The Oil Palm Developers and Processors Association (OPDPA) in Andhra Pradesh is up in arms against the government’s efforts to change the pricing formula, which it says will make processing unviable.

The proposed pricing, which is allegedly advantageous only to farmers, has ignored the Rs. 440 per tonne field cost incurred by processors and will disrupt the Rs. 800 crore industry in the State, according to OPDPA.

Speaking to The Hindu on the injustice being done to the processors, R.R. Govindan, president of OPDPA said, “The government has yielded to the farmers’ lobby and hiked the price by Rs. 609 per tonne but failed to factor in the Rs. 440 lifting cost borne by processors. We seek revision of the cost and want 29 per cent share in Rs. 7,926 value per tonne of crude palm oil, as against the present 24.75 per cent.” The present cost structure will eventually make the industry unviable and sick, according to him.

Currently, the Commissioner for Agriculture Costs & Prices (CACP) has fixed the cost ratio between farmers and processors at 75.25:24.75.The poll driven government is in a hurry to please the farmers but the processors are marginalised. A similar move coupled with other measures had killed the industry in Karnataka and Tamil Nadu, Govindan said. This apart, the association also wants the government to discourage imports by imposing 30 per cent import duty on palm oil from Malaysia, he said.

Oil palm processors’ umbrella body attributes the injustice to the powerful lobbying by farmers associations and the palm oil exporting companies in Malaysia. While farmers’ associations are constantly working to increase their share per tonne, Malaysian traders are trying their best to facilitate more exports to India and reduce import duty. The import duty, which was 70 per cent in 2008, was brought down to 10 per cent due to the lobbying, OPDPA said.

With over 70 per cent of India’s oil palm cultivation, Andhra Pradesh is a key State in the production of fresh palm fruit which is grown in 1,10,000 hectares. The total cultivation in the country is spread across 1,50,000 hectares. There are over 1,213 oil palm processors and one government processing entity in the State that leads the oil palm industry in India.

About 50 per cent of the country’s requirement of palm oil is imported and the rest is grown and processed in India. The overall production of raw palm bunches is to the tune of eight lakh tonnes per annum which is valued at Rs. 800 crore.