Agriculture Policy

Indonesia’s Palm Oil Export Ban is a Reminder to India to Shed Over-Dependence on Imports, Says Atul Chaturvedi of SEA

Atul Chaturvedi, President, Solvent Extractors Association. Photo by Vivian Fernandes

In a podcast I did for thefederal.com, Atul Chaturvedi, President, Solvent Extractors’ Association (SEA), an industry body, says Indonesia’s ban on export of palm oil – crude, refined and used- imposed on 28 April, cannot last more than a few weeks. He expects the country to lift the ban by the middle of this month (May). The reason? Chaturvedi says Indonesia produces about 4 million tonnes of palm oil a month, and consumes about 1.5 million tonnes including as bio-diesel. Soon it will run out of storage capacity, he says. Chaturvedi retired in 2017 as CEO of Adani Wilmar, which processes and sells branded cooking oil.

The ban itself is unprecedented. Even during the global food crisis of 2007-08, Indonesia did not ban exports of palm oil; it imposed an export tax. The ban aggravates the impact of the war in Ukraine. Both Russia and Ukraine are major sunflower oil producers and the military conflict has disrupted supplies. Adverse weather in Brazil and Argentina has affected large acreages of soybean crop. So the ban comes at a very inappropriate time.

Chaturvedi says India is over-depending on imported cooking oil. Complacency has set in because of a long period of low prices. Even as late as 2020, palm oil prices were down because the pandemic had shuttered hotels and restaurants where palm oil is most used. SEA had organised a webinar in the middle of that year to improve the image of palm oil so that there would be consumer preference and stickiness for it. The webinar was held in the context of India’s palm oil imports declining by 1.3 million tonnes between November 2019 and April 2020.

Indonesia is the largest producer of palm oil. It supplies 35 percent of the world’s edible oil requirement, most of it palm oil. Malaysia is the second largest producer of palm oil. India imports two-thirds of its cooking oil and palm oil accounts for 40-45 percent. Indonesia requires 30 percent of its palm oil to be converted into bio-diesel. This was meant to shore up prices and support farmers in a different context.

Chaturvedi says India will have to rethink its import dependence. While oil palm is the most efficient oil crop, yielding about four tonnes of oil per hectare (compared to an oil yield of 400-600 kg per hectare from mustard), it is a long duration plantation crop which starts yielding fruit from the fourth year onwards up to about 30 years. Last year, India announced an initiative to expand the acreage and yield of oil palm by assuring support prices to farmers. But Chaturvedi says short term measures are required. Mustard, soybean and groundnut have 100 day cycles from sowing to harvest.  He says cultivation of mustard must be encouraged in Punjab in areas under wheat. Soybean yields must improve. There should be no taboo technologies and both genetic modification and gene editing must be permitted.

In May 2017, the Genetic Engineering Appraisal Committee (GEAC) had recommended the commercialisation of genetically-modified mustard hybrid DMH-11, developed by a team of Delhi University scientists led by its former vice-chancellor Deepak Pental. The hybrid is high-yielding and GM technology allows mustard hybrids to be quickly developed. But the government has not allowed it to be cultivated owing to pressure mainly from the Swadeshi Jagran Manch, which is a body founded by the Rashtriya Swayamsevak Sangh (RSS), the parent of the ruling Bharatiya Janata Party.

NGOs have also opposed oil palm cultivation in India, saying it will lead to deforestation. But oil palm is grown in India as a substitute for paddy and sugarcane, with micro-irrigation. Clearing forests for oil palm is not official policy.

You can hear the podcast here.

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