Rethink palm-oil atmanirbharta – The Financial Express

Imports meet 50% of India’s edible oil demand, and over 55% of these imports is palm-oil, making India the world’s largest importer of palm oil.

By Payal Seth & Bhaskar Mittra

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On August 18, 2021, the Centre launched the National Edible Oil Mission-Oil Palm, with an outlay of over Rs 11,000 crore, to increase palm oil production by three times by 2025-26 and help India achieve self-sufficiency. Prices of oil palm fresh fruit bunches (FFB), from which the oil id extracted, are linked to global crude palm oil (CPO) prices and hence are subject to fluctuations. These fluctuations have previously deterred Indian farmers. To overcome these critical barriers, the scheme is offering a price assurance to the oil palm farmers and other incentives. But why this sudden push for self-sufficiency?

Imports meet 50% of India’s edible oil demand, and over 55% of these imports is palm-oil, making India the world’s largest importer of palm oil. This also makes India vulnerable to price fluctuations, as evident from prices jumping by 60% between June 2020 and June 2021, leading to edible-oil inflation of 32.5% in July 2021. Here, we discuss the consequences of oil palm production and alternatives that could be explored.

Oil palm trees have an average life of 28-30 years, rendering the land unavailable for the cultivation of other edible crops. Additionally, because it is a water-guzzling crop, it might worsen the already critical state of India’s groundwater resources. It could also pose a serious threat to India’s biodiversity because research has shown that conversion of natural forest to commercialized palm plantations has led to loss of flora and fauna species in Malaysia and Indonesia (two of the world’s largest producers of palm oil). Palm plantations are also much worse than natural forests at absorbing the carbon dioxide from the environment. The plantations also do not bode well for farmers’ livelihoods. Oil palm trees take 5-7 years to produce FFBs and can generate income only after a considerably long time. What if import prices become cheaper than the cost of production in the interim? Since hundreds of millions in India are dependent on agriculture, these uncertainties, even in the light of price assurance by the government, will continue to plague their economic security.

India already has traditional oilseed crops like groundnut, rapeseed, mustard and soybean, that are grown by resource-poor farmers in rain-fed areas. However, limited incentives have been provided to promote these crops which are not only better for the environment, but also rejuvenate the soil by fixing atmospheric nitrogen. Since India’s native oilseed productivity lags behind the world’s, there is a need to restrategise the policies that encourage research on high yielding varieties of edible oilseeds along with investment in low-cost irrigation that can sustain the yield potential of released varieties. Eastern India has approximately 11.65 million hectares under the rice-fallow system, which means that a second crop is not grown in these areas. New policies and a concentrated effort could send a positive signal to farmers in such regions to aggressively pursue the cultivation of suitable oilseeds. Incentivising farmers in Punjab and Haryana to diversify partly to oilseeds could help alleviate the severe ecological consequences of rice-wheat farming. Encouraging private sector to participate in procuring these oilseeds would further the cause. Beyond the alternatives for oil palm, research shows that intercropping, i.e., the practice of growing two or more crops near to one other can mitigate the negative impact of future palm oil plantations on the environment.

Given the nature of the global economy, the importance of saving on import bills through the push for self-sufficiency for palm oil production cannot be denied. However, the means to reach the end goal need an urgent reassessment as India’s biodiversity, groundwater resources and the livelihood of farmers are at stake. We must ask: Is the push for atmanirbharta in palm oil really necessary? Will India not gain more if it were to preserve and aggressively promote its traditional edible oilseeds while continuing to simply import the rest?

Respectively, economist-researcher, and associate director, at Tata-Cornell Institute, Cornell University