Edible oils are vital to the global food sector, and India, with a population of over 1.4 billion, faces a major challenge in meeting its demand. Currently, India imports 57% of its edible oil demand, resulting in a $20.56 billion USD outflow. To reduce this dependency, India must focus on achieving self-sufficiency by increasing the cultivation of oilseeds and palm oil.
Source: The Solvent Extractors’ Association of India
The Prime Minister recently launched the National Mission on Edible Oil-Oil Palm (NMEO-OP), committing an investment of Rs 11,040 crores over a span of five years.
It is a newly introduced Centrally Sponsored Scheme focused on expanding oil palm cultivation across India. Under this initiative, an additional 6.5 lakh hectares of land will be dedicated to oil palm cultivation by 2025-26, with plans to expand the total area to 1 million hectares by 2025-26 and further increase it to 1.67 million hectares by 2029-30.
Farmers cultivating oil palm will receive financial support, along with compensation based on a price and viability formula. This viability mechanism will function similarly to a Minimum Support Price (MSP), with the government setting the price at 14.3% of the Crude Palm Oil (CPO) price.
During a visit to Arunachal Pradesh, Prime Minister Narendra Modi emphasized the importance of India’s self-reliance in edible oil production. He introduced the “Mission Palm Oil,” a dedicated initiative by the central government aimed at fostering palm oil cultivation, particularly in the Northeast region. The Prime Minister inaugurated the first oil mill under this mission, expressing confidence that it will not only make India self-reliant in the edible oil sector but also increase farmers’ incomes. He also extended his gratitude to the farmers for their contributions to palm oil cultivation. India imports palm oil from many countries including Indonesia, Malaysia and Thailand.
The Government of India has been actively working to expand the area and production of oil palm to enhance the domestic availability of edible oils and reduce the reliance on imports. Since 1991-92, various initiatives have been launched to achieve this goal. These include the Technology Mission on Oilseeds & Pulses (TMOP), the Integrated Scheme on Oilseeds, Pulses, Oil Palm, and Maize (ISOPOM), the Oil Palm Area Expansion (OPAE), the National Mission on Oilseeds and Oil Palm (NMOOP), and currently the National Food Security Mission (NFSM)–Oilseeds & Oil Palm.
These schemes have been implemented across 13 states, including Andhra Pradesh, Telangana, Chhattisgarh, Tamil Nadu, Kerala, Gujarat, Karnataka, Odisha, Mizoram, Nagaland, Assam, Arunachal Pradesh, and Manipur. The funding for these schemes is provided at a 60:40 ratio for general states and a 90:10 ratio for North-Eastern and hill states.
Thanks to sustained developmental efforts over the years, the area under oil palm cultivation has grown significantly, rising from 8,585 hectares in 1991-92 to 3.70 lakh hectares by 2020-21. Likewise, the production of Fresh Fruit Bunches (FFBs), the main source for oil palm extraction, has risen from 0.21 lakh tonnes to 16.89 lakh tonnes during the same period. Crude Palm Oil (CPO) production has also seen a notable increase, from 0.01 lakh tonnes to 2.72 lakh tonnes. However, the actual fruiting area in the country remains at 1.87 lakh hectares.
ASSESSMENT OF OIL PALM POTENTIAL AREA IN INDIA
The ICAR-Indian Institute of Oil Palm Research (IIOPR) reassessment committee, in 2020, estimated a total potential area of approximately 28 lakh hectares for oil palm cultivation. Of this, 27.99 lakh hectares are classified as potential areas, with 18.37 lakh hectares in general states and 9.62 lakh hectares across seven northeastern states. Currently, the North-East has covered only about 38,992 hectares, far below the assessed potential of 9.62 lakh hectares, highlighting significant growth opportunities for oil palm cultivation in the region. In 2020-21, the production of crude palm oil (CPO) was approximately 2.72 lakh tonnes, derived from 1.87 lakh hectares of fruiting area.
Concerns Regarding Oil Palm Cultivation
- Impact on Tribal Lands: Oil palm cultivation poses significant challenges to tribal communities, particularly regarding land rights and traditional practices
- Threat to Wildlife: The focus areas for palm oil plantations often coincide with critical biodiversity hotspots and ecologically fragile regions
- Invasive Nature of Oil Palm: Oil palm, being a non-native species to many regions, including north-eastern India, is classified as an invasive plant
- Health Concerns: The cultivation of oil palm requires significant water consumption, with each tree using up to 300 Liters of water daily raising concerns over the sustainability and safety of palm oil production.
- Economic Struggles for Farmers: A critical issue faced by oil palm farmers is the difficulty in obtaining a fair price for their fresh fruit bunches (FFBs).
Way Forward
The government’s recent decision to raise the import duty on edible oils from 0% to 20%, making the total effective duty 27.5%, will benefit oilseed farmers, especially those growing soybean and green gram, by ensuring better prices for their crops. This move will also encourage more oilseed cultivation during the Rabi season, boosting prices for mustard, and increase soya khali production, which will support exports and benefit related sectors.
In conclusion, by strategically increasing import duties and promoting indigenous oilseed cultivation, India is working towards achieving self-reliance in edible oil production. Supporting farmers with subsidies, incentivizing oil palm cultivation where suitable, and implementing smart import duty policies will strengthen the agricultural sector. The success of initiatives like the oil palm mission, particularly in states like Andhra Pradesh, can serve as a blueprint for nationwide growth, ensuring better incomes for farmers, enhanced exports, and a more sustainable agricultural future for India.
Sources: https://nmeo.dac.gov.in/aboutus.aspx
https://pib.gov.in/PressReleasePage.aspx?PRID=2014554
https://pib.gov.in/PressReleasePage.aspx?PRID=2054937
https://www.exportimportdata.in/blogs/palm-oil-import-in-india.aspx
https://www.indexmundi.com/agriculture/?country=in&commodity=palm-oil&graph=imports
