PALM-OIL PRODUCTION

 

Latest Context

Recently, Malaysia intends to double the quantity of palm oil it exports to China, in an effort to counterbalance the EU's push to cut down on its own imports.

EU Deforestation-Free Regulation (EUDR)

• This aims to eliminate deforestation from EU supply networks for basic goods. Regulatory restrictions are imposed on palm oil exporters that seek to sell in the EU under legislation that was established in Brussels in 2023 with the year 2030 as the aim.
• Palm oil policy and deforestation legislation's primary areas of focus include biofuels, palm oil, and deforestation in addition to these.
• After December 31, 2020, companies must confirm that the product they export to the EU was grown on land that has not been cleared of trees.
• The regulation is a non-tariff barrier and is not WTO (World Trade Organisation) compliant.

Malaysia and Indonesia’s Response

• widespread criticism to this legislation's alleged protectionist tendencies in Europe.
• It would encourage export dependence on China, which might negate any environmental advantages.
• Chinese markets stand to gain greatly from it, and there are significant implications for the EU.

Palm Oil & Its Use

• About:

• The mesocarp, or reddish pulp, of the oil palm fruit is the source of palm oil, a type of edible vegetable oil.
• In addition to being used as cooking oil, it is also used in biodiesel, processed foods, spreads, pastries, chocolates, and cosmetics.
• 'Green diesel' refers to the biodiesel produced from crude palm oil.

• Production: Together, Indonesia and Malaysia produce about 90% of the world's palm oil, with Indonesia producing the most—more than 45 million tonnes in 2021.

• Challenges with the Oil Palm Industry:

• The oil palm sector has drawn criticism for what are said to be unsustainable production methods that contribute to deforestation and colonial-era labour practises that continue to be exploitative.
• However, because it is less expensive and oil palms produce more oil per hectare than some other vegetable oil plants, such as soybeans, palm oil is preferred by many.

How Significant is Palm Oil for Global Supply Chains?

• Global Supply Chain:

• The United States Department of Agriculture (USDA) estimates that the output of palm oil worldwide will exceed 73 million Tonnes (MT) in 2020, making it the most frequently used vegetable oil in the world.
• For the current fiscal year FY 2022–23, it is predicted to be 77 MT.
• According to Reuters, the four most popular edible oils—palm, soybean, rapeseed (canola), and sunflower oil—make up 40% of the world's supply.
• Approximately 60% of the world's supply of palm oil comes from Indonesia.

• Status of India in Palm Oil Import:

• 40% of the vegetable oil consumed in India comes from imports, with palm oil being the most common. 8.3 MT of palm oil, or half of India's yearly demand, is supplied by Indonesia.
• To increase domestic output of palm oil, India established the National Mission on Edible Oil-Oil Palm in 2021.
• Given the benefits of palm oil for India's cooking needs, Indian farmers should be encouraged to step up their efforts to increase the area under oil palm to increase palm oil production in the nation.
• India should diversify both its demand and its purchases.

 

Q1. Consider the following statements: (UPSC-2018)

1. The quantity of imported edible oils is more than the domestic production of edible oils in the last five years.

2. The Government does not impose any customs duty on all the imported edible oils as a special case.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Ans: (a)