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Oil Palm Revolution in India
The crop that is raising farm incomes — and eyebrows
Context: Once a marginal crop, oil palm has become a key part of Telangana’s rural economy, offering farmers steady income through strong government support. However, concerns over water use, price drops, and ecological impact raise questions about the long-term sustainability of this boom.
What is Oil Palm?
- Oil palm (Elaeis guineensis) is the world’s most efficient oil-yielding crop.
- Native to West and Central Africa and widely cultivated in Malaysia and Indonesia, it provides two valuable products — palm oil from the fruit pulp and palm kernel oil from the seed.
- These oils are used across sectors: from food to cosmetics, pharmaceuticals, and industrial applications.
Global and Domestic Overview
- India, the world’s second-largest consumer of edible oil, is undergoing a strategic agricultural transformation — the Palm Oil Revolution.
- India consumes approximately 8.15 million metric tonnes (MMT) of palm oil, accounting for about 10% of global demand. However, domestic production is negligible — just 0.3 MMT — compelling India to import nearly 9.79 MMT (2022–23), primarily from Indonesia and Malaysia, countries often criticised for unsustainable production practices.
- Palm oil makes up a whopping 56% of India’s total edible oil imports, followed by soybean (27%) and sunflower oil (16%). The government now aims to reverse this imbalance by expanding oil palm cultivation within the country.
Policy Landscape: A Journey from 1986 to 2021
- India’s journey towards palm oil self-reliance spans several decades and missions:
- 1986 – Technology Mission on Oilseeds (TMO): Initiated to boost domestic oilseed production.
- 1999 – Oil Palm Development Project (OPDP): Focused on area expansion in states like Andhra Pradesh and Tamil Nadu.
- 2004–05 – ISOPOM: Supported oil palm in 12 states via subsidies on saplings, irrigation, and demonstrations.
- 2011–12 – Oil Palm Area Expansion (OPAE) under RKVY: Linked expansion to the proximity of processing mills.
- 2014–15 – National Mission on Oilseeds and Oil Palm (NMOOP): Set ambitious targets to increase vegetable oil production to 9.51 million tonnes by 2016–17.
- 2020–21 – National Food Security Mission – Oil Palm (NFSM-OP): Focused on productivity and technology dissemination across 12 states.
- 2021 – National Mission on Edible Oils – Oil Palm (NMEO-OP): A ₹11,040 crore mission with the vision to make India self-sufficient in palm oil.
NMEO-OP: The Flagship Reform
- Launched in August 2021, NMEO-OP aims to:
- Expand oil palm area from 3.7 lakh hectares to 10 lakh hectares by 2025–26, and 16.71 lakh hectares by 2029–30.
- Raise fruiting area to 8.5 lakh hectares by 2029–30 (currently at 1.89 lakh ha).
- Increase FFB (Fresh Fruit Bunches) production to 170 lakh tonnes and crude palm oil (CPO) production to 28.11 lakh tonnes by 2029–30.
- Introduce a Viability Price (VP) mechanism, ensuring minimum returns to farmers by compensating the gap between market price and viability price, encouraging long-term investments in the crop.
- The mission prioritises states like Andhra Pradesh, Telangana, Chhattisgarh, Tamil Nadu, Kerala, Karnataka, and Northeastern states with favorable agro-climatic conditions.
Ground Reality: Promise vs Pitfalls
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- While policies on paper look promising, field-level implementation presents serious concerns, especially in palm-growing districts like Khammam in Telangana, which alone accounts for nearly half of the state’s 1.2 lakh hectares under cultivation.
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Farmer Concerns:
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- Poor Quality Saplings: Farmers from the Telangana Oil Fed Aswaraopet Oil Palm Growers Society reported receiving defective plants, with 10–50% either yielding poorly or not at all. In some cases, plants produced only male flowers, rendering them commercially useless.
- Delayed Yielding Cycle: Unlike other crops with a 3–4 month lifecycle, oil palm takes up to 4 years to produce fruit. If the plant turns out to be defective after this period, the economic loss is devastating for smallholders.
- Price Instability: Due to a 10% cut in import duties on crude edible oils, the price of FFBs fell to ₹18,700/tonne, with predictions of further drops. Farmers argue that this move severely impacts their income and undermines domestic production incentives.
- Lack of Local Processing Facilities: Several plantation zones lack nearby refineries, increasing logistical costs and reducing margins for farmers.
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Farmer Demands: Telangana Agriculture Minister Thummala Nageswara Rao has called for:
- A Minimum Support Price (MSP) of ₹25,000/tonne for oil palm.
- Reconsideration of import duty reductions.
- Empanelment of global suppliers for high-quality seed material to ensure plant viability.
