Making palm oil a ‘sustainable’ crop
Why in news?
- The Malaysian Prime Minister’s allusive remarks on Kashmir have added a new controversy to the already turbulent world of palm oil.
Largest producers scenario
- Indonesia and Malaysia, the two largest producers, are already facing allegations of destruction of the world’s most bio-diverse forests to grow oil palm.
- Other charges relating to the activities subsequent to deforestation and destruction of wild habitat, such as land clearing for plantations, release of mill effluents, burning and haze have been triggering debate about the environmental and social impacts of palm plantation.
- India being the largest consumer of palm oil has a considerable stake in securing sustainable supply and it is high time such issues are addressed.
- Palm oil comes from the fruit of oil palm trees and can be obtained either from the fleshy fruit or from its kernel.
- Oil palm trees are native of Africa and were brought to Indonesia and Malaysia as ornamental plants.
- Palm oil is an incredibly efficient crop, producing more oil per land area than any other equivalent vegetable oil crop.
Importance of cropping Palm oil
- It is an important crop for many countries where millions of farmers depend on producing palm oil for their livelihood.
- The fact that palm oil is also the common ingredient in packaged food, shampoo, toothpaste and cosmetics, makes the impact of the biofuel far bigger.
- The world export of palm oil in 2018 was $30.35 billion. Indonesia and Malaysia are the major exporters with exports of $26.2 billion and $14.9 billion, respectively.
- As much as 86 per cent of the world’s requirement of palm oil is fulfilled by these two countries. The major importers are India, China, Pakistan and the Netherlands ( it is used as a biofuel the Netherlands).
How can we make palm oil plantation sustainable with minimum harm to the environment?
- This calls for devising a sustainable framework across the palm value chain. It means having a set of environmental and social criteria at each stage of the value chain which must be complied with in order to produce sustainable palm oil.
- The palm oils thus produced would be certified ‘sustainable palm oil’.
- The certification norms would ensure adequate protection of the environment and the local communities.
- RSPO (Roundtable on Sustainable Palm Oil) is one such global effort that represents third-party standard for the more sustainable production of palm oil.
The Indian scene
- The production of palm oil in India started in 1991 with five thousand tonnes which increased to two lakh tonnes in 2018.
- The current consumption of palm oil is more than 9.3 million tonnes, which is expected to double by 2030. Since the domestic production is limited, large scale imports are inevitable.
- About 90 per cent of the palm oil is used as cooking oil and the rest in personal care and cosmetics.
- The major cooking oil users are the government (for public distribution), hotels and restaurants, middle-class consumers (use branded blends) and lower middle-class consumers (use ‘loose’ or unbranded palm oil).
- As palm oil producers, Indonesia and Malaysia have come up with their own version of RSPO, tweaked to their national requirements, to be a part of this sustainable initiative.
What India needs to take on that mantle as the user industry?
- Imports: A customs duty benefit can be apportioned for sustainable palm oil. Since there is a high dependence on palm oil, the import requirements could be strengthened over five to eight years with further consignment-based restriction for non-sustainable palm oil.
- Development of infrastructure: A phased application of these measures may start from one end of the value chain. However, before directly jumping into implementation, a year or so could be devoted to modifying ‘sustainability criteria’ and building support infrastructure responsible for its implementation.
- Producers: Once infrastructure is ready, all farm-holders could be brought into the loop of producing sustainable palm oil aided by the government. Big corporates who are already contributing to sustainable palm oil could adopt small/large farm-holdings and
develop them under their CSR initiatives. - Millers and refiners: Since the produced palm oil will call for a premium in the market, a discount/subsidy could be given to them for purchasing sustainable palm oil from the producers.
Way ahead
- The percentage of sustainable palm oil that they purchase could be mandatorily increased over time till the input to the mills and refineries is 100 per cent sustainable.
- The government will also need to ensure that palm oil being distributed through the public distribution system is sustainable without passing on the cost to beneficiaries.
- However, one of the challenges would be converting ‘loose’ or unbranded palm oil to sustainable palm oil. This category will be the last in the segment to be converted to sustainable palm oil and will be market driven.
Conclusion
- With high import dependence, bringing the domestic production chain to manufacture sustainable palm oil will be possible only if the compliance cost outweighs the cost of imports.
- It is clear that a timeline for implementation of a sustainability framework for palm oil must be drawn. A campaign for making consumers aware of the need to consume ‘sustainable’ palm oil would be a must for making the initiative successful.
- Key benefits and challenges of the selling of common drugs in India
Why in news?
- India’s government is reportedly planning to allow local retail outlets to sell common drugs.
- As per the proposal, the Centre would let regular shops retail over-the-counter medicines such as paracetamol, a popularly used pill for which people currently need to visit a pharmacy.
- Crucially, these drugs would contain key information on side effects and the appropriate dosage in local languages.
Availability of these medicines
- The wide availability of these medicines would offer relief to people living in far-flung areas where pharmacies are few and far between.
- In India, self-medication is highly prevalent, particularly in the rural areas. This is due to several reasons. There aren’t just enough qualified doctors in the country.
- The situation is grimmer in the rural hinterland. Reports suggest that about two-thirds of all doctors in India cater to urban areas.
- Moreover, going to a doctor proves to be time-consuming and expensive for rural folks.
- If non-prescription drugs can be bought at a local corner shop, it could help lower treatment costs for millions of people who have no chemist closeby.
Way ahead
- The proposal, though, alarms observers who insist on strict regulation of who is allowed to dispense medicines.
- The popping of pills without any medical authorization or knowledge could pose an immediate health risk.
- Easy availability could also result in an overuse of some over-the-counter drugs, compromising people’s health over a longer span of time.
- This has already happened in the case of antibiotics, whose rampant overuse has turned several strains of disease-causing bacteria resistant to these drugs.
Conclusion
- Yet, given the ground conditions in India, the benefits could outweigh those worries.
- Research and Development in Agriculture sector
- India and China, the world’s most populous countries, have limited arable land — China has about 120 million hectares (mha) and India 156 mha.
- The challenge before the two countries is to produce enough food, fodder and fibre for their population.
Similar stories
- Both have adopted modern technologies in agriculture, starting with high yield variety (HYV) seeds, in the mid-1960s, increasing irrigation cover and using more chemical fertilisers to produce more food from limited land.
- China’s irrigation cover is 41 per cent of the country’s cultivated area, while India’s irrigation cover is 48 per cent.
- China’s total sown area, as a result of such irrigation, is 166 mha, compared to India’s gross cropped area of 198 mha.
Output differs
- Even though China has less land under cultivation, its agriculture output is valued at $1,367 billion, more than three times that of India’s agriculture output, $407 billion.
How China was able to make it.
- China spends a lot more on agriculture knowledge and innovation system (AKIS), which includes agri R and D and extension.
- China invested $7.8 billion on AKIS in 2018-19, 5.6 times the amount spent by India — $1.4 billion.
- A study on the impact of investment and subsidies on agri-GDP growth and poverty alleviation revealed that the highest impact is from investments in agriculture research and education (R and E).
- The study estimated that for every rupee invested in R and E, agriculture GDP increases by Rs 11.2; and for every million rupees spent on agri-R and E, 328 people are brought out of poverty.
Are there lessons in China’s experience for India?
- India invests just about 0.35 per cent of its agri-Gross Value Added (GVA) while China spends 0.8 per cent (expenditure by Centre only).
- To increase total factor productivity, India needs to increase expenditure on agri-R and D, while making the Indian Council for Agricultural Research (ICAR) accountable for targeted deliveries.
- China invested $7.8 billion on AKIS in 2018-19, 5.6 times the amount spent by India — $1.4 billion.
Better seeds that result from higher R and D expenditures
- The incentive structure as measured by producer support estimates (PSEs) is much better for Chinese farmers than Indian farmers.
- The PSE concept adopted by 52 countries, that produce more than three-fourths of the global agri-output, measures the output prices that farmers get in a free trade scenario.
- It also measures the input subsidies received by them. For Chinese farmers, the PSE was 15.3 per cent of the gross farm receipts during the triennium average ending (TE) 2018-19.
- Indian farmers had a PSE of negative 5.7 per cent. In a way, this reflects that Indian farmers had been taxed much more than they have been subsidised — despite high amounts of input subsidies.
- This negative PSE (support) is a fallout of restrictive marketing and trade policies that do not allow Indian farmers to get free trade prices for their output.
- This negative market price support is so strong that it exceeds the input subsidy support the government gives to farmers through low prices of fertilisers, power, irrigation, agri-credit and crop insurance.
- The solution for correcting this situation is to carry out large scale agri-marketing reforms (APMC and Essential Commodities Act). But instead of doing that, the Indian government has been trying to jack up minimum support prices (MSPs) for 23 crops for farmers.
Pertains to direct income support schemes
- China has combined its major input subsidies in a single scheme, which allows direct payment to farmers on per hectare basis and has spent $20.7 billion for this purpose in 2018-19.
- This gives the farmers freedom to produce any crop rather than incentivising them to produce specific crops.
- Inputs are priced at market prices giving right signals to farmers to use resources optimally. India, on the other hand, spent only 3 billion dollars under its direct income scheme, PM-KISAN in 2018-19, but the country has spent $27 billion on heavily subsidising fertilisers, power, irrigation, insurance and credit.
- This leads to large inefficiency in their use and also creates environmental problems.
- It may be better for India to also consolidate all its input subsidies and give them directly to farmers on per hectare basis and free up prices from all controls.
- This would go a long way to spur efficiency and productivity in Indian agriculture.
Way forward
- India can learn three lessons from China — investing more in agri-R and D and innovations, improving incentives for farmers by carrying out agri-marketing reforms, and collapsing input subsidies into direct income support on per hectare basis.
- This could put India’s agriculture on a high growth trajectory.