In India’s Assam, ‘hopes dashed’ for high returns on oil palm production

Jorhat, India: Priya Ram Duwarah has planted 60 oil palm seedlings in his half-hectare (1.2 acres) of agricultural land at Mohara village in Jorhat district in the northeast Indian state of Assam.

The 65-year-old farmer, who typically grows paddy and seasonal vegetables, stepped into oil palm planting last September after being assured of high returns by the officials of the state agriculture department. While it takes the plants four years to bear fruits, he says that the wait is worth the time.

Reason: the promise of higher returns.

Duwarah told Al Jazeera that cultivating paddy earns him approximately 40,000 rupees ($478) a year, a sum that is “too paltry” in the wake of the rising inflation. “The government officials assured me of doubling my income,” since the region has climatic conditions favourable to oil palm and Duwarah decided to venture into the business, he told Al Jazeera, sounding enthusiastic about his new crop.

He is one of about 1,200 farmers in Assam who have taken up oil palm farming with the dream of enhancing their income.

Huge demand for edible oils

In 2014, the newly elected Narendra Modi government set up the National Mission on Oil Seeds and Oil Palm (NMOOP) with the goal of making India self-reliant in edible oils. In 2021, its name was changed to National Mission on Edible Oils-Oil Palm and the government announced an investment of 110.4 billion rupees ($1.32bn).

India is the largest importer of edible oils in the world. In the twelve months from November 2022 to October 2023, it imported 16.47 million tonnes of edible oil, including 10 million tonnes of oil palm. That was up from the previous year’s imports of 14.19 million tonnes and 8 million tonnes, respectively. Palm oil is used in a range of packaged foods, as well as soaps, cosmetics, ice cream, and other products.

While oil palm cultivation was already going on in some southern Indian states, including Andhra Pradesh, Telangana, Tamil Nadu, Odisha, and Karnataka, the Modi government decided to expand production to the country’s northeastern region including Assam.

Assam had initially allocated about 1,000 hectares (2,741 acres) of agricultural land for oil palm cultivation. But with its immense potential, the Indian Institute of Oil Palm Research in 2014 identified a total area of 375,428 hectares (927,703 acres) fit for farming.

However, despite the obvious demand for palm oil and a decade of efforts, things have not gone as planned in Assam. One of the main problems is that there are still no processing facilities in place in the state and the fruit is processed in the nearby states of Mizoram and Andhra Pradesh. The delays in that process and the resultant losses have turned off farmers who were the early adopters of the practice.

‘Hopes dashed’

Josmi Rabha, 54, a farmer in Dariduri village in Goalpara district is one of them. She planted 65 oil palm seedlings over about one hectare (2.5 acres) of her farm in 2016 with the promise of high returns.

“I spent around [100,000 rupees] ($1,200) to set up a fence to keep animals out and also installed a pump for groundwater irrigation,” even as that ran up her water bill, Josmi told Al Jazeera.

“The plants started to bear fruits in 2021. We were expecting high returns. But all our hopes were dashed after we didn’t find any market to sell them as nobody came to buy from us,” Josmi said.

The fruit begins to rot if not processed within three days and middlemen aware of that dilemma offered them low rates, she recalled. “The absence of an oil processing plant in Assam has virtually killed our business,” she said, adding that now she is having problems arranging funds to remove the plants from her land.

Rabha’s son Debajyoti Rabha, 34, a teacher in a local school, also got into the business to supplement his family’s income, but the result has devastated him.

“Oil palm is a water-guzzling crop and has killed all other crops,” which he had intercropped with the oil palm based on the suggestion of government officials, Debyajyoti said. “We are planning to clear the palm oil crop from our fields, but the branches and stems are sturdy and we will have to hire extra manpower to do that. This has been a loss-making affair for us,” he added.

While once 70 farmers in the village had signed up to the idea of cultivating oil palm, now only 10 remain as everyone else has given up on it, he said.

Pratul Chandra Rabha, 40, another farmer in the same village also blamed the poor prices they were offered for the farmers losing interest in cultivating it.

There is no minimum support price (MSP) from the government and middlemen have offered them six rupees ($0.072) per kg for fruit, much lower than the asking price of 15-16 rupees ($0.19) per kg.

“Each tree bears 15-20kg [33-35 pounds] of fruit in a gap of 20 days, but where are the buyers? I am not serious about palm cultivation any more and have almost left it,” Rabha told Al Jazeera.

Dipak Kumar Pathak, the assistant director of the agriculture department in Goalpara conceded the decline in farmer participation and the plantation area which had halved to 700 – 800 hectares (1,730 – 1977 acres) from 1,511 hectares (3,734 acres) in 2014.

“The lack of proper transportation of crops to the processing units and involvement of middlemen seems to be the biggest reason behind the set-back”, Pathak said.

New players

Last August Assam Chief Minister Hemanta Biswa Sarma announced that the state government, in partnership with Yoga guru Baba Ramdev’s Patanjali Foods Limited (PFL), had initiated a large-scale oil palm plantation project to bring 375,000 hectares (927,000 acres) of land under the cultivation out of which Patanjali will work on 60,300 hectares (149,005 acres) of land. Some of the other companies that have shown interest include 3F, Godrej Agrovet, and KE Cultivation Pvt Limited.

As part of that plan, PFL is growing palm oil seedlings in 10 of the 19 nurseries in the state which it distributes to farmers for free.

Mitu Baishyea, in charge of PFL’s nursery in Jorhat district, told Al Jazeera that they have already distributed 40,000 seedlings among 400 farmers in six districts since last September.

“Our nursery is producing [200,000] seedlings annually and we have the capacity to double that. The seedlings are given to farmers for absolutely free and technical guidance is also given to them,” he said. The seedlings are heavily subsidised by the state and PFL hopes to earn its profits when it sells the ready palm oil.

PFL has also said it will set up two factories to process the palm fruit to get the oil once it sees there are enough suppliers for it.

Neelom Baruah, a field officer at PFL, said the company has distributed mustard and millets to farmers to encourage intercropping so that they do not suffer losses during the gestation period of the palm oil. “We are distributing free sapling to farmers and the problem of market linkage will be solved once the production starts in bulk quantity as now it’s not feasible to set up the processing unit.”

On a recent day as farmer Duwarah, who is still enthusiastic about the prospects of high returns from oil palm cultivation, returned to his mud hut, he said he was not worried about the negative experiences of the farmers in Goalpara who went into the business before him.

Their crop is affected by water issues because of poor rains in Goalpara, he said. “Here, we have no issues and have been assured by PFL of doubling our income when the trees start bearing fruits. We are hopeful of better returns,” he said.