India is a net food exporting country but depends heavily on imports of edible oils. India consumes nearly 23 million tonnes of edible oil annually whereas produces only 7-8 million tonnes which means imports almost 14-15 million tonnes annually i.e. 68% of the edible oil requirement is meet through imports. The bulk of these imports are palm oil. Of the total imports of edible oil, palm oil accounts for 60 per cent or about 9 million. Edible oils are imported from countries such as Indonesia, Malaysia, Argentina, Ukraine, Russia, UAE, etc.

India’s Imports of Edible oil
Edible Oil 2017-18 2018-19 2019-20 (Nov – Sep) Qty in MT
Palm Oil 8.7 9.4 6.4
Sunflower Oil 2.5 2.4 2.3
Soybean Oil 3.0 3.1 3.1
  • Source: Solvent extraction Association of India

According to the industry experts demand for palm oil is expected to double by 2030, which cannot be sustained just by increasing the import quantity, as it would be exporting its biodiversity issues to the supplying countries. Considering this Prime Minister Shri Narendra Modi has announced Atmanirbhar Bharat in Palm oils and therefore to expand oil palm cultivation in India.

  • Significance of Palm Oil

Palm oil holds the significance in the edible oil as it is the highest oil yielding perennial crop. With good planting material, irrigation and proper management, oil palm has the potential to produce 20-25 MT fresh fruit bunches (FFB) per hectare after attaining the age of 5 years. This in turn can yield 4-5 MT of palm oil and 0.4-0.5 MT palm kernel oil (PKO). This perennial crop has an economic life span of 30 years, comprising three distinct phases viz. juvenile period (1-3 years), stabilizing period (4-8 years) and stabilized period (9-30 years). Five countries mainly Indonesia, Malaysia, Nigeria, Thailand, and Cambodia account for over 90% of the world’s total production of FFBs.

Palm oil is currently the world’s most consumed vegetable oil, with its main consumers being India, China, and European Union (EU). Besides food, palm oil is widely used in other commodities such as detergents, plastics, cosmetics, and biofuels. Thus, profits from palm oil have attracted many industrial-scale palm oils producing companies, both regional and international.

  • Potential area of Oil Palm in India
India’s oil palm Plantations (Crop year 2018-19)
States Area in Hectares
Andhra Pradesh 162,689
Karnataka 43,517
Orissa 21,777
Tamil Nadu 30,900
Telangana 18,312
Gujarat 5,797
Kerala 5,785
Chhattisgarh 4,222
Andaman Nicobar Island 1,593
Maharashtra 1,474
Goa 953
Northeastern India 34,063

Department of Agriculture has identified 19.33 lakh ha area suitable for oil palm cultivation in the country including 2.18 lakh ha area in the North Eastern States. Potential states were Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Karnataka, Kerala, Mizoram, Odisha and Tamil Nadu.

In 2014, the federal government launched the National Mission on Oilseeds and Oil Palm (NMOOP), with a special emphasis on expanding palm oil plantations in watersheds and wastelands. NMOOP started promoting plantations in 13 states, with financial incentives given to planters to buy plants and maintain them for four years. As a result, oil palm plantations grew from 8 thousand ha in 1991-92 to 3.3 lakh ha today.

Despite the efforts, production reached just a quarter of a million tonnes in 2018-19 against domestic demand of over 10 million tonnes. Currently, a number of large Indian companies including ITC, Godrej Agrovet, and Ruchi Soya, are engaged in oil palm cultivation in India. Many of their plantations are in collaboration with provincial governments, particularly in the southern states of Andhra Pradesh, Telengana, Karnataka and Tamil Nadu.

To overcome fears about deforestation, domestic palm oil producers say production in India is focused in coastal states like Telangana and Andhra Pradesh, where expansion is taking place in already degraded land or areas that were until then being used for water-hungry cash crops like cotton and paddy.

NMOOP’s latest target was to bring an additional 105,000 ha under oil palm cultivation by the year ending October 2020, bringing the total area under cultivation to 420,000 ha.

  • Constraints in Oil Palm cultivation
  • Oil palm has a long gestation period and restricts income flow to farmers for at least 4-5 years.
  • Small holdings of farmers with limited resources.
  • Fluctuation in prices of CPO in the international market.
  • Erratic monsoon leading to shortage of water.
  • Competition from other economically viable crops such as rubber, arecanut, sugarcane, banana, coconut etc.
  • Variation in import duty on edible oils.
  • Initiatives by Government of India
  • During the 12th Five Year Plan, a new National Mission on Oilseeds and Oil Palm (NMOOP) was launched under which Mini Mission - II (MM - II) was dedicated to oil palm area expansion and productivity increases.
  • The funds were made available to the states as per norms of NMOOP. The expenditure will be shared between Central and State Government in the ratio of 90:10 for Assam, Arunachal Pradesh, Nagaland and Mizoram and 60:40 for remaining States.
  • However, 100% support is being provided to Indian Institute of Oil Palm Research (IIOPR), Pedavegi, Andhra Pradesh for supply of planting materials, need based R&D and extension activities.
  • Under the MM-II of NMOOP, financial assistance is being provided to the farmers @ 85% cost of the planting material (Rs. 12000/ - per ha) and @ 50% cost of the other components like maintenance cost of new plantations for four years (Rs. 20000/ - per ha), inputs for inter-cropping in oil palm during gestation period (Rs. 20000/ - per ha), installation of drip - irrigation systems, diesel/electric pump-sets, bore-well (Rs. 50000/ - per unit), water harvesting structures/ponds, construction of vermi-compost units and purchasing of machinery & tools etc.
  • Involvement of Private entrepreneurs

States Governments have involved about 15 nos. of private entrepreneurs in which majors are M/s Godrej Agrovet Pvt. Ltd., M/s Ruchi Soya Industries, M/s Food Fats & Fertilizers and M/s Shivasais Oil Palm Ltd. for developing of oil palm seedlings nurseries and processing mills in their respective States. These entrepreneurs are involved by the State Government in their respective States by inviting the Expression of Interest (EOI). These companies have signed Memorandum of Understanding (MoU) with the State Governments for development of oil palm in the country. After signing of MoU, the State Governments have allotted area/ Mandals/Districts to the companies for new plantations. Accordingly, the companies have established nurseries in their allotted zone for developing seedling of oil palm, which takes about 10-12 months. These companies are also extending technical expertise to the farmers for development of oil palm plantation. After development of plantation, oil palm mills are also established by these companies. Government of India has also provided financial support for establishment of oil palm processing mill especially in NE/LW areas/hilly states/regions. In the country, 24 nos. Oil Palm Processing Mills have been established in different states having capacity of 312 MT/hrs for crushing of FFBs of oil palm.

If India follows corporate farming model over the existing smallholder farming and declare palm as a plantation crop on the lines of tea plantation we can overcome two major challenges, the opportunity cost of land of farmers during a long gestation period of at least 3 years when no financial income flows to farmers and high cost of irrigation.

If we have to leap-frog in oil palm cultivation, we have to find a way to break these two barriers. Keeping in mind the advantages it can bring about in terms of reducing heavy dependence on imports for key edible supplies, and augmenting farmers’ incomes within the country, an additional 16 lakh hectares of area (the difference between identified potential area and the actual area under palm oil) be expeditiously brought under palm oil cultivation by scaling up incentives in a big way. These 16 lakh hectares under oil palm cultivation would produce 6.4 million MT of palm oil, which could result in savings of huge foreign exchange. Unintentionally by importing palm oil from Indonesia and Malaysia India is helping farmers of the supplying country rather if India empowers our own farmer, it will be another decisive step towards Atmanirbhar Bharat.