Need to expand oil palm cultivation

Dr K Kranthi Kumar Reddy India has a disastrous experience of two decades of trade liberalization in edible oil. Under pressure from World Bank's Structural Adjustment Programme, India started phased liberalisation of edible oil imports from 1994-95 resulting in a big jump in import of edible oil from 0.1 million tonnes in1992-93 to 10 million tonnes in 2011-12. India's trade deficit touched a record high at $184.9 billion for 2011-12. The share of bills for import of edible oil in the total agricultural imports has risen from 6% in 1991-92 to 52% at present. India imported 57% of edible oil demand in 2011-12. In 2011-2012, we imported Rs 46,000 crore worth of edible oils and it is expected to touch Rs 50,000 crore in 2012-2013. India consumes 18 million tons of edible oils of which 45% is palm oil. Per capita consumption of edible oils increased from 3kg annually in 1950 to 14.2 kg in 2010-11. This growth trend would translate into an edible oil consumption of approximately 32 million tons by 2020. However, the ability of meeting this huge demand through imports is short-sighted. Global demand for palm oil is projected to grow from the present 20 million tons per annum to 40 million tons in 2020. The situation could get aggravated if oil exporting countries divert considerable quantities for bio-fuel. Alternative strategies to boost oilseed production could help forestall a crisis. Expansion of oil palm is a viable strategy for achieving vegetable oil security. Oil palm has the potential of making India self sufficient in edible oils. Oil Palm has highest resource use efficiency due to its unrivalled ability to transform solar energy into vegetable oil. It is the highest oil yielding plant with oil yields six times larger than rapeseed and five times larger than ground nut. Oil palm produces 33 percent of the world's vegetable oil on less than 5 percent of the land planted to vegetable oil crops. Globally palm oil is the leading edible oil with 33% of global production and consumption. Twenty five years after the introduction of oil palm in India, neither Oil palm development programme (OPDP) under Technology Mission on Oilseeds nor the Programme of oil palm area expansion (OPAE) under Rashtriya Krishi Vikas Yojana (RKVY) could make a significant mark in area expansion. India's present crude palm oil (CPO) production is a mere 1, 10,541 tonnes. A committee set up under the chairmanship of R Rethinam, former director of the National Research Centre for Oil Palm, has identified nearly 2 million hec of land that can potentially be brought under oil palm. Diversion of a mere 7.5% of oilseed area of 27.86 million ha to oil palm makes India self sufficient in edible oils, saving Rupees 40,000 crores of foreign exchange. The CACP (Commission on Agricultural Costs and Prices) recommended massive support for oil palm area expansion. Subsidising oil palm area expansion with $2billion as recommended by CACP would save $112billion of precious foreign exchange. The edible oil policy of the post-WTO period introduced a large element of instability into domestic oil palm production by exposing it to international price fluctuations, pushing oil palm farmers to distress. Newspapers reported massive uprooting of oil palms by farmers due to adverse market conditions, as prices fell much below production costs. In AP farmers were paid Rs 5500/- per tonne of FFBs, in Oct, 2012, Rs 7704/- in March, 2012, Rs 6210/- in Oct, 2008 and Rs 3415/- in Feb, 2009. The recent GOI scheme for procurement of 90,000 tonnes of oil palm fruit from Andhra Pradesh during January-March 2013 at the market intervention price (MIP) of Rs 5,720 per tonne is well below the production costs. More than spending huge public money for subsidizing area expansion, providing remunerative prices will rapidly increase the area under oil palm. The present FFBs price fixing formula (12% of CPO plus 1/3rd of Kernel value) is un-remunerative to the farmers. CACP recommended (13.52% of CPO plus 3/4ths of kernel value) 75.25% of CPO value to farmers and 24.75% to processors instead of the present 66.7% and 33.3% respectively. Also oil extraction rate (OER) in India is projected at 18% whereas it is 23% in Malaysia. A more realistic projection of the OER will further enhance the incomes of farmers.A Zonal system - restricting farmers to supply their produce to an allotted processor - has to be done away with. Areas should be de-reserved and free licenses issued to small processing units and farmers cooperatives. Transport intermediaries should be eliminated and farmers directly transporting FFBs need to be given reasonable transportation costs. A A long term edible oil import policy has to be announced taking into consideration its effect on local edible oil production, marketing and pricing. In order to protect the oil palm farmers, the government of India must adopt a trade policy to curb the import of palm and gene modified soya oils. Palm oil has been found a very healthy component of the human diet. It is considered a 'Miracle Oil' as it is found to be rich in vitamins A & E with diversity of uses. It is used to produce oleo-chemicals which are more environment friendly than petrochemicals. It is increasingly being used as bio-fuel. Oil palm has the potential to play an important role in the drive for more sustainable farming systems in the next century. A mechanism has to be developed to enable farmers obtain & sell carbon credits. A Well managed oil palms sequester more carbon per unit area than tropical rainforests, and oil palm plantations are predicted to become an important part of carbon offset management in the next century. Although oil palm is cultivated by large plantation companies elsewhere, oil palm has been successfully adapted to suit the needs of smallholders and has proved a powerful tool for poverty alleviation in developing countries like India. The writer is an agricultural A policy analyst [email protected]