Oil palm mission

Also called: National Mission on Edible Oils-Oil Palm, NMEO-OP · Topic: Major Crops of India: Distribution and Conditions · NCERT: Beyond NCERT

Meaning

The National Mission on Edible Oils – Oil Palm (NMEO-OP) is a Centrally Sponsored Scheme launched in August 2021. It aims to grow more oil palm in India, mainly in the North-East and the Andaman and Nicobar Islands, so that India makes more of its own edible oil (oil we cook with) [2]. It matters because India imports more than half of its edible oil, and palm oil is the biggest part of those imports. Oil palm also gives far more oil per hectare than any other oil crop.

Explanation

Why the mission was needed

• The edible-oil gap: the gap is the oil India uses minus the oil it makes itself. Imports fill this gap.
• Import dependence was 63.2% in 2015-16 and 56.25% in 2023-24 [3].

• Imports meet about 57% of the demand. Oil made in India meets only about 44% [4].

• Why the gap exists:

• People earn more and the population is growing, so they eat more oil.
• Oilseeds are grown mostly on rainfed drylands, so yields are low and change a lot from year to year.

• Cheap imported palm oil from Indonesia and Malaysia keeps prices low for Indian farmers.

• Why oil palm was chosen:

• Oil palm is a tropical tree. Its fresh fruit bunches (FFBs) are crushed to get crude palm oil (CPO).
• It gives far more oil per hectare than any other oil crop, so a small area can cut imports a lot.

Targets and money

• What kind of scheme: a Centrally Sponsored Scheme is one where the Centre and the states share the cost [2].
• Area: add 6.5 lakh ha of oil palm by 2025-26, and reach 10 lakh ha in the end [2].
• CPO output: 11.20 lakh tonnes by 2025-26 and 28 lakh tonnes by 2029-30 [2].
• Outlay: ₹11,040 crore. The Centre pays ₹8,844 crore and the states pay ₹2,196 crore [2].

The price promise to farmers

Oil palm takes 4–5 years to give fruit, so farmers need to know they will get a fair price. The mission gives two price tools:

• Viability price: the government guarantees a price for FFBs.
• If the market price falls below it, the government pays the farmer the difference.

• This payment is called viability gap funding [2].

• Formula price: the price that industry must pay farmers.

• It is set at 14.3% of the CPO price, rising to 15.3% [2].

• It is fixed every month [2].

• Extra support for the North-East and Andaman: the government pays an extra 2% of the CPO price, so farmers there get the same as farmers in other places [2].

Conditions the crop needs, and the criticism

• Climate: oil palm needs high rainfall and a warm, wet (humid) climate. This is why the North-East and the Andaman and Nicobar Islands were chosen.
• Criticism:
• Forest loss: plantations may replace forests in the biodiversity hotspots (places with very many species, many found nowhere else) of the North-East and the Andamans, and harm wildlife.
• Water: oil palm needs a lot of water.
• Monoculture: it is a monoculture (one crop grown over a large area). Since it takes 4–5 years to give fruit, farmers are locked into it for a long time.

Where it occurs

• Who runs it: the Union Government, with the states sharing the cost. It is a Centrally Sponsored Scheme approved by the Cabinet in August 2021 [2].
• Main focus areas:
• the North-Eastern states
• the Andaman and Nicobar Islands

• Both have high rainfall and a warm, wet climate.

• Link to imports: the mission tries to replace palm oil imported from Indonesia and Malaysia.

• Sister scheme: the National Mission on Edible Oils – Oilseeds (NMEO-Oilseeds), approved in October 2024 for 2024-25 to 2030-31 [1].
• Together, the two missions aim to raise India's own edible-oil output to 25.45 Mt by 2030-31.
• That would meet about 72% of the expected demand [1].

Don't confuse with

• NMEO-Oilseeds (2024): this mission covers the annual oilseed crops (mustard, groundnut, soybean and others), with ₹10,103 crore for 2024-25 to 2030-31 and a target of 69.7 Mt of oilseeds [1]. NMEO-OP (2021) covers only the oil palm tree.
• Technology Mission on Oilseeds (TMO, 1986): this older mission led to the "Yellow Revolution" in oilseeds. Its gains were lost after import duties were cut in the 1990s. It was not about oil palm.
• Yellow Revolution vs oil palm mission: "yellow" refers to the mustard flower, a rabi oilseed of north-west India. Oil palm is a tropical tree crop that the mission pushes in the North-East and the islands.
• Viability price vs formula price: the viability price is the government's guaranteed price, backed by viability gap funding. The formula price is what industry must pay, set at 14.3–15.3% of the CPO price [2].

Prelims Hooks

• NMEO-OP was approved in August 2021. It is a Centrally Sponsored Scheme with an outlay of ₹11,040 crore (Centre ₹8,844 crore, states ₹2,196 crore) [2].
• Area target: add 6.5 lakh ha by 2025-26 and reach 10 lakh ha in the end. Trap: the 10 lakh ha figure is the final target, not the 2025-26 target [2].
• CPO target: 11.20 lakh tonnes by 2025-26 and 28 lakh tonnes by 2029-30 [2].
• Focus regions: the North-East and the Andaman and Nicobar Islands. There, the government pays an extra 2% of the CPO price [2].
• Formula price: industry pays 14.3% of the CPO price, rising to 15.3%, and it is fixed every month [2].
• Import sources: palm oil comes from Indonesia and Malaysia, soybean oil from Argentina (also Brazil), and sunflower oil from Russia and Ukraine.

Mains Points

• Cutting import dependence (GS-III): India imports about 56–57% of its edible oil [3][4]. This makes kitchen prices move with world markets and with wars such as Russia–Ukraine (2022).
• Oil palm gives the most oil per hectare, so it is a quick way to close the gap.

• The viability price and the formula price protect farmers through the 4–5 year wait before the first harvest [2].

• Ecological trade-off (GS-III, environment): the focus regions are fragile ecosystems.

• Plantations may replace forests in the biodiversity hotspots of the North-East and the Andamans, and harm wildlife.
• The crop needs a lot of water, and monoculture reduces variety in farming.

• A balanced approach would plant on land that is already degraded, not cleared forest, and would go together with the push for annual oilseeds.

• A two-track policy: NMEO-OP (2021) and NMEO-Oilseeds (2024) aim together for about 72% self-sufficiency in edible oil by 2030-31 [1]. The second mission does this using rice-fallow and potato-fallow land, 65 seed hubs and 600+ value-chain clusters [1]. The lesson from TMO (1986) is that trade policy, such as import duties, must support these gains, or cheap imports will undo them.

Related concepts

• Oilseeds
• Groundnut
• Rapeseed and mustard
• Soybean
• GM mustard

Read more

• Oilseeds and the edible-oil gap