Ashok Gulati and Ritika Juneja write: An oil palm plan for home

News: Recently, The World Trade Organisation’s (WTO) 12th Ministerial Conference was concluded.

It struggled to find satisfactory answers to some of the complex questions pertaining to global trade, especially with respects to trade in agriculture commodities and public stockholding for food security purposes,

What are the major issues in international trade related to trade in agricultural commodities?

The most appropriate trading rules with respect to agriculture, trade and food security have not been figured out in dire situations like pandemics, wars, social/political disruptions or natural disasters.

In crisis times, many countries become inward-looking citing domestic food security needs.

– For example, Russia’s export ban on wheat and sunflower oil, Ukraine’s ban on exports of food staples, Indonesia’s ban on palm oil exports, Argentina’s ban on beef exports, and India’s wheat export ban etc.

What are the impacts of such inward-looking measures by the countries?

Sudden actions such as these lead to supply disruption, exacerbate the pressure on global trade leading to a spike in the prices of these commodities, threatening the food security of net food-importing countries.

Supply disruptions during the pandemic and the Russia-Ukraine war have led many nations to think about “self-sufficiency” in critical food items, or at least reduce their “excessive dependence” on imports of essential food products.

– For example, India is working to reduce its dependence on palm oil import.

India’s Agri-EXIM Situation

India’s Agri-exports are more than its Agri-imports. This means that Indian agriculture is largely globally competitive.

However, India’s biggest Agri-import item, edible oil, accounts for 59% of India’s Agri-import basket. Further, Palm oil comprises more than 50 per cent of India’s edible oil imports, followed by soybean and sunflower.

Measures Taken for making India self-reliant in edible oil

The National Edible Oil Mission-Oil Palm (NEOM-OP) was launched in 2021 to achieve self-reliance in edible oils, primarily through traditional oilseeds such as mustard, groundnuts and soya.

The objective of NEOM-OP also includes to bring in at least 1 million hectares under oil palm by 2025-26.

What are the challenges for making India self-reliant in edible oil?

The cultivation of traditional oilseeds would require an additional area of about 39 million hectares under oilseeds.

However, such a large tract of land will not be available without cutting down the area under cereals. This could endanger India’s food security.

Way Forward

The government can reduce import dependence in edible oils through promotion of oil palm at home.

India has identified 2.8 million hectares of area where oil palm can be grown suitably.

The oil palm is a long gestation period crop. It takes four to six years to come to maturity. Therefore, during this period, smallholders need to be fully supported in the form of subsidy or else.

Besides the cultivation, the processing industry needs to ensure that there is an oil recovery of at least 18 to 20%.

The oil palm can be declared as a plantation crop which would allow the corporate players to to develop their own plantations and processing units.

Source: The post is based on an article “An oil palm plan for home” published in the Indian Express on 20^th June 2022.