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India in need of palm oil, with sustainability and NMEO-OP
Friday, 26 April, 2024, 15 : 00 PM [IST]
CK Mishra
India consumes 24 million tonnes of edible oil annually, of which 15 million tonnes is imported, with palm oil accounting for 56% of it. All oils are recommended for consumption in moderation, as is the case with palm oil. However, data shows that India is the largest importer of palm oil globally, according to a report published by the Asia Pacific Foundation of Canada, with over 90% coming from Malaysia, Indonesia and Thailand. As India’s largest food import, the bill for edible oils went up to Rs. 1.57 trillion in October 2022, according to The Solvent Extractors’ Association of India. As for palm oil, the market size was valued at USD 7.3 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 5.0% from 2023 to 2030.

In 2022-23, India palm oil consumption went up by 24% and is only set to rise, with it being present in everything from food to cosmetics. According to WWF, palm oil can be found in almost half of all packaged products sold in supermarkets, and even they acknowledge that palm oil can contribute to sustainability if it’s managed properly.

If this is the fact, then should India not be looking at self-sufficiency? The issue is where and how to make it sustainable with the least impact on ecology. This is why the Indian government’s move to launch oilseed initiatives comes as positive news to reduce dependence on imports, while addressing food security and rising unemployment.

The National Edible Oil Mission-Oil Palm (NMEO-OP) was announced in August 2021 by Prime Minister Narendra Modi, involving an investment of over USD 1 billion (Rs 11,040 crore). Out of this, Rs 8,844 crore is the Central share, while Rs 2,196 crore is allocated to states. The ambitious roadmap plans to achieve three times higher domestic production at 11 lakh MT by 2025-26 and 28 lakh tonnes by 2028-29, with oil palm cultivation going up to 10 lakh hectares by 2025-26 and 16.7 lakh hectares by 2029-30.

In an encouraging move, the government has permitted 100% FDI in plantations, while pledging massive financial aid to farmers in coming years. This would go towards controlling domestic edible oil prices, which are currently influenced by expensive imports. An ease in investment policies, accompanied by incentivising palm oil production, increasing acreage, while supporting farmers’ access to the market is set to propel cultivation in coming years, playing a crucial role in making the country self-sufficient. State governments have involved nearly 15 private entrepreneurs, who are major players for developing oil palm seedlings, nurseries and processing mills in their respective states.

It is pertinent to remember that palm oil cultivation offers 4-10 times more output per unit of land as compared to other vegetable crops like mustard, groundnut, rapeseed, rice bran, soy or sunflower. In terms of numbers, while these crops produce between 300-500 kilograms of oil per hectare, an oil palm plantation can produce as much as four tonnes of oil per hectare.

To put that into perspective, the Our World in Data research unit, which is based at the University of Oxford in the UK, estimates that we use around 322 million hectares globally, or an area the size of India, to grow oil crops. If we were to get all of it from palm oil then we’d need just 77 million hectares – four times less, freeing up a lot of land. But if we got it all from olive oil then we’d need 660 million hectares - or the equivalent of two India’s by landmass.

Undoubtedly, India presents a huge potential for growth as global production and demand for palm oil goes up. The 2021 National Edible Oil Mission-Oil Palm (NMEO-OP) scheme includes aspects of previous schemes and aims to increase support and funding for farmers of 13 Indian states. A majority of the cultivation is expected to take place in the Andaman and Nicobar Islands and seven northeastern states. The government has also provided financial support for establishment of oil palm processing mills, especially in northeast areas and hilly regions. Nearly 24 such mills have been established in different states, possessing a capacity of 312 MT/hrs for crushing of FFBs (fresh fruit bunches) of oil palm. Presently, the prices of FFBs are linked to international price fluctuations. For the first time, the government of India has offered a price assurance to the oil palm farmers for the FFBs, known as the Viability Price (VP).

Currently, Andhra Pradesh reportedly leads palm oil production with approximately 87% of the country’s production, followed by Telangana (6-9%), Kerala, Karnataka and Tamil Nadu. Other palm oil-producing states include Orissa, Gujarat, Goa and Mizoram. So far, fluctuating import duties and the lack of plantation status to palm have posed a threat to domestic palm production.

It needs to be mentioned that palm oil comes with unique benefits and cannot be easily replaced with any other edible oil. Palm oil is seen as an efficient crop – it caters to 40% of the world’s vegetable oil demand on just under 6% of the land used to produce all vegetable oils. Millions of livelihoods are involved.?However, we have to look at sustainable sources of production.

While oil palm cultivation has long been associated with ecological damage, this may not be the case anymore. Today, palm oil cultivation can be sustainable as India takes the responsible route, looking at establishing plantations on virgin land and not on areas that need to be deforested. When it comes to allocating land, India needs to follow a command area model, wherein state governments earmark land considered as wasteland to oil palm cultivators. Concerned governments must do their due diligence and ensure that these lands pose little biodiversity or environmental risk. Besides, setting up palm oil plantations in areas that get heavy rainfall, like the Northeast and adopting methods like drip irrigation will support in not depleting the water tables. Without settling issues of sustainability, this entire exercise will be a non-starter.

India must also encourage palm growers to ensure global sustainability certification, such as the Malaysian Sustainable Palm Oil (MSPO) and Roundtable on Sustainable Palm Oil (RSPO) certification schemes, which set down responsibility guidelines for conserving biodiversity and regarding land use.

The bottom-line is that India needs palm oil and the NMEO-OP is set to reduce import dependence and substantially benefit farmers with increased income and employment opportunities.

(The author is former secretary - Ministry of Environment,
Forest & Climate Change - Government of India)
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