Why plan­ta­tions for palm oil are un­vi­able for In­dian con­di­tions


THIS OIL palm plan­ta­tion, span­ning a mas­sive 22,000 hectares (ha) in the In­done­sian is­land of Su­lawesi, can be the envy of any of­fi­cial in In­dia try­ing hard to make the coun­try self-suf­fi­cient in edible oil pro­duc­tion. In­dia is one of the ma­jor grow­ers of oilseeds. Its veg­etable oil econ­omy is the fourth-largest af­ter the US, China and Brazil. Yet the coun­try re­lies on im­ports to meet over 70 per cent of its veg­etable oil re­quire­ments; al­most 60 per cent of the re­quire­ment is met through palm oil. The rea­son is simple. Palm oil is cheap—it costs 20 per cent less than most veg­etable oils—as well as ver­sa­tile. Apart from be­ing used as com­mon cook­ing medium, it is used for mak­ing a vast ar­ray of food and con­sumer prod­ucts, right from

vanas­pati (hy­dro­genated veg­etable oil), ice creams to lip­sticks, soaps and shav­ing foams. Since 2001, palm oil con­sump­tion in the coun­try has in­creased

from 3 mil­lion tonnes to nearly 10 mil­lion tonnes—that is a growth of over 230 per cent.

The govern­ment had an­tic­i­pated this growth in de­mand as early as in the 1980s and had set up a com­mit­tee to iden­tify po­ten­tial ar­eas for grow­ing the crop. Till then, oil palm, na­tive to West Africa, was grown com­mer­cially in In­done­sia and Malaysia. By 2012, the govern­ment had iden­ti­fied 2 mil­lion ha across the coun­try for oil palm cul­ti­va­tion and de­cided to im­ple­ment the Na­tional Mis­sion on Oilseeds and Oil Palm (nmoop) un­der the 12th Five Year Plan (2012-17). Un­der the mis­sion, farm­ers were pro­vided train­ing and given sub­sidised plant ma­te­ri­als and in­put as­sis­tance. Pri­vate com­pa­nies were also in­vited to set up pro­cess­ing fac­to­ries in oil palm grow­ing ar­eas to fa­cil­i­tate pro­cure­ment as well as to pro­vide agri­cul­ture ex­ten­sion ser­vices. Ev­ery year, the 12 states un­der nmoop set a tar­get of bring­ing ad­di­tional area un­der the crop. Though the Mis­sion re­ceived an ini­tial en­thu­si­asm, the tar­gets have been rou­tinely missed (see ‘Tar­gets missed, over and again’, p35). And in 2017-18, the Union govern­ment had to cough up US $6,774 mil­lion (`45,917 crore), the high­est ever spent on im­port­ing palm oil (see ‘Im­port con­tin­ues’ on p35).

Why has In­dia not been able to achieve self-suf­fi­ciency in the pro­duc­tion of this “won­der” oil de­spite 40 years of ef­forts? To un­der­stand this, Down To Earth (dte) trav­elled to some of the oil palm grow­ing states, and found that the crop could be do­ing more harm than good to In­dian farm­ers and that a mind­less chase could land the coun­try in a de­ba­cle as In­done­sia and Malaysia are fac­ing at present (see ‘Oil’s not well’ on p39).

Crop that favours the rich

Ra­jaram Pichikula, one of the first gen­er­a­tion oil palm grow­ers in Andhra Pradesh, vouches for the prof­itabil­ity of oil palm. Ev­ery week, the 63-year-old res­i­dent of Chin­natade­palli vil­lage in West Go­davari har­vests the ripened fruit bunches, loads them in a cart and heads to­wards the vil­lage col­lec­tion cen­tre set up by

3F Oil Palm Agrotech Ltd. The bunches are then trans­ported to its mill, 30 km away, the same day and the pay­ment is made di­rectly into his bank ac­count. “On an av­er­age I earn `1 lakh per ha in a year,” says Pichikula, who grows the crop on one-fourth of his 12 ha farm. “The only prob­lem I face now is that my trees have grown very tall—up to 12 me­tres— mak­ing har­vest­ing ar­du­ous,” he says. Un­like co­conut, oil palm bunches are heavy and spiny and are thus har­vested with sharp sick­les on long poles. Pichikula plans to fell the ex­ist­ing trees, which have reached the end of their com­mer­cial life­span. He plans to plant hy­brid va­ri­eties that don’t grow as tall.

B V Sub­barao, an­other farmer from nearby Kom­mugu­dem vil­lage who grows oil palm on 12 ha, says, “Ear­lier peo­ple in the re­gion used to grow sug­ar­cane, tobacco and paddy. But they are now shift­ing to oil palm as the re­turns are con­sis­tent and sta­ble.”

But their sen­ti­ment is not echoed by other farm­ers in the re­gion. In May this year, Sri­man Narayana of Pothured­dy­palli vil­lage

in the neigh­bour­ing Kr­ishna dis­trict up­rooted close to 400 oil palm trees he had planted on his 2.6 ha farm three years ago. “The plants would have started yield­ing in an­other two years. But I was not able to bear the ex­penses in­volved in their main­te­nance,” he says. Like other peren­nial tree crops, oil palm re­quires reg­u­lar prun­ing of fronds, weed­ing and wa­ter­ing. Though Narayana had hired just one farm­hand, he had to shell out `84,000 a year on his pay­ment. “Oil palm is not eco­nom­i­cal for small landholders and ten­ant farm­ers as there is prac­ti­cally no in­come in the first six years. Be­sides, it is sus­cep­ti­ble to mar­ket and sea­sonal fluc­tu­a­tions,” says Sub­barao.

Vul­ner­a­ble and volatile

Based on the global palm oil mar­ket and the oil con­tent of the crop in a par­tic­u­lar oil palm grow­ing zone, the state govern­ment de­cides the rate of fresh fruit bunches ev­ery month. But mar­ket trends show prices have risen and fallen by up to 50 per cent over the past 15 years (see ‘Un­cer­tain re­turns’ on p35). Agri­cul­tural re­turns are also cycli­cal in na­ture. Farm­ers har­vest al­most 65 per cent of the an­nual yield be­tween June and Septem­ber and earn­ings re­main low dur­ing the lean win­ter months.

Venkateswar Rao, as­sis­tant gen­eral man­ager at 3F Oil Palm Agrotech, says small farm­ers can eas­ily ab­sorb the shocks by grow­ing other crops in the 9 me­tre gap be­tween two oil palm trees dur­ing the ini­tial four-year ges­ta­tion pe­riod. To fa­cil­i­tate in­ter­crop­ping, nmoop pro­vides a sub­sidy of 50 per cent of the cost lim­ited to `5,000 per ha for pur­chase of seeds, fer­tilis­ers, pes­ti­cides and tree guards.

But Narayana says in­ter­crop­ping on oil palm plan­ta­tions is not easy. First, it can be done only dur­ing the first two years un­til the oil palm saplings gain some height. Be­yond that, their 1 m-wide-and-3-m-long fronds block the sun­light, af­fect­ing the growth of the sec­ond crop. “In­ter­crop­ping can re­sult in lower yields of both the crops as they com­pete for re­sources,” says Kal­i­das Poti­neni, as­sis­tant di­rec­tor at the In­dian In­sti­tute of Oil Palm Re­search, Pe­dav­egi, Andhra Pradesh. “One so­lu­tion is to in­crease spac­ing be­tween the oil palm trees, but this might not be eco­nom­i­cal for the grower,” he adds.

While such pro­pos­als can be con­sid­ered by farm­ers with large land­hold­ings, any losses are in­sur­mount­able to bear for small and mar­ginal farm­ers who make up about 70 per cent of the coun­try’s farm­ing com­mu­nity. Small won­der, in May this year farm­ers staged a hunger strike at Go­drej oil fac­tory that pro­cures oil palm fruits at Chin­tam­palli in Andhra Pradesh, de­mand­ing that the govern­ment help them get min­i­mum sup­port price.

Neo prob­lems

To en­tice small farm­ers, the govern­ment is ex­per­i­ment­ing with a new con­cept in North­east In­dia whose hot and hu­mid cli­mate is con­ducive for the oil crop. In As­sam’s Goal­para and Kam­rup districts the state agri­cul­ture de­part­ment in 2015 formed 31 farmer groups to grow the crop col­lec­tively. Di­rec­tor of the state agri­cul­ture de­part­ment, M S Manivannan, told dte that the govern­ment has signed a Mem­o­ran­dum of Un­der­stand­ing (MoU) with Hy­der­abad­based Shiva­sais Oil Palm Pri­vate Lim­ited for set­ting up an oil pro­cess­ing unit in the re­gion. The mill is likely to start next year and will pro­cure the pro­duce on the lines of milk co­op­er­a­tive. The pay­ment will be di­rectly trans­ferred to the farm­ers’ bank ac­count.

While the scheme on pa­per looks promis­ing, farm­ers are far from be­ing ex­cited. “For the past four years we have been tend­ing to the oil palm trees. They have al­ready started fruit­ing. We don’t know when they are go­ing to be pro­cured,” says Bi­raj Su­trad­har of the Oil Palm Farm­ers’ Col­lec­tive of Pi­po­ra­jhar vil­lage. Farm­ers also have to reg­u­larly ne­go­ti­ate with var­i­ous chal­lenges, from ro­dents to poor rain­fall.

In Puroni Ha­timura vil­lage flanked by Garo Hills, a group of women farm­ers have painstak­ingly raised a palm oil plan­ta­tion on five bigha (0.66 ha) of do­nated land. “We have spent around `16,000 on rais­ing the plants. This does not in­clude labour and cost of bam­boo fenc­ing as it was shared by the vil­lage house­holds,” says Bi­julee Rabha of Mili Juli Mahila Samiti. “Now rats are eat­ing

While only palm fruits are traded, har­vest­ing palm re­quires la­bo­ri­ous work of scyth­ing and haul­ing both fruit and leaves that can grow up to 7 me­tres long

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