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This oil palm plantation, spanning a massive 22,000 hectares (ha) in the Indonesian island of Sulawesi, can be the envy of any official in India trying hard to make the country self-sufficient in edible oil production. India is one of the major growers of oilseeds. Its vegetable oil economy is the fourth-largest after the US, China and Brazil. Yet the country relies on imports to meet over 70 per cent of its vegetable oil requirements; almost 60 per cent of the requirement is met through palm oil. The reason is simple. Palm oil is cheap—it costs 20 per cent less than most vegetable oils—as well as versatile.
Apart from being used as common cooking medium, it is used for making a vast array of food and consumer products, right from vanaspati (hydrogenated vegetable oil), ice creams to lipsticks, soaps and shaving foams. Since 2001, palm oil consumption in the country has increased from 3 million tonnes to nearly 10 million tonnes—that is a growth of over 230 per cent.
The government had anticipated this growth in demand as early as in the 1980s and had set up a committee to identify potential areas for growing the crop. Till then, oil palm, native to West Africa, was grown commercially in Indonesia and Malaysia. By 2012, the government had identified 2 million ha across the country for oil palm cultivation and decided to implement the National Mission on Oilseeds and Oil Palm (NMOOP) under the 12th Five Year Plan (2012-17). Under the mission, farmers were provided training and given subsidised plant materials and input assistance. Private companies were also invited to set up processing factories in oil palm growing areas to facilitate procurement as well as to provide agriculture extension services. Every year, the 12 states under NMOOP set a target of bringing additional area under the crop. Though the Mission received an initial enthusiasm, the targets have been routinely missed (see ‘Targets missed, over and again’,). And in 2017-18, the Union government had to cough up US $6,774 million ( Rs 45,917 crore), the highest ever spent on importing palm oil (see ‘Import continues’).
Why has India not been able to achieve self-sufficiency in the production of this “wonder” oil despite 40 years of efforts? To understand this, Down To Earth (DTE) travelled to some of the oil palm growing states, and found that the crop could be doing more harm than good to Indian farmers and that a mindless chase could land the country in a debacle as Indonesia and Malaysia are facing at present (see ‘Oil’s not well’).
Crop that favours the rich
Rajaram Pichikula, one of the first generation oil palm growers in Andhra Pradesh, vouches for the profitability of oil palm. Every week, the 63-year-old resident of Chinnatadepalli village in West Godavari harvests the ripened fruit bunches, loads them in a cart and heads towards the village collection centre set up by 3F Oil Palm Agrotech Ltd. The bunches are then transported to its mill, 30 km away, the same day and the payment is made directly into his bank account. “On an average I earn Rs 1 lakh per ha in a year,” says Pichikula, who grows the crop on one-fourth of his 12 ha farm. “The only problem I face now is that my trees have grown very tall—up to 12 metres—making harvesting arduous,” he says. Unlike coconut, oil palm bunches are heavy and spiny and are thus harvested with sharp sickles on long poles.
Pichikula plans to fell the existing trees, which have reached the end of their commercial lifespan. He plans to plant hybrid varieties that don’t grow as tall.
B V Subbarao, another farmer from nearby Kommugudem village who grows oil palm on 12 ha, says, “Earlier people in the region used to grow sugarcane, tobacco and paddy. But they are now shifting to oil palm as the returns are consistent and stable.”
But their sentiment is not echoed by other farmers in the region. In May this year, Sriman Narayana of Pothureddypalli village in the neighbouring Krishna district uprooted close to 400 oil palm trees he had planted on his 2.6 ha farm three years ago. “The plants would have started yielding in another two years. But I was not able to bear the expenses involved in their maintenance,” he says. Like other perennial tree crops, oil palm requires regular pruning of fronds, weeding and watering. Though Narayana had hired just one farmhand, he had to shell out Rs 84,000 a year on his payment. “Oil palm is not economical for small landholders and tenant farmers as there is practically no income in the first six years. Besides, it is susceptible to market and seasonal fluctuations,” says Subbarao.
Vulnerable and volatile
Based on the global palm oil market and the oil content of the crop in a particular oil palm growing zone, the state government decides the rate of fresh fruit bunches every month. But market trends show prices have risen and fallen by up to 50 per cent over the past 15 years (see ‘Uncertain returns’). Agricultural returns are also cyclical in nature. Farmers harvest almost 65 per cent of the annual yield between June and Septe mber and earnings remain low during the lean winter months.
Venkateswar Rao, assistant general manager at 3F Oil Palm Agrotech, says small farmers can easily absorb the shocks by growing other crops in the 9 metre gap between two oil palm trees during the initial four-year gestation period. To facilitate intercropping, NMOOP provides a subsidy of 50 per cent of the cost limited to Rs 5,000 per ha for purchase of seeds, fertilisers, pesticides and tree guards.
But Narayana says intercropping on oil palm plantations is not easy. First, it can be done only during the first two years until the oil palm saplings gain some height. Beyond that, their 1 m-wide-and-3-m-long fronds block the sunlight, affecting the growth of the second crop. “Intercropping can result in lower yields of both the crops as they compete for resources,” says Kalidas Potineni, assistant director at the Indian Institute of Oil Palm Research, Pedavegi, Andhra Pradesh. “One solution is to increase spacing between the oil palm trees, but this might not be economical for the grower,” he adds.
While such proposals can be considered by farmers with large landholdings, any losses are insurmountable to bear for small and marginal farmers who make up about 70 per cent of the country’s farming community. Small wonder, in May this year farmers staged a hunger strike at Godrej oil factory that procures oil palm fruits at Chintampalli in Andhra Pradesh, demanding that the government help them get minimum support price.
Neo problems
To entice small farmers, the government is experimenting with a new concept in Northeast India whose hot and humid climate is conducive for the oil crop. In Assam’s Goalpara and Kamrup districts the state agriculture department in 2015 formed 31 farmer groups to grow the crop collectively. Director of the state agriculture department, M S Manivannan, told DTE that the government has signed a Memorandum of Understanding (MoU) with Hyderabad-based Shivasais Oil Palm Private Limited for setting up an oil processing unit in the region. The mill is likely to start next year and will procure the produce on the lines of milk cooperative. The payment will be directly transferred to the farmers’ bank account.
While the scheme on paper looks promising, farmers are far from being excited. “For the past four years we have been tending to the oil palm trees. They have already started fruiting. We don’t know when they are going to be procured,” says Biraj Sutradhar of the Oil Palm Farmers’ Collective of Piporajhar village. Farmers also have to regularly negotiate with various challenges, from rodents to poor rainfall.
Where it grows and how much oil is produced
In Puroni Hatimura village flanked by Garo Hills, a group of women farmers have painstakingly raised a palm oil plantation on five bigha (0.66 ha) of donated land. “We have spent around Rs 16,000 on raising the plants. This does not include labour and cost of bamboo fencing as it was shared by the village households,” says Bijulee Rabha of Mili Juli Mahila Samiti. “Now rats are eating their roots. We are not sure how long we can withstand the assault,” Rabha adds.
In Goalpara, Kanak Barman and his brother Akon have a 0.66 ha-oil palm plantation next to the Salpara-Borjhar Forest Reserve. “We never leave the farm unattended. Elephants regularly raid fields adjacent to the forest. Though they do not eat oil palm, they get attracted by crops grown alongside oil palm and destroy the plantation,” says Akon. Officials with the agricultural department say they are aware of the human-wildlife conflict in these areas. “It has been occurring for many years. Besides, dealing with such menace is beyond the scope of NMOOP,” an official said.
Low rainfall makes the proposition even more expensive. “Last year, the region received little winter rain,” says Sutradhar. “As local water sources dried up, we had to buy plastic pipes to bring water from a distant stream,” he says, adding that oil palm is a water guzzler when compared with local paddy and legume varieties. To secure water sources, NMOOP provides financial assistance for digging borewells and buying pumps, but most farmers are reluctant to invest as the subsidies come later.
The government, however, seems unperturbed by these grievances. To achieve its target of making the country self-reliant in palm oil production, last year, it removed the land ceiling of 25 ha for government assistance in order to “attract corporate bodies towards oil palm and derive maximum benefit of 100 per cent foreign direct investment,” according to the government’s press release. It further states that waste land, degraded land, cultivable land in the oil palm growing states can be given on lease, rent or bought by private entrepreneurs, cooperative bodies, joint ventures for oil palm plantation. A combination of individual farming, contract farming and captive plantation can boost oil palm cultivation in the country, reads the press release.
The relaxation of rules might increase production, but it raises the risk of going the way of Indonesia and Malaysia, the largest suppliers of palm oil to the world, who have earned the distinction through unsustainable practices and at environmental costs.
Can India produce palm oil with little impact on environment? 
Since the 1840s, when the oil-rich fruit was proved useful in the production of soap and later as a lubricant for steam engines, palm oil’s rise has been replete with controversies. In April last year, the European Parliament proposed a ban on palm oil, which it imports to mix in vehicular fuel, by 2021. Though the ban has now been deferred till 2030, following an outcry by producers and exporters of the oil and threats of trade wars, at the heart of the proposed ban was the massive ecological costs associated with oil palm plantations.
The Southeast Asian region, which produces 85 per cent of the world’s palm oil, has four distinct biodiversity hotspots. Indonesia, which contributes 64 per cent of this produce is in an ecological mess—54 per cent of its oil palm plantations stand on what once used to be thick rainforests, shows a July 2016 analysis pulished in PLOS One. In Sumatra and Kalimantan regions, forests are still being destroyed for plantations at a steady rate of 117,000 hectares (ha) a year, says a study published in Land Use Policy in December 2017. While photographs of Sumatran orangutans fleeing from decimated forests have periodically garnered global sympathy, the impact of deforestation is much more pervasive. Indigenous groups have been turfed off their land to make room for plantations. At least three plant and eight animal species, endemic to the region, are now extinct. Enormous amounts of carbon dioxide, released from deforestation and peatland destruction, had catapulted Indonesia in 2015 to surpass the US in terms of greenhouse gas emissions, sparking worldwide alarm. Though plantations support one-fifth of the fauna harboured by a primary forest, oil palm fares the worst when compared with rubber, cocoa and coffee.
Environmental groups have constantly attacked companies like Unilever, Nestle and Cargill and several governments for driving the palm oil expansion. And this has yielded some result. Corporations and governments have changed their policies in recent decades and taken steps to make palm oil sustainable. In 2004, a group of multinational companies, manufacturers and retailers came together to set up the Roundtable on Sustainable Palm Oil (RSPO). Companies who signed up with the initiative can get their products certified as sustainable and sell at a premium. Currently, some 32 companies running over 130 mills in Indonesia have RSPO certification. Concurrently, Indonesia launched its own sustainable palm oil system, referred to as ISPO. In 2016, the country declared a moratorium on new expansion of oil palm. Toeing the line, Malaysia has also introduced sustainability standards for plantations in the country.
So is it clean now?
Not really. So far, only 1.9 million ha, constituting less than 17 per cent of plantations in Indonesia, have received ISPO certification despite the regime being implemented since 2011. RSPO has managed to certify 2.51 million ha, representing a little under 20 per cent of the total area under oil palm cultivation in the world. Though companies responsible for trading 96 per cent of the palm oil have committed to zero-deforestation sourcing, less than half of them have time-bound plans to achieve the target, shows the Land Use Policy study. The moratorium on forest expansions by the Indonesian government also appears to be a smokescreen. Recent satellite imagery by non-profit Rainforest Action Network shows that a private firm P T Agra Bumi Niaga is expanding its plantation in eco-sensitive Aceh area.
In February this year, the government released a new draft for ISPO, which left civil society fuming. According to a statement by non-profit Environmental Investigative Agency, government consultations on the draft has deteriorated since the end of 2017 and the new draft bares little semblance with the earlier policy as well as with the government’s stated objective of ending oil palm driven deforestation.
Incidentally, unsustainable practices in the Indonesian palm oil industry have been heavily linked with the rapid rise in demand from India. A 2012 report by international non-profit Greenpeace squarely blames Indian companies for deforestation in Indonesia by continuing importing unsustainably sourced palm oil to meet India’s demands. Now that India is desperately trying to increase domestic production of palm oil, can it ensure sustainability?
India's predicament
Conventional knowledge shows oil palm grows best in a narrow band along the equator—in regions that are hot and receive 1,500-2,000 mm of rainfall. “However, my experience shows the tree is hardy and can grow almost anywhere in the country, be it dry districts like Anantapur in Andhra Pradesh or waterlogged Sundarbans,” says Kalidas Potineni, assistant director at the Indian Institute for Oil Palm Research (IIOPR). So far, committees identifying potential areas for the crop had excluded forests and ecological hotspots. But analysts, on condition of anonymity, say this discretion is gradually fading. In an attempt to close the gap between targeted expansion and achievement, the National Mission on Oilseeds and Oil Palm (NMOOP) is now evaluating the viability of oil palm plantations in areas closer to the ambitious Sagarmala project, which will connect all the 3,200 ports along the Indian coast. IIOPR has recently prepared a report for NMOOP on the feasibility of oil palm growth in waterlogged areas of the Gangetic delta in southern West Bengal, adjacent to Digha. The report is available on the Mission’s website. Sources say the Union government in 2015 signed a confidential MoU with the Dutch government to explore the potential of oil palm cultivation on small islands dotting Indian coast. The Netherlands is among the biggest proponents of palm oil in Europe. Ironically, the feasibility reports do not assess the impacts of plantations, neither environmental nor social. “The report is to study the impact of environment on plant, not the other way round,” says Potineni.
While concerns regarding sustainability are yet to get attention from the government, a movement of sorts to ensure this has already begun in the country. In 2013, RSPO tried influencing growers and producers in India. “Only few Indian companies joined the roundtable and the number of supply chain certificates issued remains low,” says a study published in the January 2018 issue of the Review of International Political Economy. Last year, another such initiative, the Indian National Palm Oil Sustainability Framework (IPOS), was launched as a collaborative effort of the Solvent Extractors’ Association of India and Solidaridad Network, a non-profit heavily funded by the Dutch government. Like RSPO, IPOS is a mechanism of certification that relies on compliance with a set of rules and suffers from the same problems as RSPO.
“The problem lies in the fact that concepts, standards and methods that sustainability bodies advocate are heavily influenced by Western inputs and experiences gathered in Indonesia and Malaysia. Whereas the conditions like farm size, socio-economic conditions, systems of agriculture and environmental conditions are completely different in India,” explains Potineni. One stark difference is the disparity in farm size of a plantation. In Indonesia, plantations usually span 4,000-5,000 ha with a processing plant on the site. They usually owned by corporations and make up nearly 70 per cent of the area under oil palm. The average landholding of a farmer in India is 1.15 ha; the big oil palm growers DTE spoke with own 12 ha.
Another vital difference is related to water availability. Oil palm is a thirsty crop and is thus advisable to grow in regions that receive abundant rainfall. Such locations are few and far between in India. In oil palm growing regions of Andhra Pradesh where the annual rainfall is between 800 and 1,000mm, irrigation needs are met through groundwater. Proponents argue that every oil palm tree requires 300 litres water a day. Farmers say this is comparable with the water requirement of paddy or sugarcane. But the latter are seasonal while oil palm requires round-the-year water supply. A mindless expansion of oil palm can exacerbate the country’s water crisis.
Kamal Seth, India representative of RSPO, acknowledges the unique characteristics of India’s oil palm sector. “For large firms the cost of certification and auditing per unit oil that reaches retail is negligible and can easily be absorbed by the company or passed on to the consumer. However, this is not the case for small farmers,” says Seth. “We are aware that individual smallholder farmers often cannot afford and do not see the profit of such certification since costs of the process are seen to outstrip the benefits. We have also had some experience of this being the case in Indonesia and working towards reviewing our principles and guidelines to better suit smallholder farmers. You can expect this reviewed system to be rolled out early next year, after the review meeting late this year,” he adds.
B V Subbarao, an oil palm grower of Kommugudem village in Andhra Pradesh, wonders how farmers can ensure sustainability while struggling to make their ends meet. It’s time the government shifted its focus from expanding area under oil palm to making the crop profitable for farmers, he says. For instance, there are only 24 mills in the country to process oil palm grown in 0.3 million ha. Of them, 11 are in Andhra Pradesh and four in Karnataka. How can India become self-sufficient with such pitiable processing capacity? If not planned and managed well, the wonder oil can be reason for farmers’ as well as the country’s distress.
(This story was first published in the 1-15th July issue of Down To Earth under the headline 'Is it a Mirage?').