Palm oil is a widespread component of products in the Indian market – from daily use products like soaps and toothpastes to edible products like biscuits, cooking oil, chocolates and more.
India consumes more than nine million metric tonnes of palm oil annually and its edible oil import bills are in trillions of rupees. India is the world’s largest importer of palm oil.
Oil Palm is the key to achieve self-sufficiency in edible oils. It constitutes 37% of edible oil demand in the country and 97% of demand for palm oil is met through imports.
India has the potential to cultivate Oil Palm in 19.33 Lakh Hectare. Despite being a smallholder crop for the last 30 years, only 3.5 Lakh Hectare (till Fiscal Year 20) has been converted to Oil Palm plantation.
To ease the burden of the treasury and lower the dependence on imports, the union government is on a mission to expand the cultivation of oil palm across the country under its ambitious National Mission on Edible Oils-Oil Palm (NMEO-OP) programme. It aims to increase the area of oil palm to 10 lakh (one million) hectares by 2025-26, up from 3.5 lakh (350,000) hectares in 2019-20.
Key Challenges:
- The oil palm plantation requires a long gestation period before giving returns to farmers. Hence, long term investment and long-term commitment by all stakeholders – Farmers, Processors and Government is necessary.
- The profitability of the farmer depends on Fresh Fruit Bunches (FFB) prices, which are highly volatile and uncertain. Compared to other crops, there is a little relief offered to farmers for FFB prices. Hence, this does not seem remunerative to farmers and the expansion of crop is hindered.
- Frequent changes in FFB pricing formula without any financial aid from the Govt make it risky for the processers to commit long term capital investment, the breakeven happens only after 8 years and this is not lucrative for the processors.
- A major issue with increasing oil palm cultivation is the water requirement. Most farmers are using groundwater for irrigation. If a farmer doesn’t have a borewell facility, oil palm cultivation is not easy.
- Oil palm is a water intensive crop, with one tree requiring 200 to 300 litres of water per day. While this may be lower than what the typical water intensive crops such as sugarcane and paddy use, it is still a considerable amount that could impact water resources.
References:
- Challenges and Opportunities in Oil Palm Cultivation in India, IFI Magazine Vol-33_May-Jun,2021;
- Despite challenges, Telangana plans to expand oil palm plantation area by 22 times – https://india.mongabay.com/2022/12/despite-challenges-telangana-plans-to-expand-oil-palm-plantation-area-by-22-times/