The Centre has approved the National Mission on Edible Oil-Oil Palm (NMEO-OP) with a financial outlay of Rs 11,040 crore to increase domestic production of palm oil and reduce dependence on foreign imports. At present, 98 percent of crude palm oil is imported from South East Asian countries.

The focus of the mission will be on increasing the productivity of oilseeds and areas under cultivation. Special focus will be given to the North Eastern states and Andaman and Nicobar Islands.

Of the Rs 11,040 crore approved for the mission, the central governmentÔÇÖs share will be of Rs 8,844 crore, while the statesÔÇÖ share will be Rs 2,196 crore, the official statement said.

The scheme aims to increase production of crude palm oil to 11.20 lakh tonnes by 2025-26 and 28 lakh tonnes by 2029-30. The area under cultivation will likely increase to 6.5 lakh hectares by 2025-26 and 10 lakh hectares by 2029-30. At present, the area under cultivation is only 3.7 lakh hectares.

ÔÇ£Palm oil farmers face a lot of challenges. The gestation period of the crop is around 5-7 years. For marginal farmers, it becomes difficult to wait for 5-7 years for the harvest. Another challenge is that of fluctuating oil prices. These factors discourage farmers from cultivating palm oil,ÔÇØ said agriculture minister Narendra Singh Tomar at the post-Cabinet meet media briefing.

ÔÇ£To address these challenges, the government will come up with a mechanism to fix and regulate the prices for palm oil keeping in mind the gestation period of five years like it is done for MSP. In case of price fluctuations due to market volatility, the government will pay the difference in price to the farmers through the direct benefit transfer,ÔÇØ the minister added.

For the first time the government is providing a price assurance, known as a viability price, to palm oil farmers, for the fresh fruit bunches from which oil is extracted by the industry. The viability price will be calculated based on the average annual crude palm oil price for the last five years adjusted to the Wholesale Price Index and multiplied by 14.3 percent. This will be fixed on a yearly basis. Similarly, a formula price will also be fixed on a monthly basis, which will be 14.3 percent of the crude palm oil price. If a viability price gap arises, the government will pay the farmers directly through direct benefit transfer. The government will bear an extra 2 percent cost of crude palm oil for farmers in the North Eastern states and Andaman and Nicobar Islands.

Special assistance of Rs 250 per plant will be given for rejuvenation of old gardens. Seed gardens will receive assistance of Rs 100 lakh per 15 hectares in the Northeast and Andaman, while the rest of India will get Rs 80 lakh per 15 hectares.

To attract industries to the Northeast and Andaman regions, the government will provide capital assistance of Rs 5 crore for 5mt/hr unit with pro rata increase for higher capacity.