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In an encouraging development for oil palm farmers in Telangana and Andhra Pradesh, the price of fresh fruit bunches (FFBs) has surged past ₹20,000 per tonne. This increase comes on the heels of the Union Government’s decision to raise import duties on crude palm oil, leading to a substantial rise in domestic demand.
As of late December 2024, the price of FFBs reached ₹20,413 per tonne, a significant increase from ₹12,534 a year earlier, marking a remarkable 63% growth. Similarly, the price of crude palm oil (CPO) also saw a considerable rise, climbing from ₹77,720 to ₹1.25 lakh per tonne, equating to a 60% increase during the same period.
Since September 2023, when the price of FFBs was ₹12,231, the price has consistently risen each month. Although prices may vary across states, the price adjustments in Telangana are expected to influence those in Andhra Pradesh as well.
In a bid to enhance oil palm cultivation, Telangana has set an ambitious goal of bringing an additional 100,000 acres under cultivation in the 2024-25 period. Thus far, however, only a quarter of that target has been achieved, with hopes to expand by another 60,000 acres by March 31, 2024, as reported by a state government official. Currently, Telangana cultivates oil palm across approximately 233,000 acres, which constitutes about one-sixth of the country’s total oil palm acreage.
While farmers are pleased with the current price surge, there are mixed sentiments regarding the timing of produce. One farmer from Khammam expressed cautious optimism, stating, “Although it’s a positive development, we must see how these prices hold up during the harvest season in the coming months.”
Telangana’s Agriculture Minister, Tummala Nageswara Rao, has urged the central government to implement measures that keep crude palm oil prices above ₹1.25 lakh by adjusting the import duties, which used to stand at 44%.
During a recent evaluation of the state’s oil palm plantation status, the Minister warned companies that have entered agreements with the government to fulfill their commitments. He stated that failure to meet targets could result in the cancellation of contracts, which would be reassigned to the Telangana Oil Federation (TG Oilfed).
Sanjay Goenka, Managing Director and CEO of 3F Oil Palm Private Limited, attributed the rise in FFB prices to increased import duties and current shortages in Malaysia and Indonesia, the leading producers of palm oil, which have led to reduced output. While he expressed satisfaction for farmers benefitting from these elevated prices, he emphasized the inherent volatility of palm oil prices. To shield farmers from potential price drops, he proposed the introduction of protective measures to mitigate market fluctuations.
Goenka referenced the viability gap price (VGP) mechanism launched by the Union Government, which guarantees farmers compensation when market prices fall below a predetermined threshold. Despite all other palm oil-producing states participating in this scheme, Telangana and Andhra Pradesh have yet to sign on.
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