Oil Palm: Telangana seeks minimum guarantee price for fresh fruit bunches

In a letter addressed to union Agriculture Minister Shivrajsingh Chouhan, he demanded the Centre to ensure a MGP of Rs.15000 per ton for fresh fruit bunches and Rs.1 lakh per ton for crude palm oil.

Hyderabad: Sharing the concern of the oil palm farmers in the State over the drop in the prices of crude palm oil (CPO), Agriculture Minister Tummala Nageshwara Rao said the price of crude palm oil was the crucial factor that determines the price given to farmers for their fresh fruit bunches (FFB) in the State.

In a letter addressed to union Agriculture Minister Shivrajsingh Chouhan, he demanded the Centre to ensure a minimum guarantee price (MGP) of Rs.15000 per ton for fresh fruit bunches and Rs.1 lakh per ton for crude palm oil.

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The Centre had introduced the concept of viability gap price (VGP) under the National Mission on Edible Oils to insulate farmers from the volatility of the crude palm oil market. The major focus of the move was to compensate the farmers if the price paid by the industry was below the viability gap price till October, 2037. The viability gap price should be between 14.3 per cent to 15.3 per of the annual average price of the crude oil palm prevailed for the last five years adjusted with the all India wholesale price index (WPI).

The States adopting this approved scheme of payments for the payments to be made by the industry, were required to enter into a memorandum of understanding with the Centre. As for Telangana, the viability gap price was fixed by the Centre taking the oil extraction rate (OER) of Andhra Pradesh. The oil extraction rate of Telangana was much higher compared to Andhra Pradesh and FFB from the State could not be priced on par with AP, the Minister wrote.

The downward trend in the price offered for FFB would prove to be detrimental to the implementation of the ‘National Mission on Edible Oils – Oil Palm’ under which the government had targeted to extend the crop to over 6.5 lakh hectares in the next two years. He made it clear that the import duty on crude palm oil, which was reduced to zero, had its bearing on the NMEO- OP as a whole. The issue needs to be addressed in the larger interest of the farmers, he stressed.