India has a large consumer base for edible oils in the global scenario. There have been initiatives to increase the domestic production of edible oils to match consumption, but there is still a gap in volume and price. India has to depend largely on the import of edible oils, mainly from Malaysia and Indonesia. Palm oil is the most widely consumed vegetable oil worldwide. It is most commonly used as cooking oil and an ingredient in a wide range of consumer goods, processed foods, and cosmetics. The usage pattern justifies the high demand and drives countries to increase palm oil production to meet consumer requirements.
Palm Oil Industry:
Palm oil is considered to be the world’s most versatile oil. It is used in cooking as edible oil and has many other applications. It has maximum use in household consumption (40%) and is also used in various food services, cosmetics, and personal care products. It is used as a preservative in ice creams, chocolates, and snacks. The greatest advantage of palm oil is that the oil content of the palm fruit is much higher than other oil crops.
The palm oil yield per hectare of land is more than any other oilseed in the world. Palm oil production also employs rural areas with increased farming to meet the market demand. The better yield and cost-effective production results in a lower price for palm oils than other vegetable oils. People belonging to lower and middle-income groups prefer palm oil due to the price benefits.
Health Benefits of Palm Oil:
- Palm oil consumption has become more widespread globally, but the debate over its health implications has also geared up. There has been conflicting information and also interest-driven claims regarding the health impact of palm oils. Many reports say that palm oil has high-fat content, which increases cholesterol levels, while others say it doesn’t. The analysis of its ingredients reveals that palm oil contains some fatty acids like oleic acid that are not harmful and protect against heart diseases.
- However, it has the same properties as other vegetable oils in controlling cardiovascular problems. The plant-based pigments called beta-carotene are found in vegetable oils that the human body can convert into vitamin A. But carotenes are removed from palm oil during the conventional refining process, thereby losing the health benefits of vitamin A.
- On the other hand, red palm oil is refined mildly and retains most of the beta-carotene content. But this palm oil is not marketable due to the red colour, which is less appealing to consumers and difficult to use as with food additives. There is a lack of awareness among consumers about the useful contents of red palm oil and its other health advantages.
Future of the Palm Oil Industry:
The increased global demand for palm oil drives the producer countries to clear substantial parts of tropical forests to create lands for palm oil plantations. These activities to meet the increased demand for palm oil can lead to numerous environmental and social impacts. The expansion of palm oil cultivation has driven massive deforestation that will increase pollution and soil erosion and endanger the habitats of many species.
Indonesia and Malaysia suffered a significant forest cover loss due to the large-scale expansion of palm oil production. It is easier to import cheap palm oil and satisfy the market needs due to a lack of investment in domestic oil production. The import market in India is extremely price-sensitive, so importers are looking at the lowest price for various grades of palm oil. There is hardly any concern about the health or environmental impact.
Present Scenario of Palm Oil in India:
- The diverse applications of palm oil and growing demand have prompted the Indian government to devise strategies and methods to promote domestic production and reduce reliance on imports. Several large Indian companies like ITC, Godrej Agrovet, and Ruchi Soya are taking various measures to increase palm oil production.
- Many of their plantations collaborate with state governments, particularly in the southern states of Andhra Pradesh, Telangana, Karnataka, and Tamil Nadu. The issue of deforestation has been addressed by expanding production in coastal states like Telangana, and Andhra Pradesh, where cultivation is carried out in already degraded land or areas declared unsuitable for paddy production.
- The palm oil demand and consumption pattern in India have a significant effect on the entire industry. There have been efforts to make the production and processing of palm oil products sustainable by addressing the environmental impacts.
- There are challenges to increasing the use of sustainable palm oil because various grades of unbranded vegetable oils are available on the open market across the country at affordable prices. The production of sustainable palm oil involves higher costs affecting the market prices, which is a big constraint to popularizing these ethical brands of palm oils.
- The National Mission on Edible Oil-Oil Palm (NMEO-OP) has been established to improve palm oil production to reduce dependence on imports and help farmers take advantage of the huge market. It will also make India self-reliant on edible oils and control domestic oil prices. The special emphasis of the scheme will be in India’s North-Eastern (NE) states and the Andaman and Nicobar islands due to the favourable weather conditions. The main features of NMEO-OP will be as follows:
- It will raise the domestic production of palm oil by three times to 11 lakh MT by 2025-26.
- It will increase the area under oil palm cultivation to a total of 10 lakh hectares by 2025-26 and 16.7 lakh hectares by 2029-30.
- Oil palm farmers will be provided financial assistance and get remuneration under a price and viability formula.
- The Indian market can drive sustainability efforts in the global palm oil sector. The India chapter of the Roundtable on Sustainable Palm Oil (RSPO) has set benchmarks for certified sustainable palm oil (CSPO) and is working in coordination with multinational companies that are committed to following the CSPO standards in palm oil production.
Essential Data About Palm Oil In India:
- India is the largest user of palm oil products, which is about 20% of global consumption.
- Palm oil constitutes about 40% of India’s edible oil consumption.
- India is the world’s largest palm oil importer and imported 8.4 million metric tons of palm oil in 2020-21, constituting around 18 % of global imports.
- Andhra Pradesh, Telangana, and Kerala are the major oil palm growing states, which account for 98% of the total production.
- The Indian government launched the National Mission of Edible Oils in 2021 to promote domestic oil palm cultivation, focusing on the northeast region and the Andaman and Nicobar Islands.
- The government aims to reduce import dependence on palm oil by 30% by producing 2.8 million tons of oil by 2030 under the National Edible Oil Mission.
Conclusion:
Consumption patterns of edible oils in India depend on the diverse category of users, with commercial establishments and lower-income groups preferring palm oil as it is cheaper than other alternatives. The competition to offer affordable products is so high that most companies would find it difficult to market the product after adding ethical palm oil production costs. Consumer awareness of the effect of sustainable production and processing of palm oil is the key factor to making a difference in the consumption and demand pattern. It’s about awareness, affordability, and marketing strategies that can make sustainable products more acceptable to customers in the future.