How sustainable Palm Oil cultivation can keep the FMCG product prices in check

 By Dr Anupam Barik, Former Additional Commissioner (Oilseeds), Department of Agriculture & Farmers Welfare, Government of India.

Around 50 per cent of the products that we find in our neighbourhood shops include palm oil. These products range from cooking oil to personal care items. Palm oil is a modern-day marvel. It is widely used in a broad variety of items, both culinary and non-food, all over the world because of its versatility and affordability, which contribute to its appeal.

India imports over 9 million tonnes of palm oil per year, making it one of the top users of palm oil in the world, according to reports. The use of edible oil in India increased by 24 per cent during the fiscal year 2022-23, despite the fact that India’s import bill for edible oil reached Rs 1.57 trillion by October 2022. The country is therefore susceptible to variations in international markets, geopolitical conflicts, and shifts in global demand as a result of these circumstances. There is a direct correlation between the fluctuations in palm oil prices and the prices of these consumer items.

Palm oil accounts for around 38 per cent of our total consumption of edible oils. Acquiring self-sufficiency in domestic production can help us get closer to lessening our dependency on goods imported from other countries. The initiation of the National Mission on Edible Oils-Oil Palm (NMEO-OP) by the Indian government in the year 2021 is a significant and encouraging move in this regard. The expansion of oil palm cultivation to a total of 1.67 million hectares by 2029-30 and 1 million hectares by 2025-26 is the objective of this proposal. The objective of the mission is to increase India’s palm oil production to 11 lakh metric tonnes by 2025-26 and then to 28 lakh tonnes by 2028-29. This would be accomplished via an investment of more than $ 1 billion (Rs 11,040 crore).

It is anticipated that the Andaman and Nicobar Islands, along with seven states in the northeastern region, will be the primary locations for the cultivation that falls under the NMEO-OP. Additionally, the government has provided financial assistance for the building of oil palm processing mills, particularly in places that are hilly and located in the northeast. Viability Price (VP) is the name given to the price guarantee that the government of India has provided to oil palm growers for the first time. This guarantee is for the FFBs, which are also known as fresh fruit bunches.

No viable alternative to palm oil

In terms of its yield and the variety of distinctive qualities it possesses, there is really no viable alternative to palm oil, with the exception of, of course, sustainable palm oil. The European Palm Oil Alliance reports that palm oil accounts for 6.6 per cent of the land that is farmed for oils and fats, while it is responsible for 38.7 per cent of the total output. Making the switch to sustainable palm oil is a more effective solution. Furthermore, if companies were to move to alternative vegetable oils like rapeseed, olive oil, and soybean, it would possibly imply nine times as much cropland, which would contribute to the loss of biodiversity and possible deforestation. India has the ability to link itself with international sustainability standards, such as the Malaysian Sustainable Palm Oil Accreditation, to extend its efforts to promote sustainability.

Additionally, there is a growing awareness among consumers as well as a preference for products that are sourced in an ethical manner, which is where sustainable palm oil comes into play. Because of this need, fast-moving consumer goods (FMCG) companies may be encouraged to implement environmentally responsible business practices and establish a price environment that is stable. It is essential to cultivate palm oil in a sustainable manner since doing so helps to limit the amount of environmental degradation, which in turn lowers the expenditures that will be incurred in the future for the control of environmental damage.

In comparison to sugarcane and rice, palm oil requires far less water, which enables farmers to generate a consistent income. Additionally, it requires less energy, fertilisers, and pesticides to be used. It is advised that palm oil be grown on only cultivable land in India, and not on forest territory. Rice is being replaced by palm oil in areas that are suited for its development. It is a well-known fact that palm oil is an exceptionally productive crop. It has the capacity to produce between four and five tonnes of oil per hectare per year, which is more than any other vegetable oil production. In the event that manufacturers were to transition to alternative vegetable oils such as soybean, olive, or rapeseed oil, the costs would skyrocket, resulting in a large increase in the cost of things that are commonly used.

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 By Dr Anupam Barik, Former Additional Commissioner