Palm oil is ubiquitous in the Bhartiya market – from the government’s public distribution system to our daily use products such as shampoo, cosmetics, soaps, detergents, toothpaste, and food products such as biscuits, cooking oil, snacks, chocolates, instant noodles, packaged bread and many more. Behind the scenes however is a complex supply chain, fraught with environmental issues that consumers of palm oil may not be aware of.
Bhartiya industry is also considering a sustainable palm oil supply chain due to various factors including pressure from environmental groups. Sustainable palm oil is the extraction of palm oil, addressing various environmental and social issues such as deforestation, water, and community rights.
In fact, the consumption of palm oil in Bharat, which is already the largest importer of palm oil in the world, would increase further if it were not for the COVID-19 pandemic to disrupt the trend.
How is the Bhartiya industry reacting to the sustainable palm oil issues?
The trends showed that the consumption of palm oil in the country has increased by almost 200 percent in the last 20 years, and is expected to increase further with the expansion of the market, food security, and nutritional needs. Bharat is dependent on Malaysia and Indonesia for palm oil and the data shows that these two countries supply more than 90 percent of annual palm oil imports. For example, in 2019, of more than 10 million tonnes imported by Bharat, more than nine million came from Malaysia and Indonesia.
Indonesia and Malaysia are the world’s largest producers of palm oil, accounting for a combined 90 percent of global supply. However, the expansion of oil palm estates, especially in Indonesia, has been criticized for fueling social conflicts with forest and indigenous communities over land and other resources, along with deforestation in most of the islands of Sumatra and Borneo. Bhartiya industry is aware of the issues of deforestation and peatland destruction in both the countries. Under pressure from environmental and conservation groups, the industry is making right noises about a sustainable supply chain that respects forests and related communities.
Over the years, many companies in Bharat have made promises and commitments for a sustainable supply chain of palm oil. Even as the industry is raising its voice about sustainable palm oil, the executives say Bhartiya palm oil being highly price-sensitive, is no secret, it often clashes with environmental standards. Meanwhile, the government is trying to increase the country’s domestic palm oil production, including through national programs to cut imports. In 2014-15, the Government of India launched National Mission on Oilseeds and Oil Palm (NMOOP) which was merged with the National Food Security Mission. This effort has led to an increase in the production of palm oil over the years, but this is not satisfactory as the long duration of the crop and water scarcity have emerged as the main issue.