The Union Cabinet, on August 18, approved the Rs 11,040 crore National Mission on Edible Oils-Oil Palm to boost palm oil production in India and reduce dependence on expensive imports from South East Asia.
"Centre will come up with a mechanism to fix and regulate palm oil prices, If the market is volatile, the difference will also be paid by the centre through direct benefit transfer," said Agriculture Minister Narendra Singh Tomar at the post-cabinet media briefing on August 18. The outlay will be for a five-year period.
"Due to the heavy dependence on imports for edible oils, it is important to make efforts for increasing the domestic production of edible oils in which increasing area and productivity of oil palm plays an important part," said an official press release.
"A financial outlay of Rs 11,040 crore has been made for the scheme, out of which Rs 8,844 crore is the central share and Rs 2,196 crore is the share of states and this includes a viability gap funding component," it said.
The aim of the centrall sponsored scheme is to raise the domestic production of palm oil by three times to 11.20 lakh tonnes by 2025-26 and to 28 lakh tonnes by 2029-30.
This will involve raising the area under oil palm cultivation to 10 lakh hectares by 2025-26 and 16.7 lakh hectares by 2029-30. The special emphasis of the scheme will be in India’s north-eastern states and the Andaman and Nicobar Islands due to the conducive weather conditions in the regions.
The proposed scheme will subsume the current National Food Security Mission-Oil Palm programme.
28 lakh hectares can be potentially cultivated
The centre said that as per an assessment by the Indian institute of Oil Palm Research (IIOPR), some 28 lakh hectares of land across the country can be used for palm oil cultivation. At present only 3.70 lakh hectares is under oil palm cultivation.
Tomar said that the centre will give a price assurance to oil palm farmers. This will be known as the viability price and will protect the farmers from the fluctuations of the international market. The viability price shall be the annual average price of the last 5 years adjusted with the wholesale price index to be multiplied by 14.3 per cent.
"This will be fixed yearly for the oil palm year from 1st November to 31st October. A formula price will also be fixed which will be 14.3 percent of crude palm oil price and will be fixed on a monthly basis," it said.
"The government by assuring a transparent price mechanism based on last 5 years average has made sure that the farmer remains unaffected by price volatility. Since it is a long gestation crop, initial improved support to the farmers will also encourage quicker adoption and sustainability of this crop," said Balram Singh Yadav, Managing Director, Godrej Agrovet Limited.
Govt assures protection against price volatility
The viability gap funding will be difference between the viability price and formula price and if the need arises, it would be paid directly to the farmers accounts in the form of DBT,
The industry will be mandated to pay 14.3 percent of the crude palm oil price which will eventually go up to 15.3 percent. The sunset clause of the scheme is 1st November 2037.
"To give impetus to the North-East and Andaman, the centre will additional bear a cost of 2 percent of the CPO price to ensure that the farmers are paid at par with the rest of India. The states who adopt the mechanism would benefit from the viability gap payment proposed in the scheme and for this they will enter into MoUs with the centre," the statement said.
To address the issue of shortage of planting material in the country, seed gardens will be provided assistance up to Rs 80 lakh for 15 hectares in rest of India and Rs 100 lakh for 15 ha in North-East and Andaman regions.