Palm oil potential

Oil palm as a perennial crop deserves differentiated support, given its unusual production features.

The Government should be complimented for the renewed recognition of the potential of oil palm to meet the country's vegetable oil supply needs. As far back as 1988, the Chadda Committee identified about eight lakh hectares as being suitable for oil palm plantation; but progress in its cultivation has been tardy. Currently, while the acreage potential is estimated at over 10 lakh hectares, just about 15 per cent is under cultivation.

The Budget has provided for Rs 300 crore to bring 60,000 hectares under oil palm plantation by integrating the farmers with the markets. This initiative is expected to yield about three lakh tonnes of palm oil annually in five years. Unlike oilseed crops, that grow in less than four months, oil palm trees take four years to start yielding fresh fruit bunches, from which oil is extracted. So, over that period, growers and project developers deserve financial support, apart from inputs and agronomic guidance. This is how Malaysia and Indonesia supported their oil palm plantation sector in the early stages. The Budgetary outlay of Rs 300 crore over a five-year time-frame to develop 60,000 hectares translates to about Rs 1,000 per hectare per year. Unfortunately, this may not be enough, as the entrepreneurs or project developers will have to wait nearly five years to see the fruits of their investment. Thus, while it is necessary to rapidly expand the area under oil palm, it is equally important to nurture existing plantations and ensure no entrepreneur exits for want of policy and financial support. We need a mechanism to ensure the growers get a minimum support price and developers are insulated from market vagaries.

A review of the present pricing and support mechanism, including on-farm investment subsidy, availability of nursery stocks, and soft loans for micro-irrigation, is called for. Currently, the Oil Palm Development Programme is being implemented in about ten States, including the four southern ones where the crop has taken root. It would also make sense for the State governments to procure palm oil from the project developers and sell it through the public distribution system. The country is forced to import as much as 80 lakh tonnes of various vegetable oils every year which represents almost half of our total consumption. While yield enhancement of cultivated oilseed crops should continue to get a policy boost in terms of minimum support price, and so on, oil palm as the perennial crop deserves differentiated support given its unusual production features, with per hectare yields as high as four-six tonnes.

Published on March 10, 2011
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