India produced 93.18 lakh tonnes (lt) of vegetable oils in 2020-21 (November-October), as against 85.38 lt and 76.87 lt in the previous two years. But despite this record output, as estimated by the Solvent Extractors’ Association of India, the country will end up importing some 133 lt, from the 155.49 lt of the 2018-19 oil year. Simply put, India imports anywhere from nearly 60 per cent to over two-thirds of its vegetable oil requirement, depending on how good the rains are, entailing an annual foreign exchange outgo of $10-11 billion. It is in this context that one must view the Narendra Modi government’s new National Mission on Edible Oils-Oil Palm. The scheme aims at increasing the total area under oil palm from the current 3.5 lakh hectares (lh) to 10 lh by 2025-26. Growers would be entitled to a minimum “viability price” for their fresh fruit bunches (FFB) production, which is 14.3 per cent of the last five-year-average crude palm oil (CPO) price adjusted for wholesale inflation.
The focus on oil palm is not misplaced as it is a crop that can yield 20-25 tonnes of FFBs per hectare, translating into 4-5 tonnes of CPO. No other oilseed can give so much: Mustard and groundnut yields aren’t more than 2-3 tonne per hectare and the oil recovery from that only at 35-40 per cent. No realistic plan of reducing import dependence in edible oils — to, say, 30-40 per cent from the existing 60-70 per cent — is possible without recognising the role of oil palm. Out of India’s annual 130-150 lt vegetable oil imports, 80-90 mt is accounted for by palm oil alone.
That said, there are valid concerns over introducing oil palm in tropical rainforests or biodiversity-rich areas such as the Andaman & Nicobar Islands and the Northeast. The crop is probably better suited for states such as Andhra Pradesh, Tamil Nadu, Karnataka and Odisha, where it can replace paddy and be grown using drip irrigation, mulching and other water-saving practices. India is anyway producing too much rice and any diversification must be welcomed. But the focus should, for now, be on states already cultivating oil palm. Farmers there have had a mixed experience with the crop that takes at least five years to grow and start yielding 20-25 tonnes of FFB/hectare. An assured “viability price”, protecting against fluctuations in global edible oil markets, should instil confidence among farmers in these states. Let them expand acreages first before others in more ecologically fragile regions.
This editorial first appeared in the print edition on August 28, 2021 under the title ‘Crude fact’.