India wants to grow palm oil on a large scale

style="float: right; margin-bottom: 10px; font-weight: 600;"Tue 24th Aug, 2021

While the dispute between the European Union (EU) and the major economies of Southeast Asia over palm oil is simmering, India now wants to make massive inroads into the cultivation of oil palms. Prime Minister Narendra Modi's cabinet has released around 110 billion rupees (1.3 billion euros) to establish huge plantations on the remote Andaman and Nicobar Islands in the Indian Ocean.In total, the area under cultivation is expected to almost triple to around one million hectares - about four times the area of Luxembourg. In India, anger is rising over the threat of monocultures. In Southeast Asia, they are leading to massive clearing and burning of tropical rainforests and peat bogs.

The Indian government plans to triple the production of palm oil to as much as 3 million tons by 2029. This is intended to relieve the pressure on imports. Palm oil is not only used as fuel, but also goes into thousands of products, from chocolate to soap to pizza. On average, a German consumer consumes around 1.5 kilograms of palm oil a year. India imports nearly 15 million tons of edible oil annually at a cost of about $10 billion, of which palm oil imports account for the largest share. The Indian Finance Ministry has just reduced the import duty on crude palm oil by 5 percent.

The island groups that New Delhi is considering for cultivation are located in the east of the Indian Ocean, significantly closer to Thailand than to the Indian mainland. The archipelago counts a total of 572 islands, 38 of which are uninhabited. New Delhi also wants to promote cultivation in the poorer, agriculturally dominated northeast of the subcontinent.

The main suppliers are the two largest cultivation countries in the world, Indonesia and Malaysia. The EU is at cross purposes with both. Since 2017, Indonesia has also been fighting at the World Trade Organization (WTO) against an import ban by the Europeans on palm oil, which is processed into biofuel. The EU is Indonesia's second-largest customer after India, accounting for about 15 percent of the industry's exports.

At around 40 million metric tons annually, a good half of the world's palm oil production comes from Indonesia. Together with its neighbor Malaysia, it accounts for 87 percent of global production. Number three is Thailand. The issue is also explosive for Southeast Asia because the EU has long been preparing a free trade agreement with the region. But Asian ministers have already threatened to boycott the purchase of Airbus aircraft or automobiles from European manufacturers. The free trade negotiations with India, which have been stalled for years, are also to be resumed. There however no export of the oil is planned.

The Indian government's high subsidy attacks Indonesia and Malaysia. "It will spur investment, create employment, reduce dependence on imports and increase the income of our farmers," Agriculture Minister Narendra Singh Tomar said. India is the world's largest importer of edible oil. About two-thirds of the consumption of its nearly 1.4 billion people is met through imports. Last fiscal year (March 31), the subcontinent imported about $5.8 billion worth of palm oil. The plan to expand acreage thanks to taxpayer subsidies is not new. There were already programs to expand the area under cultivation in 2011 and 2014.

Environmentalists in India are mobilizing against the plan, fearing monocultures similar to those destroying large parts of Southeast Asia. Among other things, they are counting on the Supreme Court to uphold the cabinet decision. In 2002, it banned all plantations of "unnatural crops" on the islands, with their fragile ecosystem. Environmentalists fear that the monocultures are destroying natural rainforest in India as well, but also the land that small farmers tilled according to the traditional model of jhum.

The ancient system of slash-and-burn cultivation is also used for this purpose; but then, depending on the season and year, up to 30 different plants are grown on small areas in a rhythm. The agronomist R. Shankar Raman of the Nature Conservation Foundation explained that this use of slash-and-burn is different from the clearing and burning of virgin forest used by palm oil companies for their monocultures: "In the northeast, as in other tropical regions, secondary forests grow relatively quickly and densely on cultivated land thanks to bamboo and other trees. Of course, they are not as diverse as an undisturbed forest. But in any case, they are far better than oil palm plantations, which are a permanent form of deforestation."

The adaptation extends to ownership structures: while jhum cultivation areas belong to villages, plantations are owned by companies - so women, for example, lose their role as co-owners. Other scientists, however, recommend converting cultivated areas for sunflowers or rapeseed into palm oil plantations, as these are more profitable.

Image by Bishnu Sarangi


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