Rise in palm cultivation can halve oil imports

Edible oil imports can be slashed by half from the current 5 million tonne if area under palm oil cultivation is expanded in the country, said O P Goenka, a leading player in the vegetable oil industry, and director of the Andhra Pradesh-based Foods Fats and Fertilisers.

In the current oil year that started in November, edible oil imports are seen 5-5.1 million tonne, up 7 lakh tonne from last year due to the expected decline in kharif oilseed output.

About 12 years back, the country had identified 8 lakh hectare land for oil palm cultivation. But, till date, only around 80,000-82,000 hectare or 10 per cent of this has been actually brought under cultivation, he said.

"This is a very gloomy picture. India has been very slow in exploiting its palm oil potential. We have to act fast in bringing more area under palm oil in order to meet the growing demand for edible oil," said Goenka, who has served in various positions with leading oil bodies such as the Central Organisation for Oil Industry and Trade and the Soybean Processors Association of India.

The country's per capita income has risen to $600 from $240 a few years back, and the food habit pattern of the masses is changing due to the fast food culture. This, in turn, is leading to rise in per capita consumption of edible oil.

According to Goenka, if all the 8 lakh hectare are brought under cultivation, and assuming a yield of 3 tonne a hectare, we can produce around 2.4 million tonne of palm oil a year. This is nearly half of the country's imports.

"In India, we have found certain areas in Andhra Pradesh, specially the Godavari district, where yield is as high as 4-4.5 tonne of oil a hectare," he said.

Malaysia, which is the largest producer of the oil, yields between 3.5-4 tonne a hectare. Andhra Pradesh, Karnataka, Goa, and Orissa are some of the states identified for plantation purposes.

According to Goenka, if the government works at the current pace to develop palm oil cultivation in the country, it would take more than ten years to complete the 8 lakh hectare quota.

"The government should focus now on meeting the rising demand for edible oil. We need a separate cell just for that," he said.

Another policy measure that can boost cultivation of oil palm is its declaration as a plantation crop in India, Goenka said. "Once you declare it as a plantation crop, around 1,000 hectare can be put under cultivation in a contiguous manner, which is not currently possible as most of the land is owned by marginal farmers having smaller land plots," he said.

A marginal farmer owns around 1-2 hectare of land, due to which cost to productivity becomes very high, leading to low realisations. This also leads to shifting of crops to more remunerative ones.

"These plantations could have a co-operative structure with around 1,000-1,500 farmers forming one unit," he said.

This would result in better utilisation of irrigation, fertilisers, nutrients, and adoption of scientific methodologies.

Goenka feels there may be further reductions in customs duty on import of edible oils in the country, as the government is trying to curb rising inflation.

India imposes 70 per cent import duty on crude palm oil and 45 per cent on crude soyoil. "However, despite reductions earlier, prices have risen sharply as they are also governed by the prices in the international markets," he said.

The solution is not reducing duties, but increasing the yield of the edible oil complex to 1.7 tonne a hectare from the current 900 kg a hectare, he said.