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State bets big on palm oil to cut $19 billion vegetable oil imports

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Indian state bets big on palm oil to cut $19 billion worth of Wegoil imports

Pularao Daravathu and thousands of fellow farmers from Telangana in India’s south are busy planting oil palms as their home state aims to add more than decades of area across the country under the controversial crop within four years.

Telangana is targeting an additional 2 million acres under palm oil cultivation over the next four years, and is going to great lengths to achieve this goal – from building large dams and irrigation canals to importing millions of sprouts until.

Generous government subsidies and bumper profit potential as compared to other crops are also encouraging farmers like Daravathu to shift to oil palm.

Daravathu said, “Oil Palm is giving returns of over 200,000 INR (2,536) per acre to farmers who had sowed the crop a few years back. In rice, I struggle to earn Rs 40,000 even after putting in a lot of effort. I’m doing it.” Planting palm oil on his 5-acre farm at Sathupalli, about 300 km (186 mi) east of the state capital Hyderabad.

The recent spike in palm oil prices has more than doubled the price of bunches of fresh fruits that farmers sell to oil mills.

Over the years, price fluctuations, water scarcity, and a period of nearly four years have restricted palm oil cultivation in India to less than one million acres, mostly in coastal Andhra Pradesh, the state that was awarded the status in 2014. was separated from Telangana.

But Telangana, which occupies an inland region on the Deccan plateau, is now keen to emerge as India’s main palm oil hub, with a field target that would make the state the fifth largest oil palm producer globally. will establish as – at present from a negligible basis.

The campaign could reduce India’s huge vegetable oil imports, which cost the country a record $18.9 billion a year ago and widen the national trade deficit.

India meets two-thirds of its vegetable oil demand through imports of about 14 million tonnes annually, which includes about 8.5 million tonnes of palm oil.

The federal government is keen to ramp up production of palm oil to cushion costly imports that pushed inflation to a multi-year high this year after top supplier Indonesia abruptly halted exports.

“In the next four years, most of the palm plantations will be planted, and after 7-8 years Telangana could produce 4 million tonnes of palm oil,” L Venkatarama Reddy, director of horticulture in the state government, told Reuters.

India currently produces less than 300,000 tonnes of palm oil and is dependent on imports from Indonesia, Malaysia and Thailand to meet its requirements.

Chava Venkateswara Rao of Godrej Agrovet Ltd, the country’s largest palm oil producer, said, “Even if Telangana is able to grow palm oil in only one million acres and produce two million tonnes of palm oil, it will be a big achievement.”

Till last year, the country was adding about 35,000 acres under palm oil every year.

water first

Thanks to rivers like Godavari, Krishna and Bhima, some areas of Telangana have enough water for thirsty oil palms. But many areas lacked sufficient water to meet the palm oil requirement of 265 liters per tree per day.

To overcome that, the state has built massive lift irrigation projects and a canal network that is now allowing farmers to plant oil palm in much of the state.

Farmer Bolampally Venkateswara Rao said, “We used to face water shortage during the summer season. Now, with the Kaleshwaram lift irrigation project, we have enough water for palm oil.”

The Kaleshwaram irrigation project, which is almost complete, has cost the state Rs 1.15 trillion ($14.44 billion).

“Central and state government subsidies are covering almost the entire cost of the drip irrigation system,” Reddy said.

The shift from paddy rice and other crops to palm oil could help the state cut annual paddy purchases by about 2.5 million tonnes, and cut electricity bills by Rs 15 billion for lift irrigation projects. This is because drip-fed oil palms require less water than this. Paddy, Reddy said.

Ravi Mathur, who heads the Indian Institute of Oil Palm Research (IIOPR), the government-backed body leading the oil palm push, said the lift irrigation project has reduced areas previously unsuitable for the crop due to water scarcity. Oil palm planting has been made possible.

shortage of planting material

While thousands of farmers are willing to move to oil palm, the availability of seedlings is limited, and raising them is a lengthy process that takes about a year.

Companies operating in Telangana imported 12.5 million sprouts last year and planted seedlings for about 200,000 acres this year, said an official of state-run TS Oilfed, which is the country’s largest importer of sprouts.

The state is targeting to import 15 million sprouts this year – mainly from Indonesia, Malaysia, Thailand and Costa Rica – and to achieve the target of 50 million sprouts next year, he said.

But only a handful of companies are supplying sprouted sprouts.

Saugata Niyogi, a top executive at Godrej Agrovet, said, “After the rise in palm oil prices, there has been a sudden jump in demand. Companies are not able to supply as much as we need this year.” “The supply position will become more comfortable next year.”

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