End of cheap palm oil? Output stalls with rise of biodiesel
(Source – The Hindu, International Edition – Page No. – 13)
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Topic: GS3 – Economy |
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Context |
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Impact of Indonesia’s Biodiesel Push
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Indonesia raised the mandatory palm oil blend in biodiesel to 40% in 2024 and plans to increase it to 50% by 2026.
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By 2030, Indonesia’s palm oil exports could fall to 20 million metric tons, a sharp drop from 29.5 million in 2024.
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Reduced exports and floods in Malaysia have driven palm oil prices higher than soybean oil, making buyers reduce purchases.
Rising Costs for Consumers
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In India, the largest vegetable oil importer, crude palm oil prices have been higher than soybean oil for six months, sometimes by over $100 per ton.
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Palm oil, which was $500 per ton in 2019, now costs $1,185 per ton.
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High vegetable oil prices increase inflation risks in many countries.
Slowing Palm Oil Production
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Indonesia and Malaysia, the top producers, have slowed expansion due to deforestation concerns, lack of land, and ageing plantations.
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Global palm oil production growth has dropped to 1% annually over the past four years.
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Labour shortages, low replanting rates, and tree diseases are further reducing yields.
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India and Palm Oil Imports |
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Need for Imports:
Lack of Self-Sufficiency:
Steps Taken by the Government and Way Forward:
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Practice Question: India heavily depends on palm oil imports, posing economic and strategic challenges. Discuss the reasons for this dependence and evaluate the steps taken by the government to enhance domestic production. (250 Words /15 marks) |
