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National mission on edible oil

  • Category
    Economy
  • Published
    6th Sep, 2021

Context

The Union Cabinet has approved implementation of a new centrally sponsored scheme National Mission on Edible Oils - Oil Palm (NMEO-OP) to achieve self-sufficiency in edible oil production.

Background

  • India’s vegetable oil economy is the world's fourth largest after the USA, China & Brazil.
  • India is the largest edible oil importer importing about 68% of the country’s total edible oil requirement (22 MT).
  • Of the total oil imported around 60% of the edible oil import is palm oil and its derivatives from Indonesia and Malaysia.
  • The Mission aims to increase the area under cultivation for Oil Palm by an additional area of 6.5 lakh hectare thereby reaching the target of 10 lakh hectares in the next 5 years.

Analysis

About Vegetable Oils

  • Oilseed crops are the second most important determinant of the agricultural economy, next only to cereals within the segment of field crops.
  • The self-sufficiency in oilseeds attained through the “Yellow Revolution” during early 1990’s, could not be sustained beyond a short period.
  • Despite being the fifth largest oilseed crop producing country in the world, India is also one of the largest importers of vegetable oils today.

Present Status of Vegetable Oil Production in India

  • Primary sources of vegetable oil:
    • Nine oilseeds are the primary source of vegetable oils in the country, which are largely grown under rainfed condition over an area of about 26 million ha.
    • Among oilseeds, soybean (34%), groundnut (27%), rapeseed & mustard (27%) contributes to more than 88% of total oilseeds production in the country.
    • Mustard (35%), soybean (23%) and groundnut (25%) contribute >80% of vegetable oil production in the country.
    • Andhra Pradesh (groundnut) & Gujarat (groundnut), Haryana(Mustard), Karnataka(G.nut), M.P(Soybean), Maharashtra(Soybean), Rajasthan (Mustard & Soybean), Tamil Nadu(G. nut), U.P(Mustard), West Bengal(Mustard) contributing more than 95% of total oilseed production in the country.
    • India is producing about 7-8 million tons of vegetable oils from primary sources.
    • In addition to nine oilseeds, 3 million tonnes of vegetable oil is being harnessed from secondary sources like cottonseed, rice bran and coconut.

 About Palm Oil

  • Palm oil is the world's most consumed edible oil derived from Palm fruits. It is an incredibly productive crop.
  • It is used in most packaged food, cosmetics, detergents, chemicals, energy to pharmaceuticals, and even in animal feed.
  • Indonesia and Malaysia are the world's largest palm oil producers.

Aims and Benefits of NMEO - OP Mission

  • Reduce Imports :
    • The mission with a pegged outlay of Rs. 11,040 crore has been formulated to boost palm oil production in the country and reduce dependence on edible oil imports.
    • NMEO-OP aims to reduce import dependence from 60% to 45% by 2024-25, by increasing domestic edible oil production from 10.5 million tonnes to 18 million tonnes.
    • ??With this move, the government expects to increase palm oil production to 11.2 lakh tonnes by FY26 and 28 lakh tonnes by FY30 and thereby reducing import dependency.
  • Development of NE region: The Mission identifies the North East region and Andaman and Nicobar as special focus areas.
  • Price stability for farmers: The Centre will give oil palm farmers a price assurance, with the industry mandated to pay the viability gap funding of 14.3% of crude palm oil prices.
  • Price assurance on Backward Linkages:
    • The Mission will also more than double the support provided for the cost of planting materials, with an increase from ?12,000 petr hectare to ?29,000 per hectare along with further assistance for maintenance, inter cropping interventions and the rejuvenation of old gardens.
    • To deal with the shortage of planting materials, the Mission will provide assistance to seed gardens up to ?100 lakh for 15 hectares in the focus areas of the northeast and Andamans, and up to ?80 lakh in the rest of the country.
  • Generation of Employment

Concerns with the Mission

  • Environmental Impact of palm oil:
    • Deforestation and Biodiversity Loss:
      • It is considered to be a major driver of deforestation and has also led to the destruction of endangered animal’s habitats in various regions of Indonesia and Malaysia.
      • Studies on agrarian change in Southeast Asia have shown that increasing oil palm plantations is a major reason for the region’s declining biodiversity
    • Contribute to Climate change: The palm plantation also led to the conversion of rich soils to millions of tonnes of greenhouse gases contributing to climate change.
    • Increase in Water Pollution due to extensive use of fertilisers and pesticides.
    • Has a possibility to become an invasive species.
  • Social Impact of Palm Oil
    • Change traditional agriculture practices:
      • Traditionally, rice and maize are grown in the North East, but with the Government incentivizing Palm oil, farmers are shifting to it.
      • In the North East, oil is used very rarely in food, thus there will not be any immediate benefit to the community.
    • Create conflict between Government and communities over customary land rights.
  • Experience of other countries :
    • Although it shares similarly suitable climatic conditions, Sri Lanka has recently disavowed oil palm, with a May announcement to raze existing plantations and ban palm oil imports as the crop has replaced more environmentally friendly and employment generating plantation crops, dried up local streams, and shows signs of becoming an invasive species threatening native plants and animals.

Palm Oil case in Supreme Court

  • There is also an ongoing case in the Supreme Court on plantation of palm in the Andaman regions.
  • A report submitted by the Indian Council for Forestry Research and Education to the court in January 2020 had said that the introduction of palm oil should be avoided in biodiversity-rich areas, including grasslands without detailed studies on its ecological impact.
  • Again in June this year, an affidavit was filed with the report and ICFRE has again recommended comprehensive and detailed studies to assess the invasiveness of oil palm in Little Andaman.

Conclusion

  • While there are real fears of impact on biodiversity, an assessment by the Indian institute of Oil Palm Research had found 28 lakh hectares across the country which could be safely used for oil palm cultivation. Less than four lakh hectares are currently planted with oil palm.
  • The Government can also extend similar subsidies and support to oilseeds which are indigenous to India and suited for dryland agriculture; they can help achieve self-reliance without dependence on oil palm.
  • Lastly, the success of mission oil palm will also depend on import duty on crude palm oil.
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