The edible oil industry in India is strategic in nature, not only because of its mass consumption but also its contribution to rural employment and rural development. Moreover, this industry plays an important role in India’s economy, specifically when it costs our country well over $14.5 billion to import various vegetable edible oils during the oil year 2021-22 (November to October) to augment domestic availability.

Palm oil constitutes 37 per cent of edible oil demand and over 60 per cent in the import basket of edible oils. The growing concern today in India is to increase edible oil production through large-scale oil palm plantations, being the highest oil-yielding crop per hectare (ha.), involving smallholder (SH) farmers. We can get 10-16 times more palm oil than soyabean oil per ha. This will help to reduce import of edible oil in future. 

Important source

The multiplier indexes of oil palm plantation compared to other traditional oilseeds shows maximum benefit, like the highest FFB yield of 20 tonnes per ha. per year and a potential oil yield of 4-5 tonnes per ha per year. The net income for SH farmers is well over ₹2 lakh per ha per year and the income is sustainable throughout the year. The development of plantations over the decades under the assistance of various schemes and policies launched by the Ministry of Agriculture and Farmers Welfare, , since inception is pioneering in economic activity in the context of rural development as evidenced in the villages of Dwarka Tirumala mandal, Kamvarapukota mandal, Chatrai and Musnuru mandals in Eluru District, Andhra Pradesh, and Aswaraopet, Dammapet mandals in Telangana state etc.

The growth of plantation areas by SH farmers in clustered approach led to the flourishing of small and medium businesses in the supply of goods and services. After the establishment of crude palm oil mills by processors, there is a further development of markets, residential buildings etc. and the villages turned into mini towns. Oil palm plantations do not destroy rural resources but attract new investments in isolated areas and improved the livelihood options for various local communities as evidenced by their increase in revenue when compared to their earnings over a decade ago.

This statement is also confirmed by the study carried out in 2017 by a third party independently, engaged by a multinational company ( MNC) in the West Godavari district, Andhra Pradesh, under the factory zone of Godrej Agrovet Ltd. The MNC is committed to “Responsible Sourcing of palm oil globally, including from SH farmers in India. 

With the increase of plantation area, FFB yield and crude palm oil (CPO) production, a portion of the economic benefits occur in rural sectors outside the plantation such as with financial institutions, infrastructure, transportation, restaurants etc. 

Poverty reduction

Rural poverty reduction with the help of plantations is made possible to a certain extent through the creation of employment opportunities, immediately after the establishment of CPO mills. With the augmentation of mill capacity, the employability of the local population further has increased. This is clearly evidenced in the rural areas in Andhra Pradesh and Telangana. Besides this, income generated from plantations also attracts business activities for food and non-food sectors required in rural areas. Thus the people from the other sector including the poor who are not associated with plantation activities also benefitted economically with the scale of economy created in rural areas. 

Several global studies have shown that palm oil does not pose any risk. Palm oil is a food source of energy and fatty acid, rich in vitamin A, and beta carotene, and acts as an antioxidant. The pharmaceutical industry extracted vitamin E from palm oil through an extraction process. Palm oil contains a sufficient and balanced amount of essential fatty acids such as oleic (C18:1) =36.3%, linoleic (C18:2) =8.3% and linolenic (C18:3) =0.5% and these are essential fatty acids in the human body. However, no oil as such is complete. By definition, “oil that has been refined has been altered by using chemicals because beneficial components are lost in traditional refining process”. 

Palm oil, supplied through the public distribution system, has helped India get its people out of poverty and supported food security.  As per The World Bank Poverty and inequality platform report, there has been a continuous downtrend towards the share of the population in the poverty rate from 1981 to 2017 period from 60 per cent to 10 per cent and it can be construed access to food to many people during this period. 

(The author is former CEO, Oil Palm Plantation, Godrej Agrovet. Views are personal)