- India plans $ 1.5 billion boost for oil palm cultivation
- High prices, government support lure farmers into some pockets
- But water shortages, seedlings limit expansion
- Imports little affected, even after expansion
DWARAKA TIRUMALA, India, September 23 (Reuters) – Convoys of tractors transported thousands of oil palm plants to new homes on farms in southeast India this month, as the top importer global edible oil company is rolling out an ambitious $ 1.5 billion plan to increase production.
Record palm oil prices and new government pledges of payments, even as Indian prices collapse, are spurring the effort, which aims to sharply increase domestic production within a decade, from a tiny level now.
“The yield of oil palm will be at least double that of rice and bananas, and it is much less labor intensive,” said B. Brahmaiah, one of hundreds of farmers in the area. countries rushing to abandon traditional staple crops like rice.
Brahmaiah, 37, owns six acres (2.4 hectares) of land in the West Godavari district of Andhra Pradesh state, where fertile soil, numerous water and oil treatment plants promise to be a powerful engine for increasing production.
Nestled amid lush green rice paddies are clumps of forest-like oil palm, coconut and cocoa plantations, watered by abundant supplies from the region’s rivers and canals.
Elsewhere, however, regular watering is just one of many obstacles to achieving the goal of a 10-fold increase in production in a decade, ranging from a shortage of seedlings to a period of growth. four years before the palm trees bear fruit.
A national edible oil mission launched last month aims to boost production to 2.8 million tonnes by nearly tripling the cultivated area to 1 million hectares (2.4 million acres), in an effort to curb imports oil, which topped $ 11 billion last year.
Ravi Mathur, who heads the Indian Oil Palm Research Institute, the government-backed body leading the campaign, said he had identified 2.8 million hectares (7 million acres) suitable for palm cultivation.
Besides Andhra Pradesh, these areas include the mountainous northeast and the isolated islands of Andaman and Nicobar, where a 2% price premium is offered to farmers to match the prices of produce in less isolated areas.
Green groups criticized the push, saying it could lead to water scarcity, reduce forest cover and affect biodiversity, but Mathur dismissed those fears as unfounded, saying authorities would protect the environment from damage.
Yet planting palm trees on the 2.8 million hectares (7 million acres) will be a major task, as thirsty plants need a steady and plentiful supply of water, a scarce commodity in India, where l agriculture depends on the annual monsoon rains.
Another obstacle to change is that it takes up to four years for oil palm to produce salable fruit, unlike rice, cotton or legumes, which can be harvested in less than six months.
This restricts income streams for farmers, said Sougata Niyogi, a senior official at India’s largest palm oil producer, Godrej Agrovet Limited (GODE.NS).
The government plans to offset some of the costs by offering 29,000 rupees ($ 394) for each hectare of new palm crop and helping to plant other faster growing crops on the farms.
It will also ensure a viability price for the fresh fruit bunches, paying the difference if market rates fall below that level.
This insurance should speed up oil palm plantations, said BV Mehta, executive director of the trade body Solvent Extractors’ Association of India, as price volatility was previously a major deterrent for growers.
YEARS BEFORE INCOME FLOW
Even with such assistance, few cash-strapped small farmers will be able to wait years for their income to arrive, said Niyogi de Godrej.
Farmer OS Chalapatha, who planted oil palm on 35 acres (14 hectares) of land more than a decade ago, said his earnings from working in a private company initially helped cover the costs. costs.
“In the early years, considerable sums were required to develop an oil palm plantation,” he told Reuters.
“I managed to work it out, since I was employed in a private company. But it is not possible for everyone.”
The shortage of palm seedlings is also a critical threat.
Palm nurseries in India and Southeast Asia, which normally take a year to increase production, have been overwhelmed by increased demand for seedlings for the drive.
To meet its target of 1 million hectares of oil palms by 2025/26, India needs to add 130,000 hectares (321,000 acres) each year, requiring millions of seedlings.
“India needs 18.6 million plants, but local supplies are limited to 1 million,” said an industry official in the financial capital of Mumbai, who spoke on condition of anonymity.
“For the rest, we are dependent on imports.
Godrej plans to import 1.15 million sprouts this year, up from 450,000 last year, to meet farmers’ demand, Niyogi added.
The shortfall prevents novice growers from starting to plant.
“We are prepared to pay three times more than the prices set by the government, but we are unable to obtain seedlings,” said another farmer from Andhra Pradesh, T Malddiramaiah.
A longer term challenge for India is to set up oil mills to press the fruits once they are ready to prevent them from spoiling.
Such infrastructure is scarce in the northeast, where congested roads and limited supplies of fertilizer are already straining supply chains.
This leaves only a few pockets of producers, like those in Andhra Pradesh, to rise to the challenge, suggesting that a huge import cut is unlikely.
Despite its best efforts, India may not be able to produce more than 2 million tonnes of palm oil by 2029/30, when demand is expected to rise another 5 million tonnes, said a major refiner of edible oil.
“India will remain dependent on imports for the foreseeable future,” said the refiner, who asked not to be identified. “Palm oil and other programs can only reduce some gradual growth in imports.”
But at his farm in Andhra Pradesh, Brahmaiah has his eyes on the prize.
“Oil palm is more profitable than other crops once it starts producing,” he said.
($ 1 = 73.5770 rupees)
Reporting by Rajendra Jadhav; Editing by Gavin Maguire and Clarence Fernandez
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