58% of potential oil palm acreage identified in five states: ICAR study

Govt says ICAR analysis shows oil palm requires less water than rice, banana and sugarcane; large-scale deforestation a concern

The Centre’s relaunched National Mission for Edible Oil-Oil Palm (NMEO-OP), which entails a total outlay of over Rs 11,000 crore, will look to expand area under oil palm largely in Andhra Pradesh and Telangana in the south and Assam, Arunachal Pradesh and Tripura in the north-eastern parts of the country.

According to an assessment by the ICAR-Indian Institute of Oil Palm Research (ICAR—IIOPR), out of a total of 2.8 million hectares of land  identified as potential by it in 2020, almost 58 per cent is in these five states, the Centre said in a reply to questions in Parliament.

In all, the ICAR study has identified 284 districts in which the palm plantations could be taken up as an alternative type of cultivation.

Most of these districts are in Bihar (35), Madhya Pradesh (29), Maharashtra (28), Telangana (27), Chhattisgarh (15) and Karnataka (15).

"While assessing the potential area, ICAR-IIOPR considered all environmental and biodiversity parameters and recommended its cultivation in selected districts and states," the government said in a recent Parliament reply

It added that the potential districts for these crops have been identified on the basis of land suitability and average yield.

The criteria

In another reply to Parliament, the Centre said the Reassessment Committee of ICAR-IIOPR had, in 2020, identified land suitable for oil palm cultivation under irrigated and rainfed conditions keeping various parameters such as remote sensing and Geographical Information Systems (GIS).

For irrigated conditions, ground water level, annual rainfall, minimum temperature, double- or triple-cropped areas were key parameters.

In the case of the rainfed category, five parameters--rainfall, minimum temperature, elevation, slope, soil depth, and length of continuous dry period were identified to delineate potential regions.

It further said under rainfed conditions, oil palm requires about 1,800 mm of rainfall a year, or 150 mm per month. Even under irrigated conditions, rainfall is seen as an key parameter with a weight of 7 per cent since it contributes water supply in lieu of ground water at least during the rainy period.

The government said as per the ICAR study, oil palm requires less water than crops like rice, banana and sugarcane for optimum cultivation.

Moreover, under the mission, emphasis has been given to promote micro irrigation and water conservation in oil palm for efficient water management and judicious use of water.

Clearly, when it comes to water usage, the Centre based on ICAR study believes that oil palm consumes less water than rice, banana and sugarcane.

What is the mission?

The Mission, according to a union cabinet decision of August 18, has approved a benchmark purchase price for oil palm along the lines of the existing Minimum Support Price (MSP) for other crops to be calculated by the Commission for Agriculture Costs and Prices (CACP). This comes with a provision to compensate for the loss through Direct Benefit Transfer (DBT) if the market price of oil palm falls below MSP.

“This is to ensure that farmers along with industry and processors remain sufficiently invested in the project, as oil palm cultivation usually has a long gestation period of 5-7 years before it starts giving returns to farmers,” agriculture minister Narendra Singh Tomar told reporters after the meeting of the Union Cabinet.

On the benchmark price, the government said that for the first time, the Centre will give a price assurance to oil palm farmers for their Fresh Fruit Branches (FFBs) from which palm oil is extracted by the industry.

This will be known as the Viability Price (VP). 

This VP will be the annual average CPO price of the last 5 years adjusted with the wholesale price index to be multiplied by 14.3 per cent," the government said in a statement.

This will be fixed yearly for the oil palm year from November 1 to October 31.

"This assurance will inculcate confidence in Indian oil palm farmers to go for increased area and thereby (will ensure) more production of palm oil. A Formula price (FP) will also be fixed each month, and will be 14.3 per cent of CPO. The viability gap funding will be VP minus FP and if the need arises, it would be paid directly to the farmers’ accounts in the form of DBT," an official statement said.

It added that the assurance to the farmers will be in the form of the viability gap funding and the industry will be mandated to pay 14.3 per cent of the CPO price which will eventually go up to 15.3 per cent.  

There is a sunset clause for the scheme which is 1st November 2037, the statement said. 

To give impetus to the North-East and the Andamans, the government will additionally bear a cost of two per cent of the CPO price to ensure the farmers are paid at par with the rest of India.

That apart, the union cabinet also approved an incentive of Rs 5 crore for oil palm processors if they set up their units in North-Eastern states.

The input subsidy for farmers has also been raised from the current Rs 12,000 per hectare to Rs 29,000 per hectare.

“The Indian Council of Agriculture Research (ICAR) has identified that around 2.8 million hectares of land in the country is suitable for oil palm cultivation of which just around 0.9 million is in North-East India which won’t be used by cutting standing forests or shifting farmers from other crops,” Tomar assured.

He said apart from the benchmark price a special assistance at the rate of Rs 250 per plant is being given to replant old gardens for rejuvenation of old gardens.

To address the issue of shortage of planting material in the country, seed gardens will be provided assistance up to Rs 80 lakh for 15 hectares in the rest of India and Rs 1 crore for 15 hectares in the North-East and the Andamans. 

Further, assistance will be provided for seed gardens at Rs 40 lakh and Rs 50 lakh for rest of India, and North-East and Andamans, respectively.

The target

According to officials, the new Mission plans to raise oil palm cultivation to one million hectares by 2025-26 and 1.7-1.8 million hectares by 2029-30. 

At present, less than 0.5 million hectares--around 0.34 million hectares--is under Oil Palm cultivation in India domestically, largely in Andhra Pradesh and a few North-Eastern states.

Domestic palm oil production is targeted to rise by three times to 1.1 million hectares by 2025-26 under the Mission and 2.8 million tonnes by 2029-30.

The problems

As per a 2013 estimate by the World Wildlife Fund (WWF), the expansion of oil palm plantations is likely to cause four million hectares (more than twice the size of Kerala) of forest loss.

Deforestation would most likely occur in high biodiversity areas, such as Borneo, Papua New Guinea, Sumatra and the Congo Basin in Africa.

The felling and burning of forests impact populations of endangered wildlife such as Sumatran Tigers, Rhinos and Orangutans. It also has adverse impacts on people’s health and disrupts local livelihoods.

At the global level, the impacts of forest loss are even more dramatic, including the release of greenhouse gases into the atmosphere that contribute to global warming.

Previous attempts

Efforts to boost domestic oil palm production has been on for several years. The Department of Agriculture Started the Technology Mission on Oilseeds and Pulses (TMOP) in 1991-92 in the potential states.

A comprehensive centrally sponsored scheme, Oil Palm Development Programme (OPDP) was taken up during VIII and IX Plan. During X and XI Plan, Government of India provided support for oil palm cultivation under Integrated Scheme of Oilseeds, Pulses, Oil Palm and Maize (ISOPOM). Further to boost oil palm cultivation, Government of India had supported a Special Programme on Oil Palm Area Expansion (OPAE) under RKVY during the year 2011-12 with an objective to bring 60,000 ha area under Oil Palm cultivation, which continued till March, 2014.

During the XII Plan, National Mission on Oilseeds and Oil Palm (NMOOP) has been launched in which Mini Mission-II (MM-II) is dedicated to oil palm area expansion and productivity increases. MM-II of NMOOP is being implemented in 13 States viz; Andhra Pradesh, Assam, Arunachal Pradesh, Chhattisgarh, Gujarat, Karnataka, Kerala, Mizoram, Nagaland, Odisha, Tamil Nadu, Telangana and Goa.

The funding pattern was 50:50 between Central and State Governments during 2014-15, which has been revised to 60:40 in case of general category States and 90:10 in case of North-Eastern and hill States from 2015-16.

Under MM-II, financial assistance is being provided to the farmers @ 85% cost of the planting material and @ 50% cost of the other components like maintenance cost of new plantations for four years, installation of drip-irrigation systems, diesel/electric pump-sets, bore-well/water harvesting structures/ponds, inputs for inter-cropping during gestation period, construction of vermi-compost units and purchase of machinery & tools etc.

Implementation of Centrally Sponsored Oil Palm Development Schemes have resulted in area expansion under oil palm from 8585 ha in 1991-92 to 3,16,600 ha by the end of 2016-17.

Similarly, production of fresh fruit bunches (FFBs) and crude palm oil (CPO) have increased from 21,233 MT and 1,134 MT respectively in 1992-93 to 12,89,274 and 2,20,554 MT respectively in 2016-17. At present, Andhra Pradesh, Karnataka and Tamil Nadu are major oil palm growing States.

However, success has been limited during the past 15 years despite the fact that oil palm has much higher productivity than other oilseeds like mustard.

The reasons are many. The foremost among them is that farmers would have to wait for four years for the trees in India to start yielding palm fruit bunches, which would then give palm oil and palm kernel oil.

That apart, Indian farmers generally have very small farm holdings, making investments in a sector like palm with varied and geographically diverse marginal farm holdings challenging.

Finally, corporate sector investments in oil palm are limited as compared with Malaysia and Indonesia.

“For plantations to be successful, these have to be taken up on a large scale to create efficiencies,” a report said

It is here that the entry of FMCG brands like Patanjali Group which recently acquired one of India’s oldest edible oil company Ruchi Soya into palm plantation in North-Eastern states generates lot of promise but its share of controversies as well