Opportunity for value-addition in Indian oil palm industry  

Nasim Ali | Updated on: Sep 17, 2022
 A view of Oil Palm factory II unit at Aswaraopet in Khammam District

A view of Oil Palm factory II unit at Aswaraopet in Khammam District | Photo Credit: RAO GN

The future of industry lies in higher value-added and higher margin downstream products

The oil palm industry is doing well currently as regards oil palm development across various States. The industry has taken various initiatives to bring more area under oil palm with the introduction of the National Mission on Edible Oils- Oil Palm (NMEO-OP) in August 2021 by the Government.  Farmers have good potential to grow oil palm over two million hectares and there is a need for an innovative approach starting from seed production to oil extraction. . Even after three decades of operation, the industry has yet not realised that several value-added products can be developed out of oil palm biomass and crop residues. This is mainly due to a lack of information on the size, volume, value and use of these products. As a result, there is poor visibility. These products have potential benefits, which will add value to scale of economy significantly. 

The first bottleneck is the lack of interest to move forward. There is a need for ground-breaking research, innovations and technology deployment by the industry. Such an approach will help mitigate the challenges such as environmental threats, waste management and others. A few oil palm processors have started working towards waste management and by-product utilisation, but this is not enough. If process improvement and integration coupled with the adoption of technology take place in the mill, then a clear transformation in the palm oil industry is assured. For example, power can be generated in a palm oil mill economically through a captive co-generation unit powered by a steam turbine or gas turbine (by using agro waste out of fresh fruit bunches processed or capturing methane gas out of palm oil mill effluent- POME). Thus, the mill can become more than self-sufficient and can reduce fossil fuel consumption and carbon dioxide (CO2) emission.  A close loop system in the mill need to be developed to tackle various eventualities while crop processing. 

Converting waste to wealth 

More focus on R&D needed for making value addition in a manner that “Conversion of waste to wealth” takes place. The key stakeholders should communicate among themselves f for making value addition and innovative products. There should be an environment of innovation linking entrepreneurs, oil palm growers, researchers and various institutes.  The industry should establish a pilot plant to carry out necessary trials before taking a final call on commercial application of new products. . Processors and the Government have a big role on this to drive growth.  

Processors should have long-term goals and patience to reap the benefit ultimately. A multi-pronged approach like improving productivity through recycling of crop residues and mill wastes in the field. by mechanisation of harvesting activities; Increasing the visibility of newly developed products with the help of digital technology; and finally, achieving economies of scale through innovations. However, the launch of newly developed value-added products should be based on SAF (Suitability, Acceptability and Feasibility) market in India. This approach will create a triple win opportunity under the umbrella of 3Ps: People, Planet and Profit, i.e. Socio-economic development in rural areas through creation of rural employment, by-products use which reduces environmental threat and a sustainable management system that improves profitability. 

Value creation  

The future of the oil palm industry in India lies in producing value-added and higher margin downstream products, and not just in producing merely palm oil and palm kernel oil. Businesses should lay stress on societal development and economic growth, through value creation. As Oil Palm a good sequester of CO2, the local industry should prepare to enter into a new sphere of Carbon trading. Going forward, the industry is well-positioned to pass on the benefit across the stakeholders.  

The author is former CEO-Oil Palm Plantation, Godrej Agrovet Ltd. Views are personal.

Published on September 17, 2022
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