• The National Mission on Edible Oil-Oil Palm (NMEO-OP) is a new centrally sponsored scheme (under the Ministry of Agriculture & Farmers’ Welfare) that was announced by the Prime Minister during his independence day speech in 2021.
  • The scheme basically aims at self-reliance in edible oil and has been allocated an outlay of Rs. 11, 040 crore over a five-year period.
    • Out of this, the centre will provide Rs 8,844 crore and the states’ share is Rs 2,196 crore.
  • The aim of the scheme is to raise the domestic production of palm oil by three times to 11.20 lakh tonnes by 2025-26 and to 28 lakh tonnes by 2029-30.
  • The scheme has a special focus on the Andaman and Nicobar Islands and the Northeastern region of India.
  • The scheme has been announced at a time when the prices of edible oils have been rising over the past few months.
    • There was a 52% hike in the prices in July 2021 compared to the same time last year.
  • It is proposed to have an additional 6.5 lakh hectares for palm oil by 2025-26. The ultimate target is to reach 10 lakh hectares.
  • The National Mission on Oilseeds and Oil Palm (NMOOP) had been launched by the GOI In 2014-15. From 2018-19, the NMOOP was merged with the National Food Security Mission (NFSM) as NFSM-OS&OP. The new scheme NMEO-OP will subsume the NFSM-OS&OP.

NMEO-OP Features

  • Under this mission, farmers who opt for palm oil cultivation will receive price assurance from the government which will hedge the farmers from price volatility. 
  • This is a Minimum Support Price-type mechanism and the government will fix this at 14.3 per cent of crude palm oil (CPO) price. 
  • This will eventually go up to 15.3%.
  • The scheme also has a sunset clause which is November 1, 2037.
  • This price assurance given to the farmers is called the Viability Price (VP).
    • VP is the annual average CPO price of the last 5 years adjusted with the wholesale price index to be multiplied by 14.3 %. 
  • The deficiency price payment would be done through direct bank transfer to the farmers’ accounts.
  • To provide additional assistance to the cultivators of the northeast and the Andaman and Nicobar Islands, the government will bear a cost of 2% of the CPO price to ensure that the farmers are paid at par with the rest of the country.  
  • Another focus area of the scheme is to substantially increase the support of inputs/interventions.
  • To replant old gardens for their rejuvenation, special assistance will be given at the rate of Rs 250 per plant.
  • Assistance for planting material for oil palm has been increased from Rs 12,000 per ha to  Rs.29000 per ha. 
  • Maintenance and intercropping interventions also see a substantial increase.
  • Seed gardens will be given assistance up to Rs.80 lakhs for 15 ha. in the rest of India and Rs.100 lakhs for 15 ha in North-East and Andaman regions. 
  • To attract industry to the NE and Andaman regions, a provision of Rs 5 crore of 5 mt/hr unit with pro-rata increase for higher capacity will be given.
Funding Pattern of NMEO-OP
  • NMEO-OP is a Centrally Sponsored Scheme and the cost will be shared as 60:40 between the Central and the State Government for General states and 90:10 for NE states and UT, 100% for central agencies.
  • All the potential states and districts identified will be under NMEO-OP including NE states and Andaman and Nicobar.

Significance of the Scheme

  • Reduction in Import dependance:
    • It is expected to incentivise production of palm oil to reduce dependence on imports and help farmers cash in on the huge market.
    • India is the largest consumer of vegetable oil in the world. Of this, palm oil imports are almost 55% of its total vegetable oil imports.
  • Rise in Yields:
    • India produces less than half of the roughly 2.4 crore tonnes of edible oil that it consumes annually. It imports the rest, buying palm oil from Indonesia and Malaysia, soyoil from Brazil and Argentina, and sunflower oil, mainly from Russia and Ukraine.
    • In India, 94.1% of its palm oil is used in food products, especially for cooking purposes. This makes palm oil extremely critical to India’s edible oils economy.
  • India is one of the major oilseeds growers and importers of edible oils. 
  • India’s vegetable oil economy is the world’s fourth-largest after the USA, China & Brazil. 
  • The oilseed accounts for 13% of the Gross Cropped Area, 3% of the Gross National Product and 10% value of all agricultural commodities. 
    • This sector has recorded an annual growth rate of area, production and yield @ 2.44%, 5.47% and 2.96% respectively during the last decade (1999-2009).
  • Oilseeds cultivation is undertaken across the country in about 27 million hectares mainly on marginal lands, of which 72% is confined to rainfed farming.
  • A substantial portion of our requirement of edible oil is met through the import of palm oil from Indonesia and Malaysia.
Palm Oil:
  • It’s an edible vegetable oil that comes from the fruit of oil palm trees, having the scientific name Elaeis guineensis
  • Palm oil is an incredibly efficient crop, producing more oil per land area than any other equivalent vegetable oil crop fulfilling 35% of the world’s vegetable oil demand on just 10% of the land. 
  • Two types of oil can be produced, crude palm oil and palm kernel oil, of which crude has more demand. 
  • Palm oil is an extremely versatile oil that has many different properties and is present in nearly 50 per cent packaged. 
  • Palm oil is a major driver of deforestation of some of the world’s most biodiverse forests, destroying the habitat of already endangered species like the Orangutan, pygmy elephant and Sumatran rhino. 
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