Price guarantee, higher input subsidy among planned support to oil palm farmers

August 12, 2021 3:30 AM

Besides, there is plan to provide an assured price to the farmers to be fixed at 150% of costs of production of oil palm, on the same pattern of minimum support price fixed for 21 kharif and rabi crops, sources said.

The notification came into effect from Saturday.The notification came into effect from Saturday.

By Prabhudatta Mishra

The government may guarantee a fixed crop price to the farmers to motivate them to take up oil palm plantation under the soon-to-be-launched edible oil mission. The mission will likely be implemented over the next five years, entailing investments of Rs 11,000 crore in the “cooking oil eco system”.

Currently, oil palm farmers get 100% reimbursement on fertilisers usage during the gestation period of 4-5 years until fruits start bearing, besides planting materials at subsidised rates. The government is considering to expand the assistance to cover some other costs farmers incur in maintaining the plantation and the aid could be directly transferred into their bank accounts under Direct Benefit Transfer (DBT), sources said.

Besides, there is plan to provide an assured price to the farmers to be fixed at 150% of costs of production of oil palm, on the same pattern of minimum support price fixed for 21 kharif and rabi crops, sources said. However, the government will have to chip in with some subsidy in case processors are unable to pay that assured price due to lower realisation from palm oil in the market, the sources said.

“Currently, there is a formula fixed by the Commission of Agricultural Costs and Prices (CACP) which processors adhere to in arriving at the farm-gate price of oil palm fruits,” an industry official said. The formula takes into account domestic market prices of palm oil as well as recovery rate, the official added.

Unless the Centre comes out with a legislation like in case of sugarcane, under which sugar mills are mandated to pay government-set price, it may be difficult to motivate farmers as they have to sell to the nearest processing mill within 24 hours of plucking the fruits, experts said. Delay in processing will reduce recovery rate (oil content in the fruit), they added. Oil palm being a long gestation crop, a long-term vision and policy plan is essential to attract investment from the industry.

The move to launch an edible oil mission comes amid repeated instances over decades of surging edible oil prices stoking food inflation and high imports of these items straining the country’s current account.

Import dependence on edible oils is as high as 60%, with the import bill hovering around Rs 75,000 crore per year. Edible oils imports are seen surging 65% on year to $17 billion in the 2020-21 oil year (November-October) due to a spike in global prices. The government appropriates more than a third of the import value through high import taxes on edible oils, which range from 30% to 49.5% at present.

Oil palm is currently grown in 12 states — Andhra Pradesh, Assam, Arunachal Pradesh, Chhattisgarh, Gujarat, Karnataka, Manipur, Mizoram, Nagaland, Odisha, Tamil Nadu and Telangana in about 4 lakh hectare, according to Oil Palm Developers and Processors Association (OPDPA). The area expansion is very low, so far—about 13,000-15,000 hectare added every year in last three years.

“The thousands of crores that we (pay) abroad to buy edible oils should be given to the farmers of the country. There is every possibility for increasing cultivation of oil palm in India, particularly in the northeast and Andaman-Nicobar Islands,” Prime Minister Narendra Modi said August 9. Along with oil palm cultivation, growing of other traditional oilseed crops would also be given a boost under the proposed mission, Modi had said.

The country has a potential of around 20 lakh hectare under oil palm, but another 8-10 lakh hectare area can be brought under it in next five years with the right policy push from the government, Sanjay Goenka, president of OPDPA told FE. There is a need for complete synergy and sync on policy between states and Centre, he added.

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