Karnataka renews thrust on oil palm

Offers incentives to increase acreage and fight price volatility

The Karnataka Horticulture Department plans to bring an additional 2,300 hectares under oil palm cultivation in 2005-06 in a bid to revive the oil palm industry in the state. The sector had slowed down considerably over the last few years.

According to Ikramullah Mahmood, additional director of horticulture department, the target area was fixed based on the availability of seedlings this year.

The move to revive oil palm cultivation has been initiated under the Central government-sponsored Oil Palm Development Programme. While the state government provides 25 per cent funds under the scheme, the balance will be met by the Central government.

The target that has been set is modest in view of the fact that oil palms were uprooted on some 4,000-5,000 hectares since 1998 as the farmers, mainly in Shimoga and Davanagere districts, switched over to lucrative plantation crops like arecanut.

"For the next five years we have set an area expansion target of 20,000 hectares and have chalked out plans for farmers to raise cultivation. We are trying to educate the serious growers to not panic and trying to help them ride the price fluctuation by giving them subsidy for four years till the trees start bearing fruits," Ikramullah told Business Standard.

The proposed expansion will be mainly in the districts of Kodagu, Mysore, Chamaraj Nagar, Hospet, Gulbarga, Bijapur and Koppal. The latter two districts will take up cultivation of oil palm for the first time.

The state government is giving subsidy of up to Rs 15,500 to each farmer for four years to encourage oil palm cultivation. Up to Rs 45,000 subsidy is being given for digging borewells, as also for purchase of harvesting tools, diesel pumpsets and diesel.

"A reason for encouraging farmers to take up oil palm cultivation again is the remunerative prices that have been ruling for the palm fruits. Prices are presently ruling at Rs 3,750 per tonne fixed by the state price fixation committee. Prices are revised every three months based on crude palm oil rates in the international market," Ikramullah said.

At present, the area under oil palm in the state is estimated to be around 5,000 hectares. This is considered to be very poor as the potential is estimated to be around 2.5 lakh hectares. An additional 750 hectares are being brought under cultivation in the districts of Kodagu, Shimoga and Chikmagalur.

Despite the low acreage, Karnataka continues to be the second largest palm oil producing state in the country, after Andhra Pradesh, where nearly 30,000 hectares were brought under cultivation. Though the area in Andhra Pradesh has now been reduced, it continues to be the largest producer, Ikramullah said.

The import policy of the Central government had indirectly contributed to the decline in acreage under oil palms. Growers lost interest because the cost of imported palmolein was much lower than the domestically-produced crop.

The import duty had been reduced to as low as 15 per cent from 65 per cent. As a result, the area fell from 11,000 hectares in the mid-1990s to about 4,000 hectares in 2000-01. The duty has now been raised to 80 per cent.

Karnataka produces nearly 6,000 tonnes of oil palm fruits annually. While the state has one oil extraction plant functioning at H D Kote, a major portion of the fruits grown in the eastern districts is transported to oil mills in Andhra Pradesh.

The government has identified four entrepreneurs to set up oil mills in the state.