The Cabinet on Wednesday approved an ₹11,040-crore National Mission on Edible Oils - Oil Palm (NMEO-OP) to promote palm cultivation and reduce the country’s dependence on edible oils imports, especially crude palm oil (CPO).

Under this Centrally-sponsored scheme, 6.5 lakh hectares (lh) will be brought under oil palm by 2025-26 and further expanded to 10 lh. India currently has 3.7 lh under oil palm cultivation. The stepped up area is to help the country produce 11.20 lakh tonnes of CPO by 2025-26 and up to 28 lakh tonnes by 2029-30.

Crucial for India

The Oil Palm Mission is crucial for India as it imports about 15 million tonnes of edible oils annually with the palm group constituting two-thirds of it. The foreign exchange outgo is over ₹70,000 crore annually; this year it expected to be ₹1.25-lakh crore in view of the surging edible oil prices in the global market.

The industry welcomed the announcement as “landmark and progressive”. “Since it is a long-gestation crop, initial improved support to the farmers will encourage quicker adoption and sustainability of this crop,” said Balram Singh Yadav, MD, Godrej Agrovet, adding that the transparent price mechanism based on the last five years average will ring-fence farmers from price volatility.

“Today’s announcement by the government will have a positive impact on the sector making it viable for the industry to continue to contribute towards becoming self-sufficient in edible oil requirements and in turn having a huge impact on foreign exchange savings,” said Sanjay Goenka, President, Oil Palm Developers and Processors Association.

Focus areas

There will be a special focus on developing oil palm plantations in the North-East (NE) and the Andaman Islands under the Mission, an official statement said.

Oil palm produces 10 to 46 times more oil per hectare compared to other oilseed crops, and India has the potential to expand the area under oil palm cultivation up to 28 lh.

The NMEO-OP has two major focus areas. A component of viability price (VP) to protect oil palm farmers from the volatility of international CPO prices as well as increase in input rates and interventions. The VP will be the annual average CPO price of the last five years adjusted with the wholesale price index to be multiplied by 14.3 per cent. This will be fixed yearly for the oil palm year which runs from November to October.

A formula price (FP), which is 14.3 per cent of the CPO, will also be fixed on a monthly basis. The viability gap funding will be the VP minus FP and if need arises, it would be paid directly to farmers’ accounts as direct bank transfer, the statement said.

Impetus to NE

The industry will be mandated to pay 14.3 per cent of the CPO price, which will eventually go up to 15.3 per cent. There is a sunset clause for the scheme which is November 1, 2037. To give impetus to the North-East and the Andaman Islands, the government will bear an additional cost of two per cent of the CPO price to ensure that farmers are paid at par with the rest of India. The States, which adopt the mechanism proposed by the Centre, would benefit from the viability gap payment proposed in the scheme, the statement.

Similarly, the assistance given for oil palm planting material has been increased from ₹12,000 per hectare to ₹29,000. A special assistance of ₹250 per plant will be given for replanting old gardens.

Seed gardens supplying planting materials will get an assistance of up to ₹80 lakh per 15 hectare, and ₹1 crore in the North-East and the Andamans.

Those setting up processing plants in the North-East and the Andamans will to get ₹5 crore for a 5 tonne per hour unit with pro-rata increase for higher capacity.

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