Andhra’s oil palm farmers are battling a triple threat: Import policy, rising production costs, and an invasive pest

Andhra Pradesh accounts for an estimated more than 80 percent of India’s total oil palm cultivation.

BySNV Sudhir

Published Jul 30, 2023 | 10:00 AMUpdatedJul 30, 2023 | 10:00 AM

Oil palm plantation

Lifting of the import duty on crude palm oil, a spike in input costs, and a deadly pest attack have put oil palm farmers in Andhra Pradesh on a slippery ground.

The state accounts for 80 percent of the country’s oil palm cultivation with around three lakh farmers growing the trees on roughly 2.25 lakh hectares. Another 10 lakh people are dependent on oil palm farming.

“To achieve self-reliance in edible oils and cut imports, the central government introduced oil palm farming in the late 1980s and early 1990s. But even after so many years, we are still importing edible oils, including palm oil, affecting the foreign exchange,” farmer Bobba Veera Raghav Rao from the Krishna district told South First.

“If the crisis continues, farmers in Andhra Pradesh will look for other alternatives, which will have an overall impact on palm oil production in the country,” he added.

Raghav Rao was one of the farmers who first took up oil palm farming.

His farm is spread over around 25 acres. The import duties that were 49 percent in 2020-21 became zero by May 2022. Subsequently, crude palm oil price fell from ₹1,46,000 per tonne to ₹72,000, putting the farmers in a quandary, he said.

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Shooting production cost

Another cultivator, Rajagopala Krishna, pointed to the increased production costs. “The labour cost which was around  ₹300 per day has now increased to ₹800 to ₹1,000,” he told South First.

“The prices of fertilisers and pesticides, too, increased manifold. Diesel which used to be ₹70 now has gone up to ₹100. There is an overall increase of at least 120 percent in the cultivation cost. But the viability price is still hovering around ₹13,000 per tonne,” he said.

Andhra Pradesh has around 13 private palm oil production mills and the government-run OilFed. The government divided the state into different zones and the private mills were assigned to each zones. These factories should buy Fresh Fruit Bunches (FFBs) from their respective zones, while OilFed fixes the viability price based on the prevailing market rate of crude palm oil. Palm oil is extracted from FFBs.

Over the years, farmers who cultivated the palms on at least 1.6 lakh acres, shifted to other profitable crops.

Oil palm is the highest-yielding crop compared to all vegetable oil seed crops. It can yield up to 20-25 MTs FFBs to produce four to five metric tonnes of palm oil and 0.4-0.5 MT palm kernel oil (PKO) per hectare.

Palm oil constitutes about 80 percent of India’s edible oil imports, and the government had encouraged oil palm farming to cut imports.

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Call for dynamic import duty mechanism

The Andhra Pradesh government implemented the oil palm farming initiative at 229 mandals spread across nine districts, Srikakulam, Vizianagaram, Visakhapatnam, East Godavari, West Godavari, Krishna, Nellore, Ananthapur and Chittoor, and created the factory zones.

“India emerged as the largest importer of edible oil spending ₹1,56,000 crore from the forex in 2022. The FFB price, which was ₹23,635 per tonne in May 2022, fell to ₹13,000 by September 2022, due to a decline in crude palm oil price to ₹74,000 from ₹1,45,000 per tonne. The import duties, which were at 49 percent, were totally lifted in April 2022, causing a huge loss to the farmers,” National Oil Palm Farmers Association’s secretary general Dr K Kranthi Kumar Reddy told South First.

“In the interests of edible oil self-sufficiency and livelihood of farmers, the Centre should evolve a dynamic import duty mechanism and re-impose import duties to protect the livelihoods of oil palm and other oilseed farmers from competition. The crude palm oil price should be maintained at ₹1,20,000 per tonne so that the input cost would be covered,” he added.

He also pointed out that oil palm is not a voluntary crop and the Government of India had promised to ensure competitive prices while introducing the crop.

“However, in these 32 years, farmers were compelled to drop oil palm farming on more than 1,20,000 acres in Andhra Pradesh alone. Farmers in India cannot compete with the forest plantations of Indonesia and Malaysia,” Reddy further said

“In 2017, oil palm farmers made a representation to the Commission for Agricultural Costs and Prices (CACP), requesting to fix the production cost of each tonne of FFB at ₹13,000. But now the fertiliser and other costs have increased more than 120 percent and the cost for producing each tonne of FFB has gone up to ₹18,000,” he added.

Reddy demanded the government fix a viability price of  ₹19,000 per tonne of FFB.

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Whitefly menace

An invasive pest, rugose spiralling whitefly, has infected oil palms, which would bring down the yield by at least 30 percent this year.

A joint survey conducted by Indian Institute of Oil Palm Research (IIOPR), Department of Agriculture, Cooperation and Farmers’ Welfare, and the agriculture departments of Andhra Pradesh and Telangana, found pests on oil palm, banana, custard apple and guava.

The survey noted the pest spreading rapidly from the Kadiam mandal of Andhra Pradesh to the surrounding mandals, threatening oil palm plantations.

According to the state agriculture department, East Godavari, West Godavari, Krishna, Srikakulam, Vizianagaram and Visakhapatnam districts are among the most affected areas, with about 10,226 hectares of coconut and 11,744 hectares of oil palm plantations affected by the pest.

“Our crop yield per acre has dropped by at least 30 percent in the majority of the plantations. Less yield means loss,” Raghav Rao added.