Telangana State Oil Palm Mission

Importance of Oil Palm

1. Oil palm is one of the highest yielding oilseed crops in the world.

2. It constitutes 33% of global and 60% of India’s edible oil consumption. India imports 1 crore MTs of crude palm oil worth Rs.80,000 crores from Malaysia and Indonesia; 2nd highest import after crude oil.

3. Oil palm needs 25% water compared to paddy. Returns from Oil palm are 5 times of paddy in a fully mature plantation.

4. However, oil palm requires an initial gestation period of 4 years. Intercropping can supplement earnings during gestation years. To establish greenfield oil palm plantations, the ecosystem of nurseries, plantations and oil-mills must be put in place simultaneously.

5. Since oil palm must be crushed within 24 hours of harvest, it is necessary to create clusters of cultivation (~200-500 acre / village) in a 50 km radius from the mill.

Current Status

6.Oil palm cultivation and processing is regulated through The Telangana Oil Palm (Regulation of Productions and Processing) Act 1993. The act mandates all harvest to be mandatorily procured by allotted companies in the zone at prices determined by state government.

7.Presently 45,000 acres is under oil palm cultivation in Khammam, Kothagudem and Suryapet. 3 companies operate in Telangana e., TS Oilfed, Godrej & Ruchi Soya. Oilfed has 2 processing plants in Dammapet and Ashwaraopet of Kothagudem.

Our Plan for Promotion of Oil Palm

8. GoI has notified an additional target of 8.24 lakh acres in 25 districts of Telangana. 9 companies have been allotted zones across the state.

9. Our target is to bring over 20 lakh acres under oil palm over 3 years:

    1. 1st year (2022-2023): 3 lakh acres
    2. 2nd year (2023-2024): 7 lakh acres
    3. 3rd year (2024-2025): 10 lakh acres

Financing the Plan and Implementation Arrangements

10. To support farmers, Government may give subsidy of Rs.36,000 per acre

  1. Year 1: Rs 26,000 per acre
  2. Year 2: Rs 5,000 per acre
  3. Year 3: Rs 5,000 per acre

11. The subsidy will be paid directly into the accounts of the farmers under the DBT mode like in Rythu Bandhu

12. Total funds required will be Rs 780 Cr during 2022-23, Rs 1,970 Cr in 2023-2024, Rs 3,100 Cr in 2024-25, Rs 850 Cr in 2025-26 and Rs 500 Cr in 2026-27. (See Table below)

13. Government of India offers subsidy support under National Food Security Mission in the Centre (60%) State (40%) ratio which during the current year is Rs 21600 and Rs 14400 respectively. The support received from GoI will be adjusted to the State Government account

14. Possibility of tie up with NABARD and NCDC can be explored to fund the subsidy portion of the plan

15. Under the act, government may levy a cess on oil palm companies for purchase of FFBs (fresh fruit bunches). With a FFB cess of Rs.100 / MT, the state may earn an additional Rs.200 crores per annum from oil palm companies

16. Banks will be encouraged to make a credit scheme for farmers to finance oil palm cultivation

17. TS Oilfed be encouraged and supported to establish more oil mills (at least 30TPH) in a cluster approach. (Each mill @ capital investment: Rs.80 crores and land: 50 acres)

18. Moreover, TS Oil-Fed may consider establishing a JV with prominent companies from Costa Rica to generate indigenous capabilities in seed production, nursery management, yield maximization, productive intercropping and oil processing.

19. To implement the Telangana State Oil Palm Mission, a Cabinet Sub-Committee headed by the Hon’ble Minister for Horticulture and consisting of Hon’ble Minister for Finance and Hon’ble Minister for Industries along with other Hon’ble Ministers as may be decided, be constituted to decide the policy and implementation strategies

20. Further, an inter-departmental committee of officials may also be constituted to ensure coordination between departments and drive the mission.

Anticipated Returns

21. The promotion of Oil Palm in an extent of 20 lakh acres over the next three years is expected to yield the following returns

       21.1 Reduce the burden on paddy procurement by an estimated 25 lakh MTs

       21.2 Reduce annual electricity subsidy burden by an estimated Rs 1500 Crore per annum since Oil palm cultivation requires only 25% water compared to paddy.

       21.3 Increase the state’s agriculture GVA (gross value addition) by 10%,

       21.4 Increase the annual incomes of an estimated 4 to 5 lakh households by at least 4 times, generate annual SGST revenues of Rs 2,000 Cr, generate rural employment for 30,000 personnel (direct) and farm level employment for 200,000 personnel.

22. In this context, the approval of the Cabinet is sought for the following 

       22.1 Approve the plan for promotion of Oil Palm Plantation in 20 lakhs acres in the three years from 2022-2023\

       22.2 Approve the subsidy pattern of Rs 26000; Rs 5000; and Rs 5000 per acre in the first, second and third year of plantation

       22.3 Agree for necessary funding from State Budget/NCDC/NABARD

       22.4 Agree to utilize the resources with Forest Department, Forest Development Corporation and with PR&RD department to raise nurseries

       22.5 Agree to depute a team to Costa-Rica, Malayasia, Thailand and Indonesia to study the crop and its ecosystem

       22.6 Agree to extend the incentives under Tidea and TS SFPZ to the Oil palm processing units

Table: Budgetary requirement to bring 20 lakh acres under oil palm in 3 years

Year1st year Plantation
(3 lakh acres)
2nd year Plantation
(7 lakh acres)
3rd year Plantation
(10 lakh acres)
2022-23Rs 780 CrRs 780 Cr
2023-24Rs 150 CrRs 1,820 CrRs 1,970 Cr
2024-25Rs 150 CrRs 350 CrRs 2,600 CrRs 3,100 Cr
2025-26Rs 350 CrRs 500 CrRs 850 Cr
2026-27Rs 500 CrRs 500 Cr