Palm oil and environmental, social challenges in India: The road ahead

Relevance: importance of palm oil for India

Synopsis: Oil palm is a valuable economic crop and a source of employment across developing countries in Asia, Africa and Latin America. Importance of palm oil and various challenges associated with its production. A brief look.

Context

Oil palm is a valuable economic crop and a source of employment across developing countries in Asia, Africa and Latin America. It allows small landholders to participate in the cash economy and helps improve living standards of the local community.

However, it leads to various environmental and social challenges such as deforestation, conversion of peat land into plantation, violation of labour rights etc.

Palm oil consumption in India

• India consumes 10% of the total global production of palm oil and is a net importer of palm oil. India produces less than 0.7 million tonnes of palm oil annually, while it imports around 7.4 million tonnes
• Demand for palm oil is driven by high consumption due to its various advantages in food industry in India
• Since domestic production is not sufficient to meet the demand, India imports around 9 million tonnes of palm oil annually
• Most palm oil imports in India originate from Indonesia, Malaysia and Thailand, accounting for over 90% of total imported volumes in 2019 and 2020
• According to FAO’s State of Food Security And Nutrition in the World report, 194.4 million people are still undernourished in India and palm oil provides a cheap solution to address the issue

Benefits of palm oil cultivation

• Food security and nutrition– Global production and demand for palm oil are increasing rapidly. The cultivation of palm oil is more advantageous than other vegetable crops like soy, sunflower and mustard, with 4-10 times the output per unit of land. This makes its cultivation critical to global food security and nutrition
• Low prices and neutral taste– which enhances oil accessibility to people below poverty lines
• Versatile nature– it can be easily blended with mustard, coconut, groundnut and sesame, oil which are locally produced and traditionally used vegetable oils in Indian cooking
• Raw material for Indian bakery industry, which is projected to reach $12 billion by 2024.

Issues with Palm oil

Because of its damaging effect on environment such as deforestation and peatland destruction, there is need for a sustainable supply chain.

The deforestation risk associated with palm and its ecological footprint is not realized given negligible media attention and the absence of on-product labelling

What needs to be done?

• Responsible production– Palm oil can be produced responsibly without damaging the environment. As the largest importer, India needs to drive the demand for sustainable palm oil.
• The signing of the ASEAN-India Trade in Goods Agreement paves the way for the creation of one of the world’s largest FTAs, and it can be used to set a high bar for the import of high-deforestation risk palm oil into India.