and mustard oil in the east and north, in a shift led by restaurants, street vendors and mass manufacturers of snacks.
In an effort to help people like Shee, New Delhi launched a five-year $1.4 billion plan late last year to increase domestic production of palm oil. It was an extension of a previously-launched program to grow more oil palms at home and reduce the nation’s reliance on global trade.
The government hopes to triple the existing 30,000 sq. km of domestic palm oil cultivation by 2026. It has identified the often-neglected north-eastern region, and the Andaman and Nicobar Islands in the Indian Ocean, as possible locations.
But not much progress has been made since the original strategy launched in 2014.
“If one does [an analysis] of India’s action plan to be self-reliant in edible oils, one of the major threats is to the biodiversity and tribal communities of the north-east and Andaman and Nicobar Islands,” Shahan Sud, a venture capitalist who focuses on consumer trends, told Nikkei Asia.
“In addition, the long gestation period …price volatility may make it unsustainable for smaller farmers,” Sud said.
From plantation to fruit bearing, the palm tree takes 4 to 5 years, compared to less than 6 months for soy, mustard and groundnut. The Indian government advocates for palm oil by citing yield, saying it “produces 10 to 46 times more oil per hectare (1 hectare = 2.47 acres) compared to other oilseed crops.”
A worker loads palm fruits in Banten, Indonesia. (Photo by Reuters)
A worker loads palm fruits in Banten, Indonesia. (Photo by Reuters)
Agriculture expert Sandip Das said the plan to increase oilseed cultivation would take several years to produce palm oil. "India should have taken such steps two to three decades ago as those moves would have borne fruits by now,” he said.
“It’s difficult to drastically cut palm oil imports. India should instead promote mustard and soybean production,” Das suggested.
Those concerns are part of a broader critique of efforts to increase palm oil output. Environmentalists say the farming is especially destructive, as farmers set light to large areas to clear the ground before cultivation.
India’s rising consumption of oils is already a growing public health problem. Many studies have linked fried foods to increased risk of heart disease and diabetes.
The country ranks among the top in the world for both. It accounts for 60% of the world's heart disease despite having less than 20% of its population, according to the Indian Heart Association said.
Deaths from heart disease in India rocketed 40% in the ten years to 2019, according to the University of Washington’s Institute of Health Metrics and Evaluation. That made it the leading cause of death in India.
Endocrinologist Richa Chaturvedi told Nikkei Asia that grilling or baking are healthier alternatives that remain uncommon practices.
“But certain practices can be changed, like avoiding deep fried food. We are so fond of puris, but parathas will take less oil,” said Chaturvedi, referring to two popular types of flatbread.
“In the top end of the population, lack of healthy eating habits is an awareness issue while among the long tail, it is an awareness as well as an affordability issue.”
-Richa Chaturvedi
There are few signs of a sharp public behavioral shift so far, according to a recent survey by Indian community tracking and building platform Local Circles.
Two-thirds of respondents said they had cut back spending in other areas to accommodate for higher edible oil prices. Only 24% said they would reduce oil consumption.
Baked vs fried: An uphill battle
The Indian samosa being cooked the traditional way -- deep fried.
A baked version of the samosa sold by alternative food brand Smart Snacks.
New brands promising to avoid palm oil or rework deep-fried snacks into baked products are taking on giants such as Haldiram and Bikaji, old storied brands found in practically every urban home. At prices nearly double those items, investors warn it will be an uphill battle.
Smart Snacks is one of the new generation of companies that has struggled to find a market. It sells baked versions of India’s beloved samosa, a deep-fried triangular pastry with spiced savory fillings. "Our biggest challenge is…we cater to a niche market. Our audience is largely the affluent or the upper middle class,” co-founder Anil Kumar told Nikkei Asia.
Only 2% of India is middle income, and even smaller percentages are upper-middle and high-income, a Pew Research Center study found in 2015.
“We are a daal-sabzi (pulses-and-vegetables) eating country and we can't suddenly overnight become a salad eating nation," said Vinay Singh, a partner at Fireside Ventures, which invests in early-stage consumer brands.
Back in Kolkata’s Dalhousie Square, about 200 meters from Shee’s egg-roll eatery, Tarun Bhattacharya stands frying onions for his Bengali pulao – a sweet rice dish with cashews, raisins and oodles of crispy caramelized onions.
A few weeks ago, he decided to raise the price 30 rupees to 35 rupees (from 38 cents to 44 cents) per order. He also eased up the cost of a puri – a soft and puffy deep-fried unleavened bread – by less than a cent.
Bhattacharya was dismayed to see traffic dip about 20% following the price hike. He decided to keep the price of his potato fritters served with khichdi – a rice and lentil dish – unchanged.
“This is Kolkata,” he explained. “Every hard-earned penny matters.”
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