A Amarender Reddy
India spends around ₹70,000 crore every year on the import of about two thirds of its edible oil consumption. The major chunk of our edible oil import is palm oil, as it is the cheapest in global markets, mainly imported from Indonesia and Malaysia and generally about half the price as that of edible oils like groundnut oil. Now, palm oil accounts for 30% of about 25 million tonnes of total edible oil consumption in India. It is used in all types of food preparations, from bakeries to preparation of food in households.
India tries to reduce its import dependency through the recently announced ₹11,040 crore National Mission on Edible Oils-Oil Palm (NMEO-OP). India’s vast diverse ecology gives plenty of scope for growing palm oil plantations. Currently, the country has only about 8.25 lakh acres under oil palm, while the potential identified for it was 48.25 lakh acres in Andhra Pradesh, Arunachal Pradesh, Andaman, Assam, Chhattisgarh, Karnataka, Odisha, Tamil Nadu, and the other northeastern states.
With the oil-palm mission, if the identified potential area of 48.25 lakh acres is planted, India can increase palm oil production from the existing 2.81 lakh metric tonnes to 9.65 metric tonnes which is equivalent to our current imports.
Palm oil cultivation had some inherent advantages, like once planted, there is continuous production for up to 30 years, and the possibility of intercropping with regular income in addition to the main crop. Palm oil plantations give 5–8 times more yield than the other oilseed crops. Globally, palm oil supplies 35% of the world’s vegetable oil demand on just 10% of the land. It means, with palm oil, we can produce 3–5 times more edible oil compared to traditional oilseeds like groundnut per unit of land, which economises a lot of land and contributes to a green economy.
Palm oil plantations also generate employment opportunities in rural areas through setting up of oil mills and packaging centres around palm oil-growing areas. As against the arguments put forward by some activists, palm oil helps in fighting climate change through thick green cover and growing crops in multiple layers. One estimate suggests that 1 acre of oil palm absorbs 8 tonnes of carbon dioxide and releases 9 tonnes of oxygen per annum.
However, it requires assured irrigation facilities, although it consumes only one fourth of water as that of paddy. Many fear that with the entry of big corporates, palm oil cultivation may be extended to forestlands and will lead to deforestation and loss of biodiversity, but stringent forest laws in India will not permit the conversion of forestland into plantation, hence the perceived danger is only an illusion. However, caution needs to be taken to preserve the hotspots of biodiversity.
The major stumbling block to start palm oil plantations is initial investment, which is addressed with the increased subsidy for planting material from ₹4,800 per acre to ₹11,600 per acre to nudge farmers to shift from other crops to palm oil. Another major problem is that palm being a perennial crop, palm oil growers are invariably exposed to year-on-year price fluctuations derived from fluctuations in international prices. The proposed scheme aims to provide a viability gap funding to protect farmers from these price fluctuations through direct money transfers to farmers’ accounts. One major problem in promoting palm oil plantations is that bunches have to be processed within 24 hours of harvesting. This problem can be overcome by incentivising long-term contractual settings for buy-back arrangements by mills in and around the identified potential areas.
Another major obstacle is waste from oil mills. The processing of fresh fruit bunches of oil palm results in the generation of different types of residues. Among the waste generated, palm oil mill effluent (POME) is considered the most harmful waste for the environment, if discharged untreated. This waste can be converted into valuable products such as feed stock and organic fertiliser if proper technology is used. Earthworms can digest the POME producing valuable products such as vermicompost. Vermicompost is a useful product rich in nutrients that can be used as a fertiliser in oil palm plantations.
Overall, the palm oil mission is likely to change the edible-oil scenario in the near future, which has the potential to reduce dependency on imports and also increase farmers’ incomes.
This article was first published on Economic & Political Weekly: Sustainable Production of Palm Oil on September 4, 2021, Vol no 36.
About the Author
A Amarender Reddy, the author is Principal Scientist (Agri Economics), ICAR Central Research Institute for Dryland Agriculture, Hyderabad.