Oil balance

India’s renewed effort to reduce import dependence for edible oils (which accounts for annual imports of ₹65,000-70,000 crore, of which about 60 per cent is made up by palm oil alone) is unexceptionable. Towards this end, the Centre has announced a ₹11,040 crore package to boost palm oil output, of which it will bear 80 per cent. A novel feature of this package is the promise of price support to growers. This is apart from the prevailing policy of supporting growers through the five-to-seven year gestation period. India is expected to attain a palm oil output of three million tonnes in a decade, against the present output of about 0.3 million tonnes. India’s edible oils output of about nine million tonnes is way below the demand of over 25 million tonnes, with the gap being covered by imports, most of it being palm oil. However, the focus on palm oil to rein in edible oil imports should be carefully weighed.

Palm oil’s promise lies in its yields. A hectare of oil palm can produce 20-25 tonnes of fruit and over four tonnes of oil, which is about four to five times the productivity of other edible oils. Therefore, oil palm will take up a quarter of the land required for other oilseeds. Given rising vegetable oil demand, palm oil is mooted by some as the best option. However, palm oil appears to grow best in tropical forest conditions where water is abundant. It has replaced pristine forests in Indonesia and Malaysia. The Centre’s intent to cultivate the Andamans is truly disturbing, while forest tracts in the north-east have already been impacted. As a study by the IISc observes, small rice fields rather than forests should be targeted. Drip irrigation should be encouraged. Above all, the push to oil palm should be accompanied by incentives to sunflower, groundnut and mustard, with a focus on small farmers.

For farmers who are used to growing two crops of paddy in a year, prompting a shift to oil palm, which yields annually, will not be easy. Hence, the incentives have to be attractive. To this end, the Centre has said that industry should pay an assured sum monthly, while the government will pay the growers for any volatility in prices. The effort here is to replicate the sugarcane model. But before going down this road, it is worth noting that there are serious health concerns around palm oil (which accounts for over 40 per cent of edible oil consumed in India). India’s self sufficiency drive should be a multi-pronged one, using tariffs — the fall in which led to the post-1995 flood of imports — and production incentives for all edible oil varieties.

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