Oil palm farmers in Telangana reel from price drop after import duty cuts

Oil palm farmers in Telangana are reeling from falling prices after import duties were slashed, pushing rates down 10%. With no MSP, rising costs, poor saplings, and logistical issues, farmers warn they may abandon cultivation without immediate support

Hyderabad: Oil palm farmers in Telangana are grappling with a severe crisis as fresh fruit bunch (FFB) prices have dropped sharply following the Central government’s decision to cut import duties on crude palm oil (CPO) and other edible oils. The duty reduction, effective from May 31, this year, triggered a roughly 10% fall in FFB prices, from Rs 20,058 to Rs 18,748 per tonne, reflecting global market trends and increased imports.

This steep decline, coupled with soaring input costs and structural challenges, is threatening the livelihoods of thousands of smallholder farmers across the State.

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The global palm kernel oil market, a key factor influencing local prices, has also been under pressure. In the US, prices are falling, while in Malaysia, rates have been on a downward trend, currently ruling at 1,345 USD per metric tonne since September 2024. Analysts attribute this to oversupply and reduced demand from industries such as food processing.

In Telangana, the absence of a minimum support price (MSP) is proving to be a critical issue. Farmers have demanded an MSP of Rs 25,000 per tonne to cushion against market volatility. “Low prices and no MSP have become our bane,” farmers say.

Adding to their woes are rising costs of cultivation. Labour rates have surged from Rs 300 to between Rs 800 and Rs 1,000 per day. Fertiliser and pesticide prices have shot up by as much as 120%. Compounding these issues are poor-quality saplings, with 10-50% of them reported as substandard. Many plantations fail after the four-year gestation period, forcing farmers to uproot and replant, resulting in massive financial losses.

Logistical issues also plague the sector. Limited access to processing mills leads to FFB spoilage, further cutting into farmers’ earnings. Oil palm, a water-intensive crop requiring 200–300 litres per tree per day, is also depleting groundwater in Telangana’s semi-arid zones.

Even as the State government pushes to expand oil palm cultivation to 8.09 lakh hectares by 2026–27, with subsidies of Rs 26,000 per acre and buyback guarantees, farmers complain that the promised support is delayed or inconsistent. They also allege that company commitments are unreliable.

The import duty cut has favoured oil refineries, which are now flooded with cheaper imported oils. However, retail cooking oil prices remain high, with palm oil still selling at Rs 116.10 per litre as of June 20, offering no relief to consumers.

While the State government, through Oilfed, insists it is supporting oil palm growers with incentives, farmers say more needs to be done. “We need MSP, better saplings, and more mills,” said a farmer from Mahabubabad. Experts warn that without urgent intervention, farmers may begin abandoning oil palm cultivation, as is already happening in other parts of the country.