Agri Business

Oil palm farmers pin hopes on Rs 300-cr Budget allocation

M. R. Subramani Recently in Kakinada | Updated on March 12, 2018

Workers weighing oil palm fresh fruit bunches at a collection centre near Peddapuram in Andhra Pradesh’s East Godavari district. – M.R. Subramani   -  Business Line

A group of farmers at Dosakayalapalli village in Korukonda mandal of Andhra Pradesh's East Godavari district, on seeing a group of journalists visiting their oil palm plantation, wondered when the Government would clear dues to them under the Market Intervention System (MIS) announced in 2009.

“The Andhra Pradesh Government had announced the MIS in March 2009 to ensure remunerative payment for oil palm farmers. Funds were released by the State Government for March and April 2009. Since then, we are yet to get any payment due under the MIS,” said a farmer. Payments to the tune of Rs 40-45 crore are pending for 2009 and 2010. “It is likely that the Rs 40-45 crore dues could be cleared with the Rs 300 crore allocated in the Budget,” says Mr N.K. Arora, Corporate Head (Palm Business) of Ruchi Soya Industries Ltd's Oil Palm Division. He was speaking to a group of journalists on a trip to the oil palm plantations sponsored by the company.

Utilising funds

According to sources, the State Government had been pressing for release of the dues but the clearance got delayed. If that is one channel of utilising the allocation, there are other requirements on which the allocation could be spent, said sources. “One way could be to announce a minimum support price, say between Rs 6,000 and Rs 7,000 for a fresh fruit bunch (FFB). If prices fall below it, the Government can chip in,” said Mr Arora.

According to sources, the Centre is considering increasing the maintenance payment from Rs 21,000 for four years to Rs 40,000. “The Government makes this maintenance payment since it takes four years before an oil palm plant can begin to yield. This helps farmers to provide nutrients and other inputs for the plant,” said Mr Arora. There is another aspect to oil palm plantation. One reason for farmers to take to this is that the need for labour is low. But an oil palm tree grows some 60 cm a year, thus causing problems for growers in harvesting a FFB.

“Aged plantations need to go in for mechanised harvesting. Maybe, some allocation can be made for this,” said Mr Arora. Then, oil palm companies supply seedlings to farmers who pay Rs 10 for a seedling. The Government pays Rs 60 for a seedling. The rest is footed by the oil palm firm that recovers it after two years only. “The basic cost for a seedling is Rs 90-100 though the landed cost is Rs 40. After importing the seedlings, companies have to keep in their nursery for 12 months and nurture them. Of this, at least 25 per cent goes waste,” said Mr Arora.

More varieties

Industry sources said if the Government can raise the payment, then companies in oil palm business could begin distributing varieties which can help more plants fit in a hectare. For example, in a hectare of land about 142 oil palm plants can be grown. But there are now varieties from Ivory Coast and Costa Rica that can help farmers cultivate over 170 plants. However, they cost around Rs 200 for a seedling.

Mr Arora said that the Government's plan to extend oil palm area by 60,000 hectares this year could also require good investment and a major chunk of the allocation could go towards meeting the target. Though industry sources say it would be hard to meet the target, they feel it could still go a long way to interest growers. “The money should go to the farmers in a judicious manner and benefit them properly,” said Mr Arora.

Published on March 20, 2011

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