"It is the Right Time for India to Invest in Palm Oil": Gayatri Divecha, Head of CSR, Godrej Industries Limited

Gayatri Divecha
Gayatri Divecha
Current palm oil cultivation push to pave way for sustainable palm oil production- says Gayatri Divecha
Current palm oil cultivation push to pave way for sustainable palm oil production- says Gayatri Divecha

Meghana from Bangalore brought a scented body moisturizer and lip gloss from a popular international brand. Candice shopped for bread and chocolates at her local store in Toronto. Shaheeda purchased a box full of protein bars in Dubai from her fitness center. Can you guess the one common thing in all the items? It’s palm oil.

There is palm oil in over 50% of the products that an average urban person uses daily. It’s added at the manufacturing stage for personal use and care items. Most edibles like chips, bakery items, pizza, and sauces could be cooked or fried in palm oil.

India’s domestic consumption of edible oils is around 25 million tonnes, while domestic production is only 11.6 million tonnes. The gap between demand and supply of edible oil is met through imports. India annually imports around 13-15 million tonnes of edible oil, primarily from Malaysia & Indonesia, within this the share of palm oil is about 60 percent followed by soybean and sunflower oil. 

India’s burgeoning population, growing urbanization, and rising incomes have trebled the edible oil demand and consumption in just over 30 years. During the 1980 to 1990, edible oil consumption was 6-7 kg per person, which was primarily met through domestic production. Post 2000’s there was an exponential increase in the demand-consumption (18.3kg per person in 2014-2015), which was unfortunately not met by subsequent increase in production thereby giving rise to import dependency.

India is now the number one importer of vegetable oil followed by China & USA, also the largest consumer of edible oils. The imports are expected to further increase up to 20 million tonnes by 2030. At present only 3.70 lakh hectares (ha.) of domestic area is under oil palm cultivation.

Under the National Mission on Edible Oils – Oil Palm (NMEO-OP), a centrally sponsored scheme, is proposed to cover 10 lakh ha under oil palm by 2025-26. This is on track to make India self-sufficient in edible oil while increasing farmer incomes. 

Currently Indonesia & Malaysia, both tropical countries with swathes of tropical rainforests are the leading producers of oil palm. Thailand is fast catching up. The ubiquity of palm oil and the hunger for more production have caused massive tracts of rainforests to be razed making room for monoculture palm cultivations and robbing endangered species of their native habitats further exposing them to extinction. Palm oil has a reputation, marred in controversy for being a water guzzler, and criticized for its cultivation at the cost of CO2 sequestering forests and rich biodiversity of the region. However, India is a case apart, here’s why: 

First, the National Mission on Edible Oils – Oil Palm (NMEO-OP) has been carefully crafted keeping biodiversity at the forefront. The primary emphasis for oil palm cultivation is on the rainfall-endowed states where farmers will bring wasteland under cultivation or use existing agricultural land for oil palm cultivation. Oil palm is being offered as an alternative to low yield crops such as sugarcane and paddy. The government will provide subsidy support for up to 50% after thorough monitoring and evaluation of the plantations. There is no scope for deforestation or harming the natural habitat. 

Second, the government guidelines focus on sustainable palm oil cultivation and integrated farming. Farmers will be supported to grow intercrops in oil palm such as cocoa, red ginger, bush pepper, banana and ornamental crops that would help the farmers during the initial non-productive gestation period (4 years) of palm oil cultivation. 

Third, apart from serving as a buffer against income shocks for the farmers, the oil palm crop serves a vital need of being a natural carbon sink. A hectare of oil palm crop absorbs a net of 64 tons of CO2 each year and produces around 18 tons of oxygen. At 10 lakh ha cultivation, India will be able to absorb 64 million tons of CO2 which will be over 1.5% of our annual carbon emission.

Fourth, palm oil cultivation in India is primarily through contract farming, which underlines the shared value approach. This route helps de-risk the farmers, guarantees income, and facilitates diversification of crop land. The corporate partners provide all the inputs to the farmers with the guarantee of purchasing the produce. 

Oil palm developers and processors like Godrej Agrovet Limited (GAVL) work directly with the farmers for the entire lifecycle of the crop. Partnership with any farmer cultivating oil palm begins with a detailed questionnaire to understand the background of the farmers with respect to their farmland, crops cultivated, and technology and fertilizers used. Companies exercise no rights on the lands of the farmers who remain the ultimate owners of the crop land.

Companies work closely with farmers from planting the seeds, using the right fertilizers while maintaining seed health, and harvesting techniques to the final stage of procuring the palm fruit kernels. To ensure traceability and transparency, GAVL has developed a web portal & an app ‘Farmer Management System’ for farmers and agents. The fields are geotagged and every farmer, agent, and collection center has a unique code that helps to distinguish farmers and get data on past cultivation. 

Furthermore, a growing number of oil processors are a part of the Sustainable Palm Oil Coalition for India by RSPO (Roundtable on Sustainable Palm Oil). The aim of the coalition is to promote sustainable production of palm oil guided by a set of sustainable standards and principles. The coalition is working closely with processors and farmers to establish systems to ensure that no forest lands are cleared for palm oil cultivation and their certification ensures oil that is sustainably sourced.

Shifting away from palm oil is not feasible, owing to the resourcefulness of the plant. One hectare of land produces five times the amount of oil as compared to soy, sunflower, or coconut oil.

Apart from its resourcefulness, there are other reasons why it is the right time for India to invest in palm oil. Doing so will do well for the balance sheet. Domestic manufacturing will bring down the skyrocketing import bills while creating employment opportunities. Furthermore, the boost in palm oil cultivation will also enlarge the total green cover in the country. This creates a ripple effect of potential carbon sinks, and thereby makes air quality cleaner in the vicinity.

The NMEO-OP is treading the much sought middle path of conscious, sustainable development. It's a policy that has integrated sustainability principles and self-reliance to boost the oil supply and support farmers. It should be viewed and evaluated in the context of its implementation in India and not in the same lens as that of Malaysia or Indonesia.

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