N. Thukral and S. Mohanty / Reuters
Singapore: Godrej Industries Ltd expects to boost its domestic palm oil output more than four fold in the next four years, as it rapidly expands area under crop, the firm’s managing director said on Wednesday, 15 August.
The company, which produced 9,000 tonnes of crude palm oil in 2006-07, is planning to add 5,000 hectares of land under oil palm every year to boost output of the commodity, prices of which have nearly doubled since last year, Nadir B. Godrej told Reuters on the sidelines of an industry conference.
By the midday break, the benchmark October crude palm oil contract on the Bursa Malaysia Derivatives Exchange was down 30 ringgit, or 1.2%, at 2,460 ringgit ($705) a tonne.
Godrej has interests in chemicals, vegetable oils, real estate and medical diagnostics.
The firm’s net profit in the three months ending 30 June nearly doubled to Rs325.3 million ($8.02 million), from Rs165.2 million in the same year-ago period.
Although an expert committee in India has identified about 800,000 hectares of land fit for oil palm production, progress has been slow and the country currently has only 80,000 hectares under the crop.
New Delhi has so far not declared oil palm as a plantation crop, like sugar, coffee and rubber, making it difficult for firms to own land growing oil palm. Corporate houses currently tie up with farmers in various provinces, with land ownership remaining with farmers and landlords.
Godrej has some 12,000 hectares under oil palm plantations. He said the company was expecting production to reach around 40,000 tonnes in the next four years.
India, which produces about 50,000 tonnes of crude palm oil annually, is not far behind Malaysia in terms of yields, Godrej said.
“Malaysian average is about 3.5 to 4.0 tonnes per hectare and our average is about 2.5 tonnes,” he said.
Godrej has also formed an equal joint venture with Malaysian planter IJM Plantations to improve yields.
“We have existing plantations which we will put in the joint venture and they will help us with improved planting material.”
Unlike tropical nations such as Malaysia and Indonesia, which get widespread rainfall throughout the year, India gets most of the rains during the June-September monsoon season. Many crops like sugarcane and grains have to depend on irrigation from rivers, dams and underground water.
“The cost of irrigation is higher but the cost of labour is probably lower than Malaysia, which has to use imported labour from Indonesia,” he said, adding that growing oil palm in India was more profitable than crops like soybeans and sugarcane.
India, the world’s largest importer of vegetable oil after China, is trying to boost its stagnating output of oilseeds and reduce dependence on expensive foreign oils.