“Masterji” or Mr Ch. Keshava Rao of Dosakayalapalli village, some 40 km from Kakinada, in East Godavari district has been growing oil palm on 10 hectares since 1996-97. He grows paddy on another 10 hectares and coconut in another two hectares.
But he is more happy with his oil palm plantation in view of the return he is getting.
“I get around Rs 30,000 a hectare a year. In paddy, I get some Rs 18,000 a hectare only. But more than this, I need not worry about labour, rush to Agricultural Produce Marketing Committee yards or look out for buyers,” the 70-year-old farmers says.
“There are around 13,000 farmers who have taken up oil palm cultivation in and around Peddapuram mandal of East Godavari district,” says Mr N.K. Arora, Corporate Head (Palm Business) of Ruchi Soya Industries Ltd's Oil Palm Division.
“Masterji” and Mr Arora were part of a cross section of people who interacted with a select group of journalists who were taken on a company-sponsored trip to the division's corporate office at Peddapuran in East Godavari district.
“In the last couple of months, interest in oil palm has increased since prices of crude palm oil in the global market have increased. This has helped farmers to get Rs 7,069 a tonne for an oil palm fresh fruit bunch (FFB) in February,” says Mr Arora.
The scenario is different from the one that prevailed three months ago when some farmers uprooted their oil palm plantations.
Prices for FFB are fixed every month based on the average crude palm oil price. For a FFB, a farmer gets 12 per cent of crude palm oil price plus 33 per cent of the realised value of palm kernel nut that makes up nine per cent in the FFB.
“The prices has been worked on the assumption that the oil extraction ration from FFB is 18 per cent. However, the ration is around 17.5 per cent,” Mr Arora says.
When a grower opts to cultivate oil palm, he or she will have to put up with the maturity period of three years. Oil palm begins to yield from the fourth year and productivity peaks from the seventh year onwards until the plant's 25{+t}{+h} year. In the first two years, farmers can earn through inter-cropping in which banana is perceived as the best. Besides, farmers get subsidy for drip irrigation and micro-nutrients added to Rs 21,000 for four years if they opt to grow oil palm on their farm.
“Ruchi gives an incentive of Rs 2,000 a hectare for drip irrigation,” says Mr Arora
Not just that, once a farmer sells FFBs to a miller, the payment is credited within a fortnight to his or her bank account. Sales are made at collection centres from where FFBs are transported to crushing units.
“If growers can get through the initial period, oil palm is the best bet since it is trouble and hassle-free,” Mr Arora says but adds that assured return to growers is a must.
“We expect prices for March to be lower by at least Rs 200 since global prices have dropped. There should be no problem as long as prices stay above Rs 6,000 a tonne. But below that, it could spell trouble,” he says. One way of sustaining farmers interest in oil palm and making them take proper care of the crop is to ensure a minimum support price. “If the Government can fix a minimum support price somewhere between Rs 6,000 and Rs 7,000 for a FFB, it will bring in tremendous change,” Mr Arora says. If market prices drop below the MSP, the Government could step in and pay the difference. If prices rise, then the millers can foot the difference,” says Mr Arora.
“Two years ago, the Andhra Pradesh Government came up with the Market Intervention System. This was to ensure remunerative price for growers. While millers have paid their share, there is an outstanding of over Rs 40 crore from the State Government,” says a grower.
An oil palm plant requires around 200 litres of water a day besides proper nutrition. The average yield in India is 10-12 tonnes a hectare, though it is higher at over 20 tonnes in Andhra Pradesh. In comparison, productivity in Malaysia is 22 tonnes a hectare. Yield is higher in other growing nations since the crop is grown in regions where there is rain throughout the year.
Besides Andhra Pradesh, oil palm is cultivated in Orissa, Karnataka, Tamil Nadu, Mizoram and Gujarat with the total acreage being around one lakh hectares. Potential exists for growing the crop in Maharashtra, Bihar, Arunachal Pradesh, Tripura, Kerala and Goa.
This year, the Centre has targeted to bring an additional 60,000 hectares under the plantation with 44,000 hectares of it in Andhra Pradesh only.