top palm oil producing nations

India’s Palm Oil Industry in 2022: All You Need to Know!

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India imports roughly 60% of its edible oil consumption, and palm oils (crude + refined) account for nearly 60% of edible oil imports. As a result, fluctuations in imports and international prices are transmitted to domestic edible oil prices. The current increase in edible oil prices is primarily due to high and rising international edible oil prices.

Palm oil in India

  • India is the world’s second-largest consumer and number one vegetable oil importer.
  • India is a major producer of oilseeds. India’s oilseed production increased by nearly 43% between 2015-16 and 2020-21. However, India’s oil production has lagged behind demand, necessitating the import of edible oils.
  • Oil palm produces 10 to 46 times more oil per hectare than other oilseed crops and yields around 4 tons of oil per ha. However, around 98 per cent of Crude Palm Oil (CPO) is being imported into India.

Efforts towards raising oilseeds production and productivity

National Food Security Mission: Oilseeds (NFSM-Oilseeds)

  • Interventions include producing foundation and certified seeds and distributing certified seeds and seed mini kits of the most notable high yielding varieties.
  • It has also established 36 oilseed seed hubs between 2018-19 and 2019-20 to increase the availability of high yielding quality seeds, and oilseed mini kits of great yielding varieties have been allocated for distribution across all major oilseed growing states.
  • Through the MSP regime, the government has provided price signals for crop diversification toward oilseed production.

National Mission on Edible Oils – Oil Palm (NMEO-OP) 

  • It was established to increase the availability of edible oil in the country through area expansion and price incentives. The government will guarantee the price of fresh fruit to oil palm farmers. This is known as the Viability Price (VP), and it protects farmers from fluctuations in international crude palm oil (CPO) prices.
edible oil production and Import in India
edible oil production and Import in India

Palm oil is a high fat, edible vegetable oil that is derived from the fruit of the palm tree. It has many uses in food production and is one of the most widely used cooking oils. Palm tree plantations are common in South India, but the industry has been met with controversy over deforestation concerns.

This article will discuss the Palm Oil policies in India alongwith the National Edible Oil Mission. You will be able to answer the following question after reading this article- Which are the top nations producing Palm Oil?, Which countries are the Major Consumer of Palm Oil?, Uses Of Palm Oil, and the Palm Oil production in India state wise.

The first thing that comes to mind when thinking about palm trees is the tropical climate that they thrive in. Palm trees are native to many areas of the world, but they are typically found in warmer climates like in South-East Asia. The other thing that most people notice about them is their leaves. They are green on top and yellow on the bottom, which is an unusual combination for a tree. Let’s have a brief Idea about Palm trees and then we will dive into Palm Oil production and Policies in India.

Palm tree

Palm trees are a type of tree found all over the world, from Asia to Africa to North and South America. They are known as pinnate plants, meaning they grow in a fan-like shape with a central trunk containing a single stem that branches out into several leaf-bearing stems. There are different types of palm trees according to their size, appearance, use and location.

In the wild, oil palm can grow to heights of 60-80 feet, but in cultivation, it is rarely taller than 20 or 30 feet. Leaf bases can be found on mature palm trunks for years, and prominent leaf marks are arranged spirally on the trunk where bases have fallen. Leaves can grow to be up to 25 feet long, with 200-300 leaflets per leaf. They are 3-4 feet long.

Scientific name of Palm tree: Elaeis guineensis

Palm oil is an edible vegetable oil obtained from the fruits of oil palm trees.

The oil is derived from the fruits in two ways:

  • By squeezing the fleshy fruit.
  • By crushing the kernel, or the stone in the middle of the fruit to obtain Palm kernel oil.

Where is palm oil grown?

Palm oil is a popular cooking ingredient in many cultures. Surprisingly, palm oil can also be found in almost everything: soaps and toothpaste, as well as biofuel. But the biggest question on most people’s minds is: where does palm oil come from?

Palm oil is grown primarily in Indonesia and Malaysia. The palm fruit, which bears the same name, is used to produce palm oil. Palm growing regions include vast areas of tropical rainforest rich in biodiversity that span the continents of Asia, Africa, and South America. Because the demand for edible vegetable oils has increased dramatically in recent decades, palm oil plantations have expanded rapidly in number and size to meet the global demand. As per an estimate, Palm Oil production has increased tenfold since 1980.

FACT: Indonesia is the largest producer of palm oil, followed by Malaysia – both countries account for 84% of the world’s palm production.

There has recently been an increase in palm oil production in South America mainly in countries like Colombia, Ecuador and Guatemala. And now they are among the Top 10 Palm Oil Producer Nations in the world in 2021. 

Significance of Palm Oil

  • Palm oil is in everything. It is found in many different products, from ice cream to shampoo. The reason for this is the versatility of palm oil. With a melting point around 100 degrees Fahrenheit, it can be used in products ranging from ice cream to peanut butter spread. One of the major advantages of palm oil over other oils is that it has a neutral flavour. This means that it tastes like itself rather than adding flavour or taste to what you are consuming.
  • Palm-oil is present in nearly everything! Almost 50% of the packaged products in supermarkets contain palm oil.
  • Palm-oil is versatile and is extensively used not only as edible vegetable oil, but also in the manufacturing of detergents, plastics, cosmetics, and biofuels.
  • The utility of palm oil explains its huge demand in the international market. It is the most consumed vegetable oil in the world.
  • Palm Oil has been a popular fatty acid for many years now. In fact, in some cases it can be found in up to 50% of a product’s ingredients list. Although it is a sustainable crop that does not require much land for production, it has been criticised because of its high levels of saturated fat and cholesterol. Palm-oil has both negative and positive impacts on the environment and human health.

Top consumer Nations of Palm Oil in 2022

The following are the top consumers of palm oil:

1Indonesia15,445
2India8,475
3China7,070
4EU-276,650
5Pakistan3,485
6Malaysia3,370
7Thailand2,452
8Nigeria1,765
9United States1,602
10Bangladesh1,410
Top consumer Nations of Palm Oil
top palm oil producing nations
top palm oil producing nations

Year of Estimate: 2021

Source: United States Department of Agriculture

palm oil production india
palm oil production india

Top 5 Palm Oil Producer states in India 2022

  1. Andhra Pradesh
  2. Telangana
  3. Kerala
  4. Karnataka
  5. Tamil Nadu

Current situation of Palm Oil in India

  • India’s import bill of edible oils will be ₹1.20-lakh crore in 2021 from ₹75,000 crores last year. According to Solvent Extractors’ Association of India (SEA), India has 3 lakh hectares of land under oil palm cultivation, and it produces approximately 2.80 lakh tonnes of crude palm oil in a year.
  • As per SEA, there is a potential to bring around 1.9 million hectares of land under oil palm cultivation in India. 
  • So It had requested the GOI to target additional 5 lakh hectares in the upcoming next five years
  • Currently, India imports nearly two-thirds of its edible oil used in the country. 
  • Palm oil has a massive share of nearly 55 per cent of edible oil imported by India.

There are two major characteristics that have significantly aided the development of this sector. One example was the establishment of the Technology Mission on Oilseeds in 1986, which was later transformed into the National Mission on Oilseeds and Oil Palm (NMOOP) in 2014. It was later merged with NFSM (National Food Security Mission). This gave a boost to the government’s efforts to increase oilseed production.

The other dominant feature that has had a significant impact on the current state of the edible oilseeds/oil industry is the liberalisation programme, under which the government’s economic policy allows greater freedom to the open market and encourages healthy competition and self-regulation rather than protection and control. The Yellow Revolution is one of the colour revolutions that was launched to increase the country’s production of edible oilseeds to meet domestic demand. The Kharif Strategy 2021 for oilseeds has also been launched by the government. It will bring an additional 6.37 lakh hectares under oilseeds and is expected to produce 120.26 lakh quintals of oilseeds and 24.36 lakh quintals of edible oil. 

Why doesn’t India produce enough edible oils to meet its own needs?

The four main concerns for oil seed and oil producers in India are micro-irrigation, quality seeds, marketing infrastructure, and government policies. According to the Ministry of Consumer Affairs, Food, and Public Distribution, the country’s total domestic demand for edible oils is around 250 lakh metric tonnes per year. Imports account for approximately 60% of the edible oils consumed in the country. Palm oil (crude + refined) imports account for roughly 60% of total edible oil imports, with Indonesia and Malaysia accounting for 54%.

The Latest Effort in becoming self-sufficient in edible oils is the National Edible Oil Mission – Oil Palm (NMEO-OP).

National Edible Oil Mission – Oil Palm (NMEO-OP)

GOI launched a ₹11,000 crore National Edible Oil Mission – Oil Palm (NMEO-OP) on 9th August 2021.

Aim: To bring down India’s dependence on imported edible oils.

National Edible Oil Mission – Oil Palm (NMEO-OP)

  • This is a long-waited step for oil palm growth in India and towards the fulfilment of the ‘Atmanirbhar Bharat’ vision in edible oil.
  • The government of India launched a ₹11,000 crore National Edible Oil Mission-Oil Palm (NMEO-OP) to achieve self-reliance in edible oils.
  • The NMEO-OP aims are: 
    • to reduce India’s edible oil import dependence from 60% to 45% by 2024-25, by focusing on domestic edible oil production.
    • The target is to scale up production of Palm oil from the current 10.5 million tonnes to 18 million tonnes, a 70% growth target.
    • The special focus under it will be given to India’s north-eastern states and also the Andaman and Nicobar Islands, due to their conducive weather conditions for the growth of Palm.
    • Oil palm farmers will be given financial assistance and will also receive remuneration under a price and viability formula.
    •  this mission will also focus on expanding the cultivation of our other traditional oilseed crops

Other Latest Updates

With effect from February 12, 2022, the central government has reduced the Agricultural Infrastructure Development Cess (AIDC) for Crude Palm Oil (CPO) from 7.5 percent to 5 percent.

This decision is intended to provide additional relief to consumers and to keep any further rise in the prices of domestic edible oils in check as a result of the global rise in the prices of edible oils. Following the reduction of the agricultural Cess, the import tax difference between CPO (Crude Palm Oil) and Refined Palm Oil has increased to 8.25 percent. The widening of the price differential between CPO and Refined Palm Oil will allow the domestic refining industry to import Crude Oil for refining.

Roadblock in Palm Oil production in India

Although there are manifold benefits of palm oil, one major setback that comes along with its production is the environmental damage & harm it causes to the biodiversity, as large areas under forest are being cleared worldwide for its production.

Palm oil production is a mainstay for many economies around the world. However, amid the rise in deforestation and environmental degradation, many countries are now trying to find alternate crops that can provide similar benefits. Palm oil production has raised serious concern because not only does it fuel deforestation, but also because of its effects on climate change. For example, in Indonesia, over 1 million hectares of forest were cleared between 1997-2001 largely to make room for palm oil plantations.

Way Forward 

In conclusion, we hope that more research will be done on the effects of palm oil cultivation. The only way we can reduce the pressure on high biodiversity landscapes used for growing palm is by implementing proper land-use planning and properly planned local strategies for palm oil cultivation. Meticulous land-use planning and implementing properly planned local strategies for palm oil cultivation can reduce the pressure on high biodiversity landscapes used for growing Palm.

As you have made this far in the article, have a look at other important Oilseeds in India.

Oil Seeds in India

  • India is one of the major oilseeds growers as well as an importer of edible oils. 
  • The vegetable oil economy of India is the fourth largest after the USA, China & Brazil. 
  • Oilseed production accounts for 13% of the Gross Cropped Area, 3% of the Gross National Product and 10% value of all agricultural commodities.
  • Agro-climatic conditions in India produces 9 oilseed crops, which includes
    • 7 edible oilseeds:- groundnut, sunflower, sesame, safflower rapeseed & mustard, soybean and niger.
    • 2 non-edible oilseeds – castor and linseed.
  • Oilseeds farming is done on 27 million hectares of land in India mainly on marginal lands, of which 72% is rainfed.
  • Groundnut is a Kharif crop and is the major oilseed produced in the country.
  • Major states of Groundnut production: Madhya Pradesh, Rajasthan, Gujrat, Maharashtra, UP
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