This issue of encouraging oil palm cultivation is slated to be discussed in the two-day conference of state agriculture ministers beginning September 29 convened to discuss strategies for the coming rabi (winter) crop season. The ambitious Oil Palm Development Programme (OPDP) was launched in 1992 for bringing in identified eight lakh hectare land in Andhra Pradesh, Tamil Nadu, Karnataka, Andaman & Nicobar Islands and Lakshadweep under oil palm cultivation, but the progress so far has been tardy as only 50,000 hectares have been brought under cultivation as per official records.
Imports of edible oils in 2002-03 increased by 33 per cent to be at $1,806.97 million in value terms as against $1,355.57 million in 2001-02. The imports of edible oils still on the rising trend even in the current fiscal.In fact, imports of edible oils started rising after the government reduced duty on refined edible oils from from 85 per cent to 70 per cent in April, 2003. It good that Union agriculture minister, Rajnath Singh, has of late realised this fact and has asked for restoration of 85 per cent duty, said KLM Chabbra, executive director, the Central Organisation for Oil Industry & Trade (COOIT).
A document prepared by the Union agriculture ministry has admitted that whenever there has been a reduction in duty on edible oils, the ambitious OPDP suffered largely. The document paper says, After the launch of OPDP for promoting cultivation of this new crop in India, annual area covered under oil palm increased steadily up to 1995-96 but declined steadily after that. i995-96 is the year during which import duty on edible oils was reduced from 65 per cent to 35 per cent. In years subsequent to 1995-96 import duty on edible oils followed downward trend. Further, import of edible oil being under open general licence (OGL), large quantities of edible oils were imported.
The document paper further says, Against the estimated gap of 15 lakh tonne between demand and supply, during 1997-98 (November-October) 20.83 lakh tonne of edible oils were imported. Imports of edible oil reached all-time high of 43.93 lakh tonne during 1998-99 (November-October), in which contribution of palm oil was as high as 26.77 lakh tonne. Malaysia, which is the largest exporter of plamolein reduced the price of palmolein to $355 per tonne in July, 1999 as compared to $720 per tonne in March 1995. As a result domestic price of palm oil crashed and price of crude palm oil (CPO) which were ruling at about Rs 35,000 per tonne in 1995-96 and Rs 32,690 per tonne in November, 1998 declined to as low as Rs 13,000 to Rs 15,000 per tonne in November, 1999. At this price of CPO, oil palm is viable only if the yield levels are good (above 20 tonne per hectare) but even with profitable level of yields oil palm would find it difficult to compete with other crops like sugarcane, arecanut and paddy.
The document paper also identified other factors for slow progress in oil palm cultivation like reluctance of farmers to take up the new crop having gestation period of three to four years and requiring high initial investment and assured irrigation, shortage of assured power supply, non-enactment of Oil Palm Act by states other than Andhra Pradesh, Tamil Nadu, Goa and Karnataka, failure of Nabards refinance scheme in providing timely loan to farmers, cultivation subsidy not being made available to farmers having more than six hectare land and lack of processing facilities in near by areas.
Another government document, Economic Survey 2002-03 has suggested declaring oil palm as a plantation crop so that cultivation of this crop can be taken in larger areas in excess of the ceiling limits for landholdings. Alternately it has also suggested industrys involvement in contract farming with farmers and payment of agreed minimum gaurantee price (MGP) for fresh palm fruits (FPFs), in lieu of the minimum support price (MSP) announced by the government. Tobacco farmers are paid as per MGPs by the industry which are usually higher than the MSPs. Mr Raghu Mody, chairman of the Rasoi group to set up an Oil Board on the lines of the existing tea and coffee boards.