The Tamil Nadu government has permitted contract farming in oil palm and plans to create large oil palm farms in over 20,000 hectare in the next five years. It has roped in some of the leading farm sector private sector companies to take the lead in this. By the end of 2006-07, oil palm was being cultivated in 5,341 hectare, mostly in the Cauvery delta districts of Tiruchirapally, Thanjavur, and Perambalur. During 2007-08, oil palm was planted in over 3,000 hectare.
Cauvery Oil Palm Ltd has been purchasing oil palm bunches from the farmers at Rs 4,000 a tonne. It has set up a plant with a capacity to process 2.5 tonne of oil palms an hour.
The latest proposal of the state government is to expand the cultivation to other districts, including Villupuram, Cuddalore, Vellore, Thirunelveli, and Tuticorin. Companies like Godrej, Ruchi Soya, Foods and Fats are allotted cultivable regions in these districts. They will enter into a contract with farmers, help them cultivate oil palms, and buy back the palm bunches for processing.
The plan is to develop large oil palm farms of 100 hectare extending up to 2 square kilometre. These companies are asked to set up oil palm processing plants within three years in their respective areas of operation. The proposal is to cultivate oil palm in at least 20,500 hectare in the next five years, government sources said.
The state government promotes palm oil cultivation to meet the growing demand for edible oils and for increasing the income of farmers. According to the agriculture department sources, it is estimated that cultivation of oil palm in a hectare would cost up to Rs 15,000. The yield is expected to be around 20-25 tonne, and the net returns would be up to Rs 30,000.