Oil palm prices soar past ₹20,000/tonne in Telangana and Andhra Pradesh
Here’s some good news in the New Year for the oil palm farmers in Telangana and Andhra Pradesh. Prices of FFBs (fresh fruit bunches) per tonne have zoomed past the ₹20,000-mark as the demand for FFBs has shot up in the domestic market after the Union Government’s decision to increase the import duties on crude palm oil.
The price of FFBs went up to ₹20,413 a tonne by the end of December 2024 against ₹12,534 a year ago, reflecting a growth of 63 per cent. The price of crude palm oil (CPO) showed a similar trend during the period. The CPO price went up to ₹1.25 lakh from ₹77,720 a tonne during the period, a growth of 60 per cent.
The price of FFBs continued to grow every month beginning September 2023, when the price stood at ₹12,231. Though the prices are State-specific, the prices announced by Telangana are likely to be adopted by Andhra Pradesh, sources said.
Coverage may fall short
Telangana set a target to bring in an additional one lakh acres under oil palm cultivation during 2024-25. It, however, could cover one-fourth of the target and hopes to cover another 60,000 acres by March 31, 2024, a State Government official said.
Telangana grows oil palm on about 2.33 lakh acres, which is about one-sixth of the total oil palm area in the country.
Farmers have mixed feelings. While they are happy that prices have breached the Rs 20,000-mark, their concern is that it is a lean period for the production of FFBs. “Though it is a good thing, we need to see how they (prices) change when we enter the harvest time a few months later,” an oil palm farmer in Khammam told businessline.
Telangana Agriculture Minister Tummala Nageswara Rao appealed to the Centre to take steps to maintain crude palm oil prices above ₹1,25,000 by adjusting the import duty accordingly. He noted that the import duty used to be at 44 per cent.
Recently reviewing the oil palm plantation status in the State, the Minister cautioned the companies which signed an agreement with the Government to keep the promises made. “If they fail to meet the targets, their contracts will be cancelled and will be handed over to Telangana Oil Federation (TG Oilfed).”
Insulating mechanism needed
Sanjay Goenka, MD and CEO 3F Oil Palm Private Limited, attributed the increase in prices of FFBs in the country to the increased duties and Malaysia and Indonesia, the major palm oil producers, experiencing a shortage of FFBs, leading to decreased production.
While he is happy for farmers who are currently benefiting from the high prices, he cautioned that that palm oil prices fluctuate. To protect farmers from price drops, there should be a safety mechanism to insulate the farmers from price volatilities.
Referring to the the viability gap price (VGP) mechanism introduced by the Union Government, he said if the market price falls below the VGP, the government directly pays the difference to farmers in the times of prices falling below the agreed upon price.
While all other palm oil producing States signed the agreement with the Government to join the scheme, Telangana and Andhra Pradesh are yet to join.