18/01/2020 - Agriculture

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January 18, 2020
1 month

Restrictions imposed by India on the import of refined and processed palm oil, coupled with the  EU’s proposal to phase out the use of palm oil as transport fuel, are likely to prove game-changers for the global palm oil sector. Explain (200 Words) 

Refer - Business Standard

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IAS Parliament 27 days


·        India and the EU are the largest importers of this oil from Indonesia and Malaysia, which together account for 85 per cent of the world production.

·        The EU’s move emanates from the perceived adverse impact of expansion in oil palm cultivation on the environment, owing to deforestation and habitat destruction.

·        Palm oil is Malaysia’s biggest agricultural export and accounts for 2.8 per cent of its gross domestic product (GDP).

·        Unsurprisingly, therefore, Malaysia is already considering price discounts and barter deals involving import of Indian sugar and buffalo meat in exchange for palm oil.

·        Malaysia frequently rejigs its palm oil duty structure to promote the export of refined oil vis-à-vis unprocessed oil. This hurts the Indian edible oil industry, which has invested heavily in creating vegetable oils refining capacity, much of which is currently lying idle or underutilised.

·        Going by the industry’s reckoning, the average capacity utilisation has plummeted to merely 46 per cent. Many small and medium scale refineries have shut down, rendering thousands of workers jobless.

·        Cheaper imports have also kept domestic edible oil prices down to the detriment of the local oilseed growers. This has been one of the significant reasons for the failure of the domestic oilseed output to keep pace with growing demand.

·        India, however, has huge potential to raise the output of other crop and tree-based oilseeds to meet the demand for cooking and use in industries such as food processing, cosmetics and pharmaceuticals.

·        Checking the inflow of cheaper edible oils through measures like the new curbs on import of refined palm oil can prove a step in that direction.

Shivangi 1 month

Please review.

IAS Parliament 1 month

Good attempt. Keep Writing.

Shantanu tiwari 1 month

Plz review 

IAS Parliament 1 month

Good attempt. Keep Writing.

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