India is the biggest importer of palm oil in the world. Very few Indian consumers know what damage they are causing to ecologically sensitive rainforests in South-East Asia by using palm oil rampantly. Most food companies use palm oil but don’t mention it in the labels. The Indian government is insensitive and is more worried about reducing the growing import bill. But the poor need this oil as it is the most affordable. Is there a way out of this conundrum?
India is promoting palm oil cultivation in eco-sensitive areas of North-East India with huge subsidies even after many states’ official reports show that previous experiments with palm oil cultivation have failed miserably. Farmers are forced to abandon the land as nothing grows for a few years. The productivity of Indian palm oil is one-fifth of that of what’s produced in Indonesia and with very high subsidies. So, why is India taking up cultivation of palm oil again?
Indian poor do need affordable vegetable oil, but at what cost? The Rs. 11,000 crores earmarked for palm oil cultivation in the next few years could be given to farmers to grow indigenous vegetable oils that are healthier and will help improve farmers’ income and boost rural employment.
So, what is driving India’s affection towards palm oil? Is it ignorance? Is it unwillingness to think medium to long term? Is it policy paralysis? Is it plain indifference? Possibly, all of them.
- The cost difference between coconut oil and palm oil is narrowing. With highly productive hybrid coconut palms replacing old ones, the cost difference is expected to drop even further. Can India subsidize coconut oil, instead of/along with palm oil at ration shops?
- Coconut farmers need plantation industry status for coconut farming, if India can give it to coffee and tea, why not to coconut? This will bring in more investment into the sector and make it more efficient
- Subsidies given to palm oil production and distribution can be diverted to production of other oil seeds in India.
- Manufacturers of food products should be made to declare, in bold letters, the name of oil they use, and if they use palm oil, whether it is sourced from sustainable sources.
In its November 2021 report The Sustainable Trade Initiative (IDH), a foundation that works with businesses, financiers, governments, and civil society, has identified barriers and solutions to India importing responsibly sourced palm oil.
- Price implications – The price of certified sustainable palm oil is higher than conventional palm oil. Can India subsidize sustainable palm oil?
- Lack of accountability and awareness – There is limited awareness about responsibly sourced palm oil in the Indian market and amongst individual consumers. Strong regulatory requirements around responsible sourcing of palm oil further can very quickly push for positive action to limit offshore deforestation risks inherent in our food system.
- Thought Leadership – Since palm oil import and trade concerns multiple ministries and key departments in India, there is a need for centralised coordination along with a defined steering role on the sustainability agenda in relation to palm oil and India’s deforestation footprint. India is also well positioned to lead regional stewardship for sustainable trade and set a precedence within the Asian continent.
- A Better Monitoring System – A key government agency could be designated for maintaining a central repository of palm oil imports at all terminals and ports. This will improve transparency and accountability through better documentation of origin, port of import, company specific responsibly sourced volumes and overall volumes. This will, in turn, aid the Government of India to inform policy decisions and improve performance on SDGs.
- Standardization of Duty and Tariff – Fluctuating tariffs and duty structure were found to be some of the recurring sourcing risks for market stakeholders during the study. Long-term tariff structures will help in providing stability to the sourcing risks faced by companies.
- Strengthening Efforts on Procurement of Responsibly Sourced Palm Oil – The lack of a strong regulatory push on deforestation-free supply chain in palm oil imports has been a driver for the low uptake of responsibly sourced palm oil. There is a need to strengthen existing work by the Sustainable Palm Oil Coalition of India (I-SPOC) and the Indian Palm Oil Sustainability Framework (IPOS) to improve the Global South dialogue. This would also serve as a step towards creating a level playing field to help Indian companies in transitioning towards responsible palm oil sourcing practices.
While India draws up its sustainability agenda, it cannot ignore how it sources and consumes palm oil. That the time has come.