The Union Government is taking all steps to promote oil palm cultivation in the country to meet edible oil scarcity and for import substitution, but unless farmers get a remunerative price for the fresh fruit bunches (FFB), the situation will not improve, said Dr Y. Sivaji, honorary president of the AP Tobacco Growers' Association and a former member of the Rajya Sabha. Dr Sivaji, who participated in pre-budget consultations with the Union Finance Minister, Mr Pranab Mukherjee, pleaded in a written note that the present price fixing formula for oil palm FFBs is “unscientific and wholly in favour of the oil palm processor rather than the farmer. Unless farmers get remunerative price for FFB, the objective of area expansion cannot be achieved.”
He said that unlike in Indonesia and Malaysia where oil palm was a rain-fed crop it was being cultivated in India in irrigated conditions.
Andhra Pradesh stood first in oil palm cultivation, especially West Godavari district, and several processing units had been set up in the district by private companies.
There was also one by the AP Oil Federation.
However, due to the flawed policies of the Government, enterprising oil palm farmers in Andhra Pradesh and elsewhere were being forced to give up the crop.
He said the present price-fixing formula for oil palm FFBs was based on the statistics of oil extraction rates and value realisation provided by the processing units and not on the research of the Indian Council of Agricultural Research (ICAR) or some other independent agency. It was being done on a monthly basis, he added.
He said that at present the processing units were realising Rs 11,400/tonne of FFB. The farmer was spending Rs 8,145 per tonne of FFB, according to a 2010 survey, exclusive of cultivation subsidies given by the Government.
Processing cost
The processing cost as recorded in the AP Oil Fed processing unit in West Godavari district was Rs 1,853/tonne of FFB.
Therefore, proportionately, the farmer should get Rs 8,900/tonne and the processor Rs 2,500/tonne.
But in fact now the farmer was getting Rs 6,000/tonne and the processor Rs 5,400/tonne.
It clearly showed how flawed the price fixing formula was, he added.
He urged the Union Finance Minister to address the issue in the coming budget and also to announce some incentives to oil palm farmers.
Published on February 12, 2012
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