Union Cabinet approves national palm oil mission with assured price support to farmers

New Delhi, August 18: The Centre on Wednesday approved the launch of the National Mission on Edible Oils – Oil Palm (NMEO-OP) with a special focus on the North-eastern region and the Andaman Islands and provide price assurance to oil palm farmers.

The proposal was cleared by the Union Cabinet chaired by Prime Minister Narendra Modi, a week after he had disclosed the Government’s plan to launch this mission.

The financial outlay of this centrally funded programme will be Rs 11,040 crore, out of which the Centre’s share will be Rs 8,844 crore.

The price assurance component is one of the key aspects of this scheme. It will cover farmers harvesting ‘fresh fruit bunches’ that are used for oil extraction by the industry, thereby shielding them from price volatility in the international market. The farmers will be paid directly through the DBT.

Explaining this component, a government statement said it will be known as ‘viability price’ and it will be fixed yearly for the oil palm year from 1st November to 31st October.

The assurance to the farmers will be in the form of the viability gap funding and the industry will be mandated to pay 14.3 per cent of the crude palm oil price which will eventually go up to 15.3 per cent, it said.

“This assurance will inculcate confidence in the Indian oil palm farmers to go for increased area, thereby ensuring more production of palm oil.  A Formula price (FP)  will also be fixed which will be 14.3 per cent of crude palm oil and will be fixed on a monthly basis.”

According to the government, the scheme will help India to reduce its dependence on the import of crude oil, generate employment and increase farmers’ income.

The second major focus of the scheme is to substantially increase input for oil palm production in the targeted regions. The scheme proposes to cover an additional area of 6.5 lakh hectares for oil palm till 2025-26 and a target to reach 10 lakh hectares ultimately.

The production of crude palm oil is expected to go up to 11.20 lakh tonnes by 2025-26 and up to 28 lakh tonnes by 2029-30. As of now, 98 per cent of crude palm oil is being imported.