India is a net food exporting country but depends heavily on imports of edible oils. Prime Minister Narendra Modi appealed on 23 July 2020 to the farmers in the North-East States to take up oil palm cultivation in a big way. It is a step to support the Atmanirbhar Bharat initiative and will reduce the imports of Palm oil and make India self-sufficient in edible oils too. The domestic consumption of edible oils in India has been outstripping the production and the gap between the two is quite significant which is being met by imports. India imports nearly 15 million tonnes annually (or nearly 68 per cent) of edible oils to meet the country’s annual consumption demand of about 22 million tonnes. The bulk of these imports are palm oil. Of the total imports of edible oil, palm oil accounts for 60 per cent or about 9 million tonnes.
Even though each vegetable oil has unique characteristics, they are substitutes in food as well as in industrial sectors. The choice between various oils largely boils down to the relative prices among oils. Palm oil is preferred over other edible oils for food purposes especially by price-sensitive consumers while palm kernel oil is preferred by manufacturing industries due to price differential in relation to other oils. The prices of all major edible oils have been ruling above those of palm oil in the post-2000 era in varying magnitudes.
Low prices of palm oil in relation to other edible oil prices have been driven mainly by productivity gains attained by major oil palm producing countries like Indonesia and Malaysia, and also because of preference function of high-income consumers of the US and Europe who prefer other oils (like olive oils, canola, or soy oil, etc.,) for direct human consumption. Indonesia and Malaysia, which account for over 82 percent of world palm oil production, have exploited natural endowment of rainfall to the best of their comparative advantage which explains, in good measure, their low cost of production and processing, and therefore low prices of this oil.
Among the vegetable oil yielding crops, oil palm is the highest oil yielding plant in the world and has a critical role to play in meeting the vegetable oil requirements. With good planting material, irrigation, and proper management, oil palm has the potential to produce 20-25 MT fresh fruit bunches (FFB) per hectare after attaining the age of 5 years. This, in turn, is capable of yielding 4-5 MT of palm oil and 0.4-0.5 MT palm kernel oil (PKO) which is about 4.5 times the yield of other traditional oilseeds, on average.
This perennial crop has an economic life span of 30 years, comprising three distinct phases viz. juvenile period (1-3 years), stabilizing period (4-8 years), and stabilized period (9-30 years). At present, it is the largest source of vegetable oil in the world. Five countries mainly Indonesia, Malaysia, Nigeria, Thailand, and Cambodia account for over 90% of the world’s total production of Fresh Fruit Bunches (FFBs).
Global production of vegetable oils is estimated at 197 million tonnes, out of which 40 percent is traded. Indonesia is the largest producer with 47 million tonnes production accounting for 24 percent of world production, followed by China (13.2%), Malaysia (11.3%), and EU (9.2%). Indonesia (37%) and Malaysia (22%) account for 59 percent of global exports. India is the largest importer of vegetable oils with a share of about 20.7 percent, followed by EU (13.5%) and China (12.8%). During the last decade, the import of edible oils has increased by more than 250 percent indicating a huge drain on foreign exchange reserves as well as adverse impact on domestic growers.
Detailed analysis reveals that 4 million MT of traditional oils is being produced in the country by using 15.80 million hectares of land. This much quantity of palm oil could be produced from just 1 million hectares. Thus, one million hectares under oil palm is akin to more than 15 million hectares under another mix of oilseeds. Currently, the country has only about 3.3 lakh hectares under oil palm, while the potential identified for it is 19.3 lakh hectares in the states of Andhra Pradesh, Arunachal Pradesh, Assam, Chhattisgarh, Karnataka, Kerala, Mizoram, Odisha, Tamil Nadu, and the other N-E States.
Two important constraints that impede area expansion programme under oil palm are the opportunity cost of land of farmers during a long gestation period of at least 3 years when no financial income flows to farmers and high cost of irrigation. So long as India follows the model of smallholder farming for oil palm growth (in contrast to corporate farming, which can be done to some extent if this crop is declared as a plantation crop on the lines of tea plantations), these challenges remain high as smallholders do not have much-sustaining capacity without any fruit at least in the first three years. Nor do they have many resources to invest in assured irrigation facilities with bore wells and drips.
If we have to leap-frog in oil palm cultivation, we have to find a way to break these two barriers. Keeping in mind the advantages it can bring about in terms of reducing heavy dependence on imports for key edible supplies, and augmenting farmers’ incomes within the country, an additional 16 lakh hectares of area (the difference between identified potential area and the actual area under palm oil) be expeditiously brought under palm oil cultivation by scaling up incentives in a big way. These 16 lakh hectares under oil palm can cultivation would produce 6.4 million MT of palm oil, which could result in savings of huge foreign exchange.
To carry this forward, farmers need to be nudged and incentivised to cultivate palm oil by compensating them for three years for their land against that potential loss (i.e. opportunity cost of their land during ‘lock-in’ period of 3 years) and also give them one-time irrigation investment (borewell, drip, and associated channels, etc.) subsidy. At the end of the round, India would move away from helping farmers in a country like Indonesia and Malaysia, albeit unintentionally (from where we have been importing) to empowering our own country’s farmers. And it will be another decisive step towards Atmanirbhar Bharat.
Ashok Vishandass is a Professor (Applied Economics), Indian Institute of Public Administration and former Chairman(CACP), Ministry of Agriculture and Farmers Welfare, New Delhi; and Nitisha Thakwani is a freelancer.
The next webinar in the SSF series, with ecological economist and futurist Hazel Henderson, will address how the UN SDGs can and should replace GDP as the basis for valuing society leading to an economy based on planet protection and human wellbeing. Claudine Schneider is Hazel’s guest.
GDP accounts for all the public expenditures as “debt” while ignoring the value of the assets they created. If GDP were to be corrected by including the missing asset account, these debt-to-GDP ratios would be cut by up to 50% — with a few keystrokes! Learn why money isn’t what you think it is and why that matters to life on Earth in the next two webinars with Hazel and guests.
Claudine Schneider is a former Republican U.S. representative from Rhode Island. She was the first, and to date only, woman elected to Congress from Rhode Island. She is founder of Republicans for Integrity, which describes itself as a network of “Republican former Members of Congress who feel compelled to remind Republican voters about the fundamentals of our party and to provide the facts about incumbents’ voting records.”
October 22nd webinar with Claudine Schneider and Hazel
Akron, Ohio-based RVShare has seen sharp growth in demand amid the pandemic, as more would-be travelers seek socially distanced options for hitting the road. Founded in 2013, the company matches RV owners with prospective renters, filtering by location, price and vehicle types.
Previously, RVShare had raised $50 million in known funding, per Crunchbase data, from Tritium Partners. The company is one of several players in the RV rental space, and competes alongside Outdoorsy, a peer-to-peer RV marketplace that has raised $75 million in venture funding.
BrightFarms closes on $100M: Indoor farming company BrightFarms said it secured more than $100 million in debt and new equity capital to support expansion plans. The Series E round of funding was led by Cox Enterprises, which now owns a majority stake in the company, and includes a follow-on investment from growth equity firm Catalyst Investors.
Anyscale inks $40M: Anyscale, the Berkeley-based company behind the Ray open source project for building applications, announced $40 million in an oversubscribed Series B funding round. Existing investor NEA led the round and was joined by Andreessen Horowitz, Intel Capital and Foundation Capital. The new funding brings Anyscale’s total funding to more than $60 million.
Klar deposits $15M: Mexican fintech Klar closed on $15 million in Series A funding, led by Prosus Ventures, with participation from new investor International Finance Corporation and existing investors Quona Capital, Mouro Capital and Acrew. The round brings total funding raised to approximately $72 million since the company was founded in 2019. The funds are intended to grow Klar’s engineering capabilities in both its Berlin and Mexico hubs.
Blustream bags $3M: After-sale customer engagement company Blustream said it raised $3 million in seed funding for product usage data and digital transformation efforts for physical goods companies via the Blustream Product Experience Platform. York IE led the round of funding for the Worcester, Massachusetts-based company with additional support from existing investors.Pillar secures another $1.5M: Pillar, a startup that helps families protect and care for their loved ones, raised $1.5 million in a seed extension to close at $7 million, The round was led by Kleiner Perkins.
Google rejects DOJ antitrust arguments: In the wake of a widely anticipated U.S. Justice Department antitrust suit against Google, the search giant disputed the charges in a statement, maintaining that: “People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”
Facebook said to test Nextdoor rival: Facebook is reportedly testing a service similar to popular neighborhood-focused social Nextdoor. Called Neighborhoods, the feature reportedly suggests local neighborhood groups to join on Facebook.
Online shopping has become the norm for most people in 2020, even coaxing traditional retail brands to up their presence to stay competitive. However, now that shoppers can’t see and touch products like they used to, e-commerce discovery has become a crucial element for customer acquisition and retention.
Enter Syte, an Israel-based company that touts creating the world’s first product discovery platform that utilizes the senses, such as visual, text and voice, and then leverages visual artificial intelligence and next-generation personalization to create individualized and memorable customer experiences, Syte co-founder and CEO Ofer Fryman told Crunchbase News.
This brings the company’s total fundraising to $71 million since its inception in 2015. That includes a $21.5 million Series B, also led by Viola, in 2019, according to Crunchbase data.
Fryman intends for the new funding to be put to work on product enhancements and geographic expansion. Syte already has an established customer base in Europe, the Middle East and Africa, and will now focus expansion in the U.S. and Asia-Pacific.
Meanwhile, Syte has grown 22 percent quarter over quarter, as well as experienced a 38 percent expansion of its customer base since the beginning of 2020.
“Since we crossed $1 million annual recurring revenue, we have been tripling revenue while also becoming more efficient,” Fryman said. “We can accelerate growth as well as build an amazing technology and solution for a business that needs it right now. We plan to grow further, and even though our SaaS metrics are excellent right now, our goal is to improve them.”
Anshul Agarwal, managing director at LG Technology Ventures, said Syte was an attractive investment due in part to its unique technology.
“They have a deep-learning system and have created a new category, product discovery that will enable online shopping in a way we never had the ability to do before,” Agarwal said. “The product market fit was also unique. We believe in the strong execution by the team and the rapid growth in SaaS. We looked at many different companies, and the SaaS metrics that Syte showed are the strongest we’ve seen in a while.”