Commodities

Interest in oil palm cultivation rises as global vegoil market rallies

M. R. Subramani Chennai | Updated on May 22, 2011

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Two and a half years ago, Mr Kumarasamy Reddiar of Vikaravandi village in Tamil Nadu's Villupuram district decided to cultivate oil palm. He chose to replace paddy, casuarina and sugarcane and today, he gets 20 tonnes of fresh fruit bunch (FFB) of oil palm a year on the nine hectares.

“If this is what he gets within four years, then in the coming years he can get a higher yield compared with productivity in Malaysia,” says Mr R.R. Govindan, Vice-President, Godrej Agrovet Ltd, that helps him in cultivating the crop.

Godrej Agrovet buys the FFB from farmers such as Mr Kumarasamy and crushes them at Cauvery oil mill in Ariyalur, about 100 km away. Godrej has a majority stake in the mill owned by Cauvery Oil Palm that has been floated by Dr V. Krishnamurthy.

Mr Kumarasamy is one of the many farmers in Tamil Nadu who have taken to oil palm cultivation in the last three years, helping to raise the area under the crop to over 7,500 hectares now.

“At least 5,000 hectares have been added in the last three years. Some 2,500 hectares are older than four years and of this, only 500 hectares are older than eight years,” says Mr Govindan. This year, there is a potential to add another 2,500 hectares under oil palm, he says.

Godrej Agrovet has 38,000 hectares under the crop totally in the country. It is the leading firm in oil palm cultivation ahead of the Ruchi group. Of the total oil palm area with Godrej, 50 per cent is in Andhra Pradesh, 19 per cent in Tamil Nadu, 15 per cent in Mizoram and the rest in Orissa, Gujarat, Karnataka and Goa.

Budgetary allocation

Last week, the Agriculture Ministry said 60,000 hectares would be brought under oil palm this fiscal. The Union Finance Minister, Mr Pranab Mukherjee, has allocated Rs 300 crore oil palm development in the Budget. Overall, oil palm is grown on 1.71 lakh hectares.

According to the Ministry, the allocation for oil palm development has been made for eight States with Andhra Pradesh getting Rs 192 crore, Karnataka and Tamil Nadu Rs 33.6 crore each, Orissa Rs 17.76 crore, Mizoram Rs 14.8 crore, Gujarat Rs 4.8 crore, Maharashtra Rs 96 lakh and Chhattisgarh Rs 48 lakh.

During the current fiscal, domestic oil palm production could be around 1.40 lakh tonnes. “This is less than one per cent of the country's requirement,” says Mr Govindan.

yield

Oil palm farmers get a yield of 20 tonnes a hectare from mature gardens. A couple of years ago, the yield was 17 tonnes. “Some enterprising farmers get a yield of 30 tonnes against the Malaysian yield of 35 tonnes a hectare,” Mr Govindan says.

In Tamil Nadu, most of the farmers are getting around 17.5 tonnes as their plants are yet to mature.

An oil palm tree begins to yield after three years and it takes seven years before the production peaks. From then on, the production could be sustained for another 20 years or so.

“We plan to more than treble our crude oil production in the next three years. By that time, production in the country could rise to 2.7 lakh tonnes,” he says.

With labour availability an issue for farming, there are growers who are now willing to switch over to oil palm and wait for three years before they can begin reaping gains.

Palm oil rally

With palm oil prices rallying in the global market, growing oil palm has turned attractive. In Tamil Nadu, prices for FFB of oil palm are fixed once in three months. Currently, farmers are paid Rs 5,250 for a tonne of FFB plus Rs 250 as subsidy by processors. Andhra Pradesh, which has a nodal agency to look at oil palm sector, pays a higher price of over Rs 7,000.

“Things will change soon in other States as interest is picking up. For now, any price above Rs 5,000 is good. Farmers face loss only if the price drops below Rs 3,500,” said Mr P. Balasubramaniam, President of Tamil Nadu Oil Palm Farmers Association.

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Published on May 22, 2011
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