Why India’s Oil Palm Production is low?

There are several constraints in domestic cultivation of oil palm in India. These are discussed briefly here.

Geographical location:

Although the tree has naturalized in the tropical regions within 20° of Equator; yet the most ideal location for oil palm tree are within the 8° latitude north and south of equator. Thus, India’s mainland is not ideal geographical position for oil palm cultivation.

Irrigation

The oil palm tree needs regular rainfall, a characteristic of tropical climates. The hydrology of most states in India is such that it does not support the abundance of oil palm.

Long gestation period

Although oil palm has high productivity in comparison to other crops such as mustard. Yet, the cultivator needs to wait for four years for trees to start yielding oil.

Small farm holdings

The farmers in India have small farm holdings and this makes palm cultivation challenging.

Unstable policy

Domestic prices of Oil Palm are significantly affected by cheaper imports from Malaysia and Indonesia, thus demoralising the production. Further, there is only an ad-hoc and un-remunerative FFB price fixing formula. Further, the financial support and institutional credit to this sector has been insufficient.

Limited investments by private sector

Unlike Malaysia and Indonesia, the entry of large corporate into planting has been limited in India and subject to much regulation including Land ceiling rules.