CABINET GIVES NOD TO ~11,040-CRORE PALM OIL MISSION
The mission, approved by Cabinet, has Msp-like mechanism for growers
With India’s edible oil imports projected to rise manifold, the Union Cabinet on Wednesday approved a new ~11,040-crore mission to boost domestic palm oil production, which includes a minimum support price-like mechanism for growers. Of the total outlay, ~8,844 crore would be the central government’s share and ~2,196 crore the states’ share. Prime Minister Narendra Modi had announced the new central scheme during his Independence Day speech at Red Fort.
With India’s edible oil imports projected to rise manifold, the Union Cabinet on Wednesday approved a new ~11,040-crore mission to boost domestic palm oil production, which includes a minimum support price-like mechanism for growers. Of the outlay, ~8,844 crore would be the central government’s share and ~2,196 crore the states’ share.
The decision comes after Prime Minister Narendra Modi announced the new central scheme during his Independence Day speech at Red Fort. Under the scheme, the government will give a price assurance to oil palm growers for their Fresh Fruit Bunches (FFBS). This will be known as the viability price (VP). “This VP shall be the annual average CPO (crude palm oil) price of the last 5 years adjusted with the wholesale price index to be multiplied by 14.3 per cent,” the government said in a statement. This will be fixed yearly for the oil palm year, which runs from November 1 to October 31.
“A formula price (FP) will also be fixed, which will be 14.3 per cent of CPO and will be fixed on a monthly basis. The viability gap funding will be the VP-FP and if the need arises, it would be paid directly to the farmers’ accounts in the form of DBT,” the statement added.
It further said the industry will be mandated to pay 14.3 per cent of the CPO price, which will eventually go up to 15.3 per cent.
“This is to ensure that farmers along with industry and processors remain sufficiently invested in the project as oil palm cultivation usually has a long gestation period of over 5-7 years before it starts giving returns to farmers,” Union Agriculture Minister Narendra Singh Tomar told reporters.
“The Indian Council of Agriculture Research has identified that around 2.8 million hectares of land is suitable for oil palm cultivation of which just around 0.9 million is in Northeast, which won’t be used by cutting standing forests or shifting farmers from other crops,” Tomar assured.
To give impetus to the Northeast and Andaman, the government will additionally bear a cost of 2 per cent of CPO price to ensure growers are paid on par with the rest of India.
That apart, the Cabinet also approved an incentive of ~5 crore for oil palm processing units if they plan to set up in the Northeastern states. The input subsidy for farmers has also been increased from the current ~12,000 per hectare to ~29,000 per hectare.
The target
According to officials, the mission aims to increase oil palm cultivation to 1 million hectares by 2025-26 and 1.7-1.8 million hectares by 2029-30 from around 0.34 million hectares at present. India imports around 13-15 mt of edible oil annually of which palm accounts for about 55-60 per cent. This is projected to rise to 20 mt by 2030.