Price assurances, viability gap funding for oil palm farmers

New Mission to boost domestic production and reduce dependence on imports

August 18, 2021 05:43 pm | Updated 10:27 pm IST - New Delhi

File photo for representation.

File photo for representation.

The Centre will offer price assurances, viability gap funding and planting material assistance to oil palm farmers to boost domestic production and reduce dependence on imports via a new mission approved by the Cabinet on Wednesday.

Over a five-year period, the financial outlay for the National Mission on Edible Oils-Oil Palm (NMEO-OP) will amount to ₹11,040 crore of which ₹8,844 crore is the share of the Central government, according to an official statement. The Mission hopes to increase oil palm acreage by an additional 6.5 lakh hectare by 2025-26 and grow production of crude palm oil to 11.2 lakh tonnes by 2025-26 and up to 28 lakh tonnes by 2029-30.

Volatility in international market

At a press briefing after the Cabinet meeting, Agriculture Minister Narendra Singh Tomar said the government aimed to reduce the risk for farmers facing price fluctuation of the fresh fruit bunches from which oil is extracted, due to volatility in the international market.

“The government will develop a mechanism to fix and regulate palm oil prices. So if the market is volatile, then the Centre will pay the difference in price to the farmers through direct benefit transfer,” he said.

This is the first time the Centre will give oil palm farmers a price assurance, with industry mandated to pay the viability gap funding of 14.3% of crude palm oil prices. In a bid to encourage oil palm cultivation in northeastern India and in the Andaman and Nicobar islands, the Centre will bear an additional cost of 2% of the crude palm oil prices in these States. The scheme has a sunset clause, ending November 1, 2037.

The Mission will also more than double the support provided for the cost of planting materials, with an increase from ₹12,000 petr hectare to ₹29,000 per hectare along with further assistance for maintenance, inter cropping interventions and the rejuvenation of old gardens. To deal with the shortage of planting materials, the Mission will provide assistance to seed gardens up to ₹100 lakh for 15 hectares in the focus areas of the northeast and Andamans, and up to ₹80 lakh in the rest of the country.

Biodiversity concerns

Asked about biodiversity concerns involved in monoculture plantations, Mr. Tomar said an assessment by the Indian institute of Oil Palm Research had found 28 lakh hectares across the country which could be safely used for oil palm cultivation. Less than four lakh hectares are currently planted with oil palm.

In a separate decision, the Cabinet Committee on Economic Affairs approved a revival package of ₹77.45 crore for the revival of the Northeastern Regional Agricultural Marketing Corporation to provide marketing and post harvest processing support to farmers.

Reforms in the sector

The Oil Palm Developers & Processors Association hailed the Cabinet decisions and said it has been relentlessly urging the government to usher reforms in the sector. The decisions would benefit farmers and make it viable for the industry to continue contributing towards making the country self-sufficient in edible oil requirements and consequently save foreign exchange, president Sanjay Goenka said.

Noting that India is heavily dependent on imported edible oils, the OPDPA in a press release said nearly 15 million tonnes or about 68% of country’s annual edible oil requirement of 22 MT are imported. About 9 MT or around 60% of the edible oil import is palm oil and its derivatives.

Managing Director of Godrej Agrovet Balram Singh Yadav said by assuring a transparent price mechanism based on the last five years average, the Centre has made sure the farmer remains unaffected by price volatility. Since it is a long gestation crop, initial improved support to farmers will also encourage quicker adoption and sustainability of this crop, he said in a release.

(With inputs by our Special Correspondent, Hyderabad)

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