Palm Oil: Public awareness and accurate information are crucial for reshaping perceptions

Business MInutes
Dr. Anupam Barik, Former Additional Commissioner (Oilseeds) Dept. of Agriculture & Farmers Welfare, GOI.

A recent Down to Earth article titled “India’s palm oil plans wreak havoc on the ground” warns about the so called  dangers of India embracing what is widely considered to be the world’s most versatile vegetable oil as well as the most productive oil crop.


The alarmist article paints a negative picture of palm oil for India, citing the news item "If India gives land, we will work together to produce palm oil here, says visiting Malaysian Minister," which it suggested was an odd request to make from a visiting minister. 


The truth is, and for those already in the know, we have a lot to learn from Malaysia and its experience with palm oil, its cultivation and in aiding the livelihoods of smallholder farmers. We might also want to build the capacity to export palm oil, but that is a long way down the line; for now, our main focus must be to meet our demand for food security by gaining self-sufficiency or “Atmanirbharta” in edible oils.


We, as a people, need to work in tandem with the government for better infrastructure around its National Mission on Edible Oils-Oil Palm (NMEO-OP) initiative, launched in 2021. By expanding oil palm cultivation to cover 650,000 hectares by 2025-26, the goal is to produce 1.16 million tonnes of crude palm oil, thus meeting 5% of the total edible oils demand by 2025-26. In fact, India’s palm oil plan provides the potential for food and economic security.


At this point, it’s important to note that India consumes about 25 million tonnes of vegetable oil annually, with only 40% produced domestically, leading to a heavy reliance on imports. India's vegetable oil consumption is growing by almost 1 million tonnes per year. While palm oil now constitutes over 38% of the total edible oil consumption, soybean oil is around 21%, followed by mustard oil at 14% and sunflower oil at 12%. Moreover, India happens to be Malaysia’s largest importer of palm oil.


India stands to gain significantly from Malaysia’s experience to reduce its dependence on imports and meet the demands of food security. But why Malaysia, you may ask. Well, palm oil is a flourishing industry in that country, contributing roughly 3% to its GDP, which is about $400 billion USD. Malaysia’s export of palm oil represents approximately $20 billion USD annually. It also supports smallholder farmers, contributing to nearly 450,000 households.


Encouragingly, India and Malaysia have decided to increase bilateral cooperation in the field of palm oil, especially in areas like research and development, seed supply and partnership management experience to India under NMEO-OP. The meeting between the Union Minister for Agriculture & Farmers Welfare and Rural Development, Shivraj Singh Chouhan and the Minister for Plantations and Commodities of Malaysia, Datuk Seri Johari Abdul Ghani in New Delhi on 18th July, 2024 was a step forward in meeting this goal.


Despite its potential, palm oil has faced concerns regarding its environmental implications, which is an outdated narrative. The NMEO-OP initiative aims to counter these claims by emphasising the sustainable expansion of oil palm, which is seen as crucial for reducing oil imports and bolstering the domestic economy. Palm oil is a highly productive crop, capable of yielding 4-5 tons of oil per hectare per year, which is higher than any other vegetable oil crop. According to Our World in Data, the statistical unit based at the University of Oxford, palm oil “produces 36% of the world’s oil but uses less than 9% of croplands devoted to oil production.”

To put that into perspective, because of its high yield, palm oil requires around one-ninth the amount land of that substitutes like rapeseed, olive oil and soybean require. To keep pace with growing food demand would require 36 million hectares of additional oil palm land globally, whereas soybean, the second most popular oil crop, would need 204 million more hectares. 

It also requires less water than crops like sugarcane and rice, offering farmers a reliable income source, and contrary to what the doomsayers say, producing palm oil takes significantly less amount of fertilizer, pesticides and energy inputs.


Moreover, numerous studies have substantiated the many fold benefits of palm oil across various applications in both edible and nonedible products, owing to its versatile characteristics and balanced fatty acid profile.


In India, it must be noted that forest lands are not being recommended and used for oil palm cultivation, but only the cultivable land of individual farmers, mainly as replacement for rice cultivation and, that too, only in agro-ecologically suitable regions. Oil palm is a rapidly expanding profitable crop in NE states under NMEO-OP. The Indian government has identified 28 lakh hectares across 22 states and 284 districts, including 9.62 lakh hectares in the NE, as suitable for oil palm cultivation. The goal is to expand oil palm cultivation in these regions without harming the environment. By March 2023, 42,977 hectares in the NE had been planted under NMEO-OP, with a target of covering 3.28 lakh hectares by 2025-26.


Oil palm is also not a monoculture as expressed by many. Special provision for intercropping of annual crops in oil palm plantation has been made for the initial four years of the non-bearing period of oil palm. Such agri-horticultural systems conserve land resources and are better adapted to climate change. The annual biomass productivity of oil palm amounts to 50 tonnes during its 30-year life span, which could serve as an effective carbon sink to protect the environment by arresting global warming.


Under the NMEO-OP, financial assistance covers 85% of planting material costs and provides significant support for plantation maintenance. This support is split 60:40 between the Central and State Governments, with a higher ratio of 90:10 for North Eastern states. The program offers comprehensive support, including assured buyback agreements with private players and protection for farmers against global oil palm price volatility through viability gap payments (VGP). Additionally, the government allows 100% FDI in plantations and commits to substantial financial aid for farmers.


Therefore, misinformation around palm oil could prove incredibly damaging for the future of India’s economy. Public awareness and accurate information are crucial for reshaping perceptions and ensuring the sustainable growth of the palm oil industry in India.


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