What is the palm oil situation in India?
- India is the largest importer of palm oil. Most of the imports are from Malaysia and Indonesia.
- It is the 2nd largest palm oil consumer after Indonesia.
- The government has been trying to increase the domestic production over the years. Between 2015-16 and 2020-21, palm oil production increased at a compound annual growth rate of 6.1%– according to the 2021-22 Economic Survey.
How is the government boosting production?
- In the 1980s, a series of Technology Missions were launched.
- The objectives were:
- Increase productivity– as India suffers below global average yield levels
- Address increasing demands for edible oils
- Reduce edible oil import bills
- The Missions sought to increase the application of technology to optimize oil extraction.
- In 1990, the Technology Mission on Oilseed and Pulses was launched. According to the National Commission on Farmers, these missions helped improve yield, production, extraction technology and reduced import bills.
- The Commission recommended a mini mission on oilseed trade strategy. This is because external environment also plays a role in the initiatives’ success as technology dissemination.
- However, following the 1990s economic liberalization, edible oil imports fell under open general licensing regime.
- Consequently, edible oil self-sufficiency lost priority. The TMOP was dissolved during the 10th FYP (2002-07).
- However, in 2004-05, an integrated scheme on oilseeds, oil palm, pulses and maize was brought in, instead of the TMOP.
- In 2011-12, a special initiative was launched, under the Rashtriya Krishi Vikas Yojana, to expand the oil palm cultivation area.
- A National Mission on Oilseeds and Oil Palm guided the sector between 2014-15 and 2017-18. This was later subsumed under the National Food Security Mission-Oilseeds and Oil Palm in 2018-19.
- Also in 2017, the land ceilings for palm oil cultivation was removed and 100% FDI was allowed.
- More recently, the National Edible Oil Mission-Oil Palm was announced under the Aatmanirbhar Bharat Abhiyan.
- Some 11,000 crore INR was allocated to this mission.
- It aims to bring 1 million hectares under oil palm cultivation in 5 years.
- Some 2.8 million hectares have been assessed by ICAR- Indian Institute of Oil Palm Research’s reassessment committee to be fit for oil palm cultivation.
- An additional 0.65 million hectares is to be covered by 2025-26.
- About 0.325 million hectares is to be in the north-east.
- The government has released the guidelines for technical support and monetary support under this mission.
- To prevent negative impacts from the international fluctuation in crude palm oil prices, the oil palm farmers are to be given price assurance for fresh fruit bunches.
Why must we look for alternatives?
- The initiatives being undertaken in mission mode would improve the palm oil situation in India. However, giving so much importance to oil palm needs reconsideration.
- There is a need for serious efforts to take stock of the experience before such large-scale promotion. This is because the oil palm experience has been unsatisfactory in different states.
- Despite the multiple initiatives, the domestic oil palm production remains insufficient to meet the domestic demands. Imports still account for 60% of domestic edible oil requirements. Over 50% of these imports is palm oil. These imports are only expected to grow in the future.
- Major oil palm producers- Malaysia and Indonesia- are facing major biodiversity loss. Now India is targeting biodiversity-rich lands in the northeast and in the Andaman and Nicobar Islands.
- Oil palm is a water-intensive crop. This has major implications for Indian agriculture which is still significantly rain-fed.
- Also, studies show that palm oil cultivation negatively affects water quality. This is because a shrinking water table increases the risk of arsenic contamination and saline water ingress.
- It requires large stretches of agricultural lands while majority of Indian farmers hold less than a hectare of land.
- It is reported that oil palm’s yield per hectare is higher than that of other oilseeds. However, its wide-spread cultivation stands at odd with the objectives of curbing deforestation and groundwater overuse.
What are some alternatives?
- In terms of nutritional content, oil palm is trumped by oils from groundnut, rice bran, sunflower and oilseeds like mustard, sesame and linseed.
- However, India’s yield from these other oilseeds is also below global average. There is also the issue of long time period- while the crop’s gestation period is 4 years, it takes 7 years to stabilize the yield and achieve good oil quality.
- The government has already covered crops like soybean, groundnut, sunflower seeds, niger seed, sesamum, rapeseed, mustard, copra and safflower among the 22 crops for which MSP is provided. However, these crops are often sold at prices below the MSP.
- These alternative crops can be promoted through provision of assured prices and guidance.
- Rice bran has 18-20% oil content. It also contains oryzanol which is beneficial for metabolism.
- It is true that bran deteriorates fast and the oil sees a quick increase in free fatty acid content. This would affect the oil’s processing and edibility. However, this can be solved via heat treatment of the bran. Heat treatment technology is already available and millers could be incentivized to set up such bran stabilizing units.
- As paddy is already a major crop, extracting oil from rice bran can be more easily exploited.
- In addition to this, the husk from paddy mills can be used as fuel for steam generation. This steam can be used in the stabilizing units.
- Quick transport of the bran to solvent extraction plants would also help reduce this issue. Technical issues in the supply chain can be addressed with proper planning.
- The bran, after oil extraction, functions as a fertilizer and it already has an export market. Cooperative effort, along the lines of Amul’s dairy model, with the farmers as active participants, could help establish rice bran oil solvent extraction plants in the rice bowl regions.
- Farmers are familiar with cultivation of oilseed crops and tree-borne oils (like linseed, Mohua and Karanja).
- Farmers have been cultivating sesame and mustard crops on small patches of land to meet household requirements. Mustard and rapeseed (mustard variant) are notable less water-guzzling and give yield in short time period.
- Steps are needed to increase area under cultivation of mustard and rapeseed, during the Rabi season. Some necessary steps:
- Strengthening oil processing infrastructure
- Assured price
- Procurement policy, etc.
- Such support would be much less compared to investment being planned in oil palm cultivation. The results would also come in much faster.
India has a huge demand for palm oil, given its ubiquitous use in a range of products. However, at the end of the day, India is less likely to boost production to such extents that the domestic demand gets fulfilled. Also, given its water-guzzling nature and linkage to biodiversity loss, it is time India considers greener alternatives.
Practice Question for Mains:
How is the government trying to boost oil palm production in India? Examine the feasibility of going for greener alternatives. (250 words)