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11-December-2023

1. Discuss the factors behind distribution of global palm oil production. Why does India depend on palm oil imports despite having conditions suitable for its cultivation?

ANSWER

Palm oil is a widely produced vegetable oil. It has domestic as well as industrial applications. India imports nearly 60% of its palm oil demand.

The distribution of global palm oil production is influenced by the following factors:

  1. Tropical Climate: Palm oil is predominantly produced in tropical regions as it requires high temperatures, abundant rainfall, and a relatively consistent climate throughout the year. Countries within the equatorial belt account for around 85% of global production due to ideal climatic conditions for palm cultivation.
  2. Land Availability: Palm cultivation requires allocation of a significant amount of land. Countries such as Indonesia and Malaysia have been able to allocate substantial areas for palm plantations by clearing rainforests.
  3. Technological advancements: The adoption of new technologies, such as high-yielding oil palm varieties and mechanized harvesting techniques result in high oil yield per unit of land compared to other oilseed crops. Better economic viability leads to increased production from palm cultivating regions.
  4. Government Policies: Countries with supportive policies, infrastructure development, and investment in research & development have been successful in promoting palm oil cultivation and production. E.g., increased demand due to bio-diesel mandate in Indonesia.
  5. Market demand: The global demand for palm oil is coming from a range of industries, including food, cosmetics, and biofuels. With increasing consumer demand for palm oil products, countries with favourable climates are likely to increase their production of palm oil.

India has a diverse climate with suitable tropical conditions for palm cultivation in Northeast and Andaman and Nicobar Islands. But India depends on palm oil imports due to the following reasons:

  1. Land availability: The availability of land is limited due to rice-wheat dominance, growing population, and urbanization. Equatorial climate regions are limited to a few pockets.
  2. Low productivity: Palm oil production in India is relatively low due to lack of high-yielding varieties of oil palm, low investment in research and development, and inefficient farming practices.
  3. Production cost: Lower productivity, and higher input costs increases the cost of producing palm oil in India. Economic viability is weaker than in Indonesia and Malaysia.
  4. Environmental Concern: Allocating areas for palm cultivation might require clearing forests in biodiversity hotspots such as the Indo-Burma region, the Western Ghats and the Sundaland.
  5. Domestic demand: India has a rapidly growing population, and the demand for edible oils is high. This increasing domestic demand cannot be met by domestic production alone.

Achieving self-sufficiency in palm oil production remains a complex task. Government initiatives such as National Mission on Edible Oil (Oil Palm) and support through subsidies, research and extension services etc. are helpful interventions that will take time to materialise.

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