India to Invest US$1.5 Billion in Three Years to Reinvent Palm Oil Sector
Driven by both population and incomes growth, India’s consumption of edible oils has tripled over the past 20 years while production has increased by less than a third, placing the country in the position of becoming the world’s top importer. Imports have increased by 12 times to 14.4 million tons per year, of which 80% is palm oil.
India is now importing $10 billion worth of edible oils per year – representing the country’s third largest import bill after oil and gold. This has prompted the government to consider buying oilseeds directly from farmers and to make changes to its support policies for growing rapeseed, soybeans and peanuts.
As part of a push for the nation to become self-sufficient in edible oils within this decade, India has announced plans to invest US$1.5 billion over the next three years to support farmers in planting oil palm trees across an area equal in size to the state of New Jersey. Palm is the highest yielding perennial oil crop, requiring a fraction of the area needed for production compared to other oilseeds – an important aspect for countries such as India where population density is such a concern.
The government is targeting mostly fallow farmland across nine (primarily coastal) states in the country that have been identified as having suitable climatic conditions for the cultivation of oil palm trees. However, government officials worry that the long gestation period of up to five years would cause farmers to reject planting the crop, as had happened in the past when the country tried to develop the sector. Government officials hope that the allocated backing of US$1.53 billion will sway farmers.