PROJECT REPORT

ON

INITIATION OF THE PROCESS TO ATTAIN

RSPO CERTIFICATION
IN TSOILFED’S OIL PALM PLANTATIONS IN
TELANGANA STATE

SAHAKAR MITRA INTERNSHIP

By

NADIKUDA RAVI KIRAN

INDIAN INSTITUTE OF MANAGEMENT LUCKNOW
2018-2020

National Cooperative Development Corporation

An ISO 9001 : 2015 Certified Organization
4, Siri Institutional Area, Hauz Khas, New Delhi - 110016
Phone : +91-11-26962478, 26960796
Fax : +91-11-26962370, 26516032
Website : www.ncdc.in
 PROJECT REPORT

ON

INITIATION OF THE PROCESS TO ATTAIN

RSPO CERTIFICATION
IN TSOILFED’S OIL PALM PLANTATIONS IN
TELANGANA STATE

SAHAKAR MITRA INTERNSHIP

By

NADIKUDA RAVI KIRAN

INDIAN INSTITUTE OF MANAGEMENT LUCKNOW
2018-2020

Under the guidance of

Smt. K. THEJOVATHY,
Regional Director, NCDC Hyderabad

National Cooperative Development Corporation

An ISO 9001 : 2015 Certified Organization
4, Siri Institutional Area, Hauz Khas, New Delhi - 110016
Phone : +91-11-26962478, 26960796
Fax : +91-11-26962370, 26516032
Website : www.ncdc.in
PREFACE

The “SAHKAR MITRA Scheme on Internship Program” (SIP) is an arrangement where NCDC will
provide short term opportunity to young professionals acquire learning experience by applying skills
and knowledge in organizational context to facilitate professional development. The programme aims
at providing an opportunity to professional graduates to get experience in areas of functioning of NCDC
and related aspects of cooperatives. On scrutiny of the applications submitted on NCDC portal, I along
with 18 other candidates have been selected for internship under SIP for a period of 4 months i.e., 1st
September to 31st December, 2020, for the Regional Offices/LINAC. And, I was allocated NCDC’s
Regional Office Hyderabad. As an intern, I was further mapped to TSOILFED on 23rd September 2020,
to understand their business problem and prepare a business plan / project report on expansion of
business of the cooperative society.

This report gives a comprehensive account of the study carried out to assist TSOILFED on how to attain
RSPO certification. Through this certification, we believe how TSOILFED can play an important role
in driving improved sustainability practices in the Oil Palm sector in Telangana State and be a pioneer
to adopt The Roundtable Sustainable Palm Oil (RSPO) certification in India. We have also analysed
the dual benefits of RSPO certification to the Oil Palm growers in generating of higher yields and also
helping them to avail higher prices for their certified produce.

This report presents a holistic picture on how we identified the problem definition by conducting
interviews with the executives in the federation, and surveys in the form a fixed questionnaire to gather
insights from the Oil Palm growers. To conduct the survey, I visited Khammam and Mancherial districts
and stayed there for 1 week to gather insights from the Oil Palm growers. The main objective of the
interviews and survey was to highlight the pain points from both the perspectives of the federation and
Oil Palm growers and to come up with a business problem which can cater the needs of both the
stakeholder. We decided to go ahead with the process to attain RSPO certification which is a one-stop
solution to all the problems faced by TSOILFED and the Oil Palm growers. Then we started our
secondary research through various sources available on Internet. Once we got a fair idea about the
certification, we directly interacted the leaders of RSPO, WWF-India, and TransGraph Consulting to
understand various caveats of the certification.

This report also presents our understanding of how we did a feasibility check as a part pre-analysis to
ensure that the farmers are ready for the execution of the certification. Then, we went on to propose a
Business Model and the details steps to achieve it along with their financials and the future expansion
opportunities. At last, we concluded the report with a few recommendations. Any feedback is welcome.
ACKNOWLEDGEMENT

The “SAHKAR MITRA Scheme on Internship Program” (SIP) has helped me to learn these three
important lessons for life:

 To have a never ending appetite for learning,

 Perseverance in sticking to a plan of action, and
 How to sustain learning

I thank almighty for being able to complete this project successfully. This project itself is an
acknowledgement for all those who gas given me their heartfelt co-operation in making it a success.

I am highly grateful to National Cooperative Development Corporation the for giving me this
opportunity to get experience in areas of functioning of NCDC and related aspects of cooperatives.

First and foremost, a special thanks and gratitude reserved for my Mentor Smt. K. THEJOVATHY,
Regional Director, NCDC Hyderabad, who has been like the guiding lights since the day of starting
of the projects. Her minute explanations at every stage and her clear approach to the problem statement
and the flexibility meted out by her have been instrumental towards completing the project successfully.
I feel fortunate to have a mentor like her. I am profoundly grateful to NCDC Hyderabad Team for the
unmatched help rendered by them.

I am also thankful to the Managing Director of TSOILFED Smt. K. Nirmala, IAS, for giving me an
opportunity to work with their federation and also providing the necessary infrastructure and valuable
guidance at every stage of the project work. And, I am also grateful to the whole TSOILFED Team,
who have not only provided me with the facts and figures required for the completion of our project but
have also made sure that the deadlines are adhered to and all the requirements of the project are fulfilled.

Last but not the least, I would like to thank my parents and friends who have helped me with their
suggestions and guidance in various phases of the completion of the project.
EXECUTIVE SUMMARY
India’s consumption of palm oil is the highest of any nation in the world. Palm oil lies at the heart of
India’s vegetable oil market and plays a key role in providing affordable food to a rapidly growing
population in a country with limited productive land. In India, against an annual consumption of 22
million tonnes of edible oil in India, only 7 million tonnes was being produced in the country. India is
importing the rest 15 million tonnes at an expenditure of about Rs 70,000 crore in foreign exchange per
annum. Further, there is every risk of imported oil getting contaminated.

As on date, Oil Palm was being cultivated in only eight lakh acres in India including 38,000 acres in
Khammam, Nalgonda, and Suryapet districts in Telangana State. Telangana State is one of the potential
states for Oil Palm cultivation in India and stands third in area after Andhra Pradesh and Mizoram states.
Hon’ble Shri Chief Minister K Chandrashekhar Rao Garu suggested increasing Oil Palm cultivation to
8.14 lakh acres in the State. In Telangana State, TSOILFED covers more than 82% of the total Oil Palm
plantations, making it the most critical part of the expansion program.

The sustainability challenges facing the palm oil sector are well known and are under increasing
scrutiny. Oil Palm plantations are a major driver of land conversion, forest loss and habitat destruction
in producer countries. India’s adoption of principles and practices to create demand for and uptake of
sustainable palm oil is critical in driving a sustainable future for the industry and better production.

The report summarises the key role that TSOILFED can play in driving improved sustainability
practices in the Oil Palm sector in Telangana State and be a pioneer to adopt The Roundtable Sustainable
Palm Oil (RSPO) certification in India. This certification enables companies to demonstrate that they're
responsibly protecting the environment, improving social and labour practices in Oil Palm plantations,
as well as positively assisting with wildlife conservation. It is a way to boost demand for sustainable
palm oil and increase market uptake, thereby incentivizing growers in producing countries to keep up
their standards and level of commitment. In the long run, both Oil Palm growers and users will benefit
economically from the higher demand for sustainable palm oil.

The report provides clear guidance for TSOILFED on how to attain RSPO certification. And, also
highlights the approaches available for TSOILFED to achieve RSPO certification for both their Mill
and Oil Palm growers associated with the federation. This report concludes with the assurance given
by RSPO and WWF-India, for the inclusion of TSOILFED in phase two of the pilot project, which most
probably starts from July 2021. RSPO and WWF-India will sponsor 100% of the Training Cost and
Consultation Fee for the certification of around 2000+ Oil Palm growers within a year.
Table of Contents
1. INTRODUCTION .............................................................................................................................. 1
1.1 About Palm Oil ............................................................................................................................. 1
1.2 Global Production ......................................................................................................................... 1
1.2 Global Consumption ..................................................................................................................... 2
1.3 Oil Palm in India ........................................................................................................................... 2
1.5 Oil Palm in Telangana .................................................................................................................. 3
1.5.1 Feasibility study for identification of potential area for Oil Palm area expansion in
Telangana State ............................................................................................................................... 3
1.6 About Telangana State Cooperative Oilseeds Growers Federation Limited (TSOILFED) .......... 3
1.6.1 Experience in edible oils marketing ....................................................................................... 4
1.6.2 Performance of TSOILED in Telangana State....................................................................... 5
1.6.3 Highlights of TSOILFED....................................................................................................... 5
1.6.4 TSOILFED’s expansion in TS: Seeking Allocation of following districts for Oil Palm
expansion ........................................................................................................................................ 6
2. PROBLEM DEFINITION .................................................................................................................. 7
2.1 Onboarding With TSOILFED ....................................................................................................... 7
2.2 Problem Identification .................................................................................................................. 7
2.2.1 Understanding the problems from the perspective of TSOILFED ........................................ 7
2.2.2 Understand the problems from the perspective of farmers/growers ...................................... 8
2.3 Data Analysis and the Insights gathered from the Survey .......................................................... 17
3. BUSINESS PLAN FORMULATION .............................................................................................. 23
4. IMPLEMENTATION OF THE PROJECT TO INITIATE RSPO CERTIFICATION .................... 25
4.1 Secondary Research .................................................................................................................... 25
4.1.1 What is the Roundtable on Sustainable Palm Oil(RSPO)? .................................................. 25
4.1.2 Why should we choose RSPO certification? ....................................................................... 25
4.1.3 Benefits of RSPO certification/trademark: .......................................................................... 25
4.2 Primary Research ........................................................................................................................ 27
4.2.1 Interactions Phase-I: Meetings to understanding about RSPO certification form the direct
stakeholders involved.................................................................................................................... 27
4.2.2 Interactions Phase-II: Meetings to plan an action-plan for RSPO certification ................... 29
4.2.3 Interactions Phase-III: Requesting a commercial proposal for RSPO certification ............. 30
4.2.4 Interactions Phase-IV: Feasibility Analysis – To identify the Progressive Farmers, and to
understand more about the Auding Process .................................................................................. 31
4.2.5 Interactions Phase-V: Initial Negotiations and Budget discussions between TransGraph
Consulting and TSOILFED .......................................................................................................... 33
4.2.6 Interactions Phase-VI: Final Negotiations with RSPO/WWF-India/TransGraph Consulting,
and Future Steps for TSOILFED .................................................................................................. 34
5. PROPOSED BUSINESS MODEL ................................................................................................... 36
 5.1 Proposed Business Model-I: Inclusion of TSOILFED in their Phase Two of the Pilot Project . 36
5.2 Proposed Business Model-II: Approaches Suggested for Initiating RSPO’s Certification from
January 2021 ..................................................................................................................................... 37
6. DETAILED STEPS IN PROJECT EXECUTION IRRESPECIVE OF BUSINESS MODEL ........ 38
6.1 Place Work .................................................................................................................................. 38
6.2 Scope of Work ............................................................................................................................ 38
6.2.1 Objective of the project ........................................................................................................ 38
6.2.2 Scope of Work ..................................................................................................................... 38
6.2.3 A Phased Approach to Attain RSPO Certification .............................................................. 38
6.2.4 Detailed Steps in project ...................................................................................................... 43
6.2.5 Team and project structure................................................................................................... 46
6.2.6 Project Timelines ................................................................................................................. 47
7. FUTURE EXPANSIONS ................................................................................................................. 49
7.1 Phase-I: Certification of Mill and Certification of the Plantations of Existing and the Most
Progressive Farmers with an Estimated Target of 500/2000 Oil Palm Growers .............................. 49
7.2 Phase-II : Certification of the Plantations of Other Farmers in a Staggered Approach with an
Estimated Target 2000/5000 Oil Palm Growers ............................................................................... 49
7.3 Phase-III: Certification of the Plantations of Other Farmers in a Staggered Approach with an
Estimated Target of Certifying All the Oil Palm Growers Associated with the Federation ............. 50
8. FINANCIAL ANALYSIS OF THE BUSINESS .............................................................................. 51
8.1 Proposed Business Model-I: Inclusion of TSOILFED in their Phase Two of the Pilot Project . 51
8.1.1 Objective .............................................................................................................................. 51
8.1.2 Extension Cost to be borne by TSOILFED.......................................................................... 51
8.1.3 Auditing costs for Farmers and the Mill .............................................................................. 52
8.1.4 Details of the overall cost to be incurred by TSOILFED for RSPO Certification ............... 53
8.1.5 Calculation of Premium on the Production of Certified CPO.............................................. 53
8.1.6 Returns Vs Premium ............................................................................................................ 54
8.1.7 Cost-Benefit Analysis .......................................................................................................... 54
8.1.8 Future Projections ................................................................................................................ 54
8.2 Proposed Business Model-II: Approaches Suggested for Initiating RSPO’s Certification from
January 2021 ..................................................................................................................................... 56
8.2.1 Objective .............................................................................................................................. 56
8.2.2 Commercial quote given by TransGraph Consulting........................................................... 56
8.2.3 Extension Cost to be borne by TSOILFED.......................................................................... 56
8.2.4 Auditing costs for Farmers and the Mill .............................................................................. 57
8.2.5 Details of the overall cost to be incurred by TSOILFED for RSPO Certification ............... 58
8.2.6 Calculation of Premium on the Production of Certified CPO.............................................. 59
8.2.7 Returns Vs Premium ............................................................................................................ 59
8.2.8 Cost-Benefit Analysis .......................................................................................................... 60
 8.2.9 Future Projections ................................................................................................................ 60
9. CHALLENGES AND LIMITATIONS ............................................................................................ 61
10. RECOMMENDATIONS ................................................................................................................ 62
10.1 For TSOILFED ......................................................................................................................... 62
10.2 For NCDC ................................................................................................................................. 62
11. ANNEXURES ................................................................................................................................ 63
Annexure-I: Copy of the Official Project Onboarding Letter ........................................................... 63
Annexure-II: Abbreviations .............................................................................................................. 64
Annexure-III: Contact Details of All the Involved Stakeholders...................................................... 65
Annexure-IV: Photographs during Project Visits ............................................................................. 66
12. REFERENCES ............................................................................................................................... 68
1. INTRODUCTION
1.1 About Palm Oil
Palm oil is also known as palm fruit oil. Palm oil is said
to be nature’s gift to the world. Consumed for more than
5,000 years, its nutritional value, health benefits and value
as a natural resource continue to be discovered even
today. Palm oil is produced from the fruit of the Oil Palm
tree Elaeis guineensis.

Palm oil comes from the mesocarp (flesh of the fruit) and
the lauric palm kernel oil from the kernel at the fruit’s
core. Palm oil is one of the few vegetable oils relatively
high in saturated fats (such as coconut oil) and thus semi-
solid at room temperature.

Previously the second-most widely produced edible oil,

after soybean oil, 28 million metric tons were produced worldwide in 2004. It may have now surpassed
soybean oil as the most widely produced vegetable oil in the world. Since its introduction, Oil Palm is
now a leading agricultural crop. Increased planting, cultivation and refinement have led to the
introduction of a wide range of processed palm oil products.

1.2 Global Production

Indonesia, China and Malaysia are the top 3 producers of edible oil in the world. Indonesia and Malaysia
dominate global palm oil production with 55% and 31% share of the total respectively – a total of 63.8
MMT in 2016-17.

Table 1: Global palm oil producers

The palm oil industry is critical to the economic and overall development of Indonesia and Malaysia
and other producer nations. With 3.7 million people directly employed and 25 million indirectly

1
dependent on it in Indonesia, palm oil is the most important agricultural crop in the country from an
economic perspective. The developmental significance of the industry is underlined by the fact that
almost 40% of plantations belong to smallholders.

1.2 Global Consumption

India dominates overall global consumption of palm oil at 9.75 MMT in 2017 while Indonesia is the
second highest consumer with 9.47 MMT and the EU comes in next with 6.65 MMT.

Table 2: Region wise palm oil consumption in 2017

1.3 Oil Palm in India

Indian Vegetable Oil Economy is world’s fourth largest after USA, China and Brazil which includes
Palm Oil. The Indian palm oil industry is primarily driven by demand created for domestic consumption
with little or no re-export taking place. Since India is not able to meet its demand for edible oils from
domestic production, it increasingly draws on imports. The proportion of imports in the total edible oil
consumption has been steadily growing after liberalization of the economy in the 1990s, accounting for
close to 71% as of 2016-17. Palm oil, being cheap and versatile, makes up about 62% of imported
vegetable oil volumes.

Figure 1: Import volumes of different edible oils into India (Volumes in MMT)

The gap between demand and supply is expected to widen further as domestic production is unlikely to
keep pace with India’s growing population and rising incomes and consumption levels, driving a

2
continued reliance on imports. Palm oil is expected to continue to dominate the overall mix. At current
consumption levels, palm oil represents 44% of the total oil consumption in India, amounting to 9.75
MMT in 2016. Extrapolating this share to India’s projected total vegetable oil demand for 2025 - around
27 MMT - the expected volume of palm oil use at this time will be around 11.3MMT. The deficit of 15
million tons of edible oil is being met through imports spending Rs.75,000 crores per year. Out of the
total imports, Palm oil accounts to 60% i.e., 8-9 million tons of the total imports worth of Rs.40,000
crores.

1.5 Oil Palm in Telangana

Telangana State is one of the potential states for Oil Palm cultivation in India. An area of 18932 Ha
(47330 ac) is covered till date under Oil Palm covering around 9810 beneficiaries in 47 mandals of
Khammam, Kothagudem, Nalgonda and Suryapet districts. Telangana State is one of the potential states
for Oil Palm cultivation in India and stands third in area after Andhra Pradesh and Mizoram states. In
Telangana four districts namely Kothagudem, Khammam, Nalgonda and Suryapet are identified to be
potentially viable areas for Oil Palm cultivation To increase area under Oil Palm cultivation to a large
extent, identification of other suitable areas in the State is under process.

Three companies are operating in Telangana for distribution of Oil Palm seedlings and supply of inputs
for maintenance of old Oil Palm plantations:

1. TSOILFED
2. Godrej AgroVet
3. Ruchi Soya Industries

1.5.1 Feasibility study for identification of potential area for Oil Palm area expansion in
Telangana State
To identify the potential area in the Telangana State, Agri- Horticultural Society, Hyderabad was
awarded with the project to take up study for preparation of feasibility report for Oil Palm cultivation
in Telangana State. Besides this, M/s. Ruchi Soya Industries has also conducted a feasibility study for
Oil Palm area expansion in the State. Accordingly, an area of 2.78 lakh hectares in 206 no. of mandals
of 18 districts has been identified as potential for Oil Palm cultivation in the state, which enable the
State to attain self-sufficiency under edible oil production.

1.6 About Telangana State Cooperative Oilseeds Growers Federation Limited

(TSOILFED)
APOILFED was established jointly by the Agriculture and Cooperative departments and registered on
25.09.1980 with a concept to attain self-sufficiency in oilseeds production and avoid middle men to
help oilseeds farmers. Initially entire project was funded by NDDB for promoting primary societies,

3
extension programmers and establishment of processing units. During this time, federation was
involved in the activities such as:

 Procurement of Ground Nut and Sunflower in entire project area

 Payment of remunerative prices to the farmers
 Processing of procured material through custom hiring mills
 NDDB commenced two central processing units at Gadwal, Mahbubnagar district and Piler in
Chittoor district
 Initially NDDB used to reimburse the staff salaries and other expenditures incurred to make the
APOILFED a viable project for a limited period.
 APOILFED also started commercial activity in 1985 through consumer marketing in the brand
name of Vijaya

Federation also diversified its activity into Oil Palm development in 1990 with Oil Palm cultivation and
later processing plant with one ton capacity at Pedavegi, West Godavari, AP in 1983 and 1984. With
state bifurcation in June 2014, APOILFED is listed under IX Schedule. APOILFED is bifurcated into
TSOILFED in 2015 with division of Assets and Employees with Registration no: TAB322 Dated:
30.07.2017.

1.6.1 Experience in edible oils marketing

The “Vijaya Hyderabad” Brand of Edible oils are sold in :

 RBD Palm olein Oil

 Refined Sunflower Oil
 Groundnut Oil
 Refined Rice bran oil
 Gingelly/Til Oil
 Coconut Oil
 Deepam Oil
 Refined Vegetable Cooking Oil

Marketing of Vijaya Edible oils started in 1985. By selling nearly 30,000 MTs of edible oil in the state
of Telangana per year, TSOILFED is playing an important role in stabilizing the market rates. A
network of 200 Distributors suppling edible Oils to the Consumers in the state. Govt. Institutional
supply, through PDS Systems (Ration Shops), Social welfare hostels, Educational Institutions
(SC/ST/BC/Minorities Residential), Anganwadi Centres (ICDS) to provide quality oils to the Children
and for preparation of Balamrutam by TS Foods.

4
1.6.2 Performance of TSOILED in Telangana State
The following table provides the details of Oil Palm area under TSOILFED as in below:-

Table 3: District wise Alloted Area and Beneficiaries

The following gives the details of the total number of seedlings produced during the last three financial
years:-

 2017-18 – 2,50,000 Seedlings

 2018-19 – 4,07,000 Seedlings
 2019-20 – 3,10,000 Seedlings

List of the Processing mills established so far in Telangana State:-

 Mill 1: Aswaraopeta , Bhadradri Kothagudem district

o Capacity : 30 TPH/720 MTD
 Mill 2: -Apparaopet , Bhadradri Kothaguem district
o Capacity 45 TPH/1080 MTD

The following gives the details of the total FFB processed by both plants during the last three financial
years:-

 2017-18 - 1.42 Lakh MT

 2018-19 - 1.89 lakh MT
 2019-20 - 1.99 lakh MT

1.6.3 Highlights of TSOILFED

 TSOILFED covers more than 82% of total Oil Palm Plantations in Telangana State
 TSOILFED have a centralized nursery in 53 acres at Ashwaraopet, Khammam
 TSOILFED become the first and leading in the list of achieving highest oil recovery rate(OER)
of 18.94 for the year 2018
 Due to TSOILFED, the Telangana State Oil Palm Farmers were paid the highest FFB price of
Rs. 12,032/- during the month of February’ 20 which is also all time record in India

5
  FFB and transportation payments to the farmers are made to the Oil Palm Farmers through
online systems, directly to their bank accounts on weekly basis

Awards:

The Government of India and the Government of Telangana has awarded:

 Best Innovation Award from Industries & Commerce, Government of Telangana

 India Agribusiness Award from Government of India

Pioneer in Area Expansion:

 A survey has been proposed to be taken up by IIOPR for identification of new potential areas
in 206 mandals to be covered area of 2.78 lakh hectares in Telangana State
 TSOILFED are the pioneers and have received sanctions from government to take up the
responsibility of Oil Palm expansion in Telangana State

1.6.4 TSOILFED’s expansion in TS: Seeking Allocation of following districts for Oil Palm
expansion
TSOILFED is seeking total area allocation
of 12 districts. These 12 districts are
classified into three factory zones. The focus
for next 4 years is plantation and thereafter
factory and capacity utilization to the fullest
possible.

Government has initiated promotion of Oil

Palm in New Areas and Allotted Erstwhile
Mahbubnagar and Adilabad districts to TS
OILFED through Memo No.
0162/H&S/2020, dated 10.01.2020.

6
2. PROBLEM DEFINITION
2.1 Onboarding With TSOILFED
At this stage, the intern is allocated to a cooperative operating within NCDC administrative jurisdiction
radius. The intern is expected to the business model of that cooperative and also form an idea regarding
the business problem that the cooperative is trying to address.

As a part SAHKAR MITRA Scheme on Internship Program, I was allocated to TSOILFED on 23rd
September 2020, to understand their business problems with regard to any business activity of the
cooperative i.e., production, credit, storage, logistics, value chains, marketing, retailing etc.

2.2 Problem Identification

2.2.1 Understanding the problems from the perspective of TSOILFED

Smt. K Nirmala, IAS, Managing Director, TSOILFED

Interaction with Smt. K. Nirmala, IAS, Managing Director, TSOILFED

Agenda: To know about TSOILFED, Oil Palm Sector and the business problems faced by the
federation.

Attendees: Smt. K. Nirmala, IAS, MD, TSOILFED and Nadikuda Ravi Kiran, SIP Intern.

Date and Place: On 23rd September 2020 at TSOILFED Head Office, Parishrama Bhavan, Hyderabad

Summary of the Discussion:

Smt. K. Nirmala garu, has briefed on the following points:

 Inception of TSOILFED
 Main activities of the federation
 Oil Palm cultivation

7
  Intercropping in Oil Palm plantations
 Processing of Fresh Fruit Bunches(FFB)
 Processing Plants of TSOILFED
 Oil Extraction Rate(OER)
 Schemes available to Oil Palm cultivation
o NSFM
o MGNREGS
o Rythu Bandhu scheme
o Pradhan Mantri Kisan Samman Nidhi Yojana
 Expansion plans in Telangana State

Bottlenecks

o Faced in expansion of Oil Palm plantations

o Oil plantations height makes the harvest collection a problem
 Sources of funding for their business development

Problems the federation needs help in preparation of business plans and projects

o To create a 2-tier structure of cooperatives through farmer group organizations

o Poaching of FFB by other competitors, this is mainly because the growers work
individually and are not a part of any group(FPO/Co-operative)
o The sustainability challenges facing the palm oil sector are well known and are under
increasing scrutiny
o Expansion of Oil Palm plantations into tribal areas

Next Steps:

To do secondary and primary research on the problems highlighted by Smt. Nirmala garu, and come up
with a possible business solution and a corresponding plan of action.

2.2.2 Understand the problems from the perspective of farmers/growers

To understand the problems at the grass root level, I visited Khammam and Mancherial districts and
stayed in the latter for 1 week i.e., from 5th October 2020 to 11th October 2020, to conduct surveys in
the form a fixed questionnaire to gather insights from the Oil Palm growers. The main objective of this
survey was to understand the pain points of the growers and to relate them with the business problem
being faced by the cooperative.

The following are the few photographs from my visit.

8
The following shows the fixed survey questionnaire used to gather insights from the growers.

Questionnaire For Farmers/Growers:

Name: Village: Mandal: District:

Contact:
Gender:

❏ Male
❏ Female
Age of Oil Palm Plantations:
❏ Above 5 years

9
 ❏ Above 10 years
❏ Above 15 years
❏ Above 20 years
Occupation: Main: Secondary:
Category:

❏ SC/ST
❏ BC
❏ OC
Size of land holding under operation?
❏ Below 1 acres
❏ Between 1 - 2.5 acres
❏ Between 2.5 - 5 acres
❏ Between 5 - 10 acres
❏ Above 10 acres
Annual Household Income (Gross in Rs.)

❏ Below 1.5 lakh

❏ 1.5 - 3 lakh
❏ 3 - 5 lakh
❏ Above 5 lakh

Please answer the following questions relating to the federation

1) Who influenced you to become a member of the federation? Tick the appropriate box.
❏ On your own
❏ Friends/relatives/neighbours
❏ Employees of the societies
❏ Employees of the federation
❏ Any other, please specify ___________________

2) Why did you become a member of the federation?

Yes (Y) No (N)

 For marketing of produce / selling produce ☐ ☐

 To get quality inputs ☐ ☐
 To get consumer goods ☐ ☐
 To get animal/ cattle feed ☐ ☐
 To avail storage facility ☐ ☐
 To get packing facility ☐ ☐
 Any other, (please specify) _____________________

If you sell your agricultural produce, please answer the questions from 4 to 6.
3) Which type of intercrops along with Oil Palm do you cultivate?
❏ Cocoa
❏ Banana
❏ Vegetables
❏ Maize

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 ❏ Chili
❏ Flowers
❏ Any other, (please specify) _______________________

4) Please give following information regarding the selling of produce to the federation
a) Reason of selling the produce directly to the federation
❏ Immediate payment
❏ Less chance of malpractices
❏ Right price
❏ Time saving
❏ Any other. (please specify) ________________
b) Days needed to take the produce to the factory?
❏ 1 day
❏ 1 - 3 days
❏ 3 - 5 days
❏ More than 5 days
c) Do you get the printed bill when you sell produce Yes ☐ No ☐

5) How would you rate the following on the basis of your satisfaction level?
(Please tick the appropriate box)

Particulars Highly Satisfied Neither Dissatisfied Highly

Satisfied Satisfied Nor Dissatisfied
Dissatisfied

Collection of
produce/crop at the
federation

Release of payment
for produce/crop by
the federation

Procedure for
weighing of produce

Notified Price paid for

produce/crop

Time taken for selling

of produce/crop

11
How does federation help you to grow Oil Palm plantations? please answer the questions from 7
to 13.

6) Which product/services are provided by the federation? Please list them

❏ Trainings
❏ Technical Assistance
❏ Seeds/Saplings
❏ Credit
❏ Inputs(Pesticides/Fertilizers)
❏ Any other, (please specify) ____________
7) Please tick the names of the product which you buy?
Agro-chemicals (inputs) Consumer good Animal/cattle feed

a) Fertilizers ☐ a) Refined oil ☐ a) Cattle feed ☐

b) Seeds ☐ b) Bottled products ☐ b) Poultry feed ☐

c) Pesticides ☐ c) Canned products ☐ c) Any other.

d) Any other. d) Any other. (please specify) ______

(please specify) ______ (please specify) ______

8) From where do you mostly purchase Agro-chemicals, Consumer goods, and Animal/Cattle
feed products for your day-to-day activities?
Agro- Consumer Animal/

chemicals good Cattle feed

(inputs)

a) Co-operative Marketing societies (CMS)☐ ☐ ☐ ☐

b) Primary Agricultural Co-operative ☐ ☐ ☐
Societies (PACS)

c) Retail shops/outlets ☐ ☐ ☐
d) Private dealers ☐ ☐ ☐
e) Directly from federation ☐ ☐ ☐
f) Any other, (please specify) _______________________________

12
 11) Why do you use products of the federation?
❏ Fair price
❏ Good quality
❏ Easy availability
❏ Exact quantity
❏ Any other, (please specify) ____________
12) Do you know about the helpline numbers for queries/complaints regarding products?
Yes ☐ No ☐

If yes, give the following information

a) Reason for usage:

b) Satisfaction level:

13) How would you rate the following on the basis of your satisfaction level?
(please tick the appropriate box)

Particulars Highly Satisfied Neither Dissatisfied Highly

Satisfied Satisfied Nor Dissatisfied
Dissatisfied

Quality of inputs

Timely availability of
inputs

Prices of inputs

Weighing system of
different inputs/feed

Location from where

you buy the product

If you avail additional services from the federation, please answer the question from 14 to 17.

14) Tick the additional services if any availed from the federation directly or through society
a) Camp/ training facility Yes ☐ No ☐
b) Farming contracts

13
 i) Contract farming Yes ☐ No ☐ Not aware ☐
ii) Organic farming Yes ☐ No ☐ Not aware ☐
iii) Export zone Yes ☐ No ☐ Not aware ☐
c) Godown / storage facility Yes ☐ No ☐
d) Soil testing facilities Yes ☐ No ☐
e) Any other. (please specify) ________
15) If engaged in any of the farming contracts, please give the following information:
a) Are you paid extra for such contracts? Yes ☐ No ☐
b) If yes, are you satisfied with the contracts?
❏ Highly Satisfied
❏ Satisfied
❏ Neither Satisfied Nor Dissatisfied
❏ Dissatisfied
❏ Highly Dissatisfied
c) Problems _______________
16) If you avail storage/godown facility of the federation, please answer the following questions:
a) Crops stored
b) Charges
c) Period of storage
d) Problems faced
e) Suggestions
17) Please give your opinion regarding the following statements (Please tick the appropriate box)

Particulars Highly Satisfied Neither Dissatisfied Highly

Satisfied Satisfied Nor Dissatisfied
Dissatisfied

Federation provides ready

market to farmers

Federation has helped in

eliminating exploitation
by private traders

Federation is playing
multi-faceted role for the

14
upliftment of Oil Palm
growers

Federation has proper

grievance handling
mechanism

Federation provides
information on the proper
usage of inputs

Federation has helped in

improving crop production

Federation provides
general information
regarding price trends

Federation organises
trainings on emerging
agricultural practices

18) What are the problems you faced in dealing with the federation and the societies in regard to
the following?
a) Selling of produce:
b) Product availability:
c) Other facilities:
19) Are you aware of any sustainable practices to be followed?
❏ Yes
❏ No
20) Are you interested to recommended others to become a part of this federation?
Rate it on a scale of 1 to 5: ___________(1 being the lowest and 5 being the highest)
21) Please give your suggestions for improvement and better functioning
a) Of federations _________________________________________________
___________________________________________________________

b) and products/services of the federation ___________________________

15
The following table gives the list of surveyed farmers:

Area Age of the

S.No Name of the Farmer Catgeory Village Mandal District Contact
(acres) Plantation
1 Davarapalli Harikrishna OC Mandalpalli Dammapeta Bhadradri kothagudem 12 Above 10 Years 9885858616
2 Ankata Umamaheswer Rao BC Malkaram Dammapeta Bhadradri kothagudem 40 24,15,10 9000327210
3 Budde Koteswer Rao BC Malkaram Dammapeta Bhadradri kothagudem 10 Above 10 Years 9381619649
4 Ankata MallikarjunRao BC Malkaram Dammapeta Bhadradri kothagudem 20 Above 10 Years 9948872696
5 Kavatha Umamahaswer rao OC Mallaram Dammapeta Bhadradri kothagudem 10 above 15 years 9849557270
6 Kavtha Sreerama Chandra murthy OC Malkaram Dammapeta Bhadradri kothagudem 13 above 15 years 9949422052
7 Davulapalli Gopal Rao OC Naidupeta Dammapeta Bhadradri kothagudem 20 Above 10 Years 9949633775
8 Kolikipogu Satish SC Moddulagudem Dammapeta Bhadradri kothagudem 5 above 7 years 9948261216
9 Cheekati Balakrishna OC Moddulagudem Dammapeta Bhadradri kothagudem 8 above 8 years 7780510589
10 Tummala Nageswerrao OC Gandugulapalli Dammapeta Bhadradri kothagudem 48 Above 10 Years 9100443456
11 Kotagiri.Ramachender rao OC Gandugulapalli Dammapeta Bhadradri kothagudem 11 Above 10 Years 9000312136
12 Tummala Sankar Rao OC Gandugulapalli Dammapeta Bhadradri kothagudem 10 Above 10 Years 9398949335
13 Dodda Prasad Rao OC Reddyalapadu Dammapeta Bhadradri kothagudem 25 Above 10 Years 9866463536
14 Kandimalla Krishna Rao BC Nagupalli Dammapeta Bhadradri kothagudem 20 Above 10 Years 9866509577
15 Tandra Umamahaswer rao OC Malkaram Dammapeta Bhadradri kothagudem 50 above 15 years 9177774312
16 Pinnamaneni Murali OC Malkaram Dammapeta Bhadradri kothagudem 50 above 15 years 9701257722
17 Alapati Prasad OC Allipalli Dammapeta Bhadradri kothagudem 40 Above 10 Years 9912886469
18 Kambampati Umamaheswer Rao OC Dammapet Dammapeta Bhadradri kothagudem 15 Above 10 Years 9912873145
19 Konsothu Venkatnarayana ST Malkaram Dammapeta Bhadradri kothagudem 20 Above 10 Years 9010155856
20 Yatla Nagaraju ST Malkaram Dammapeta Bhadradri kothagudem 15 Above 10 Years 9618649781
21 Konsothu Roopsingh ST Malkaram Dammapeta Bhadradri kothagudem 70 Above 10 Years 9177693069
22 Maddineni Venkateswer Rao OC Dammapet Dammapeta Bhadradri kothagudem 70 Above 10 Years 9866396133
23 Morampudi Raja OC Mandalpalli Dammapeta Bhadradri kothagudem 12 Above 10 Years 9989502086
24 Kasani Padma sekhar OC Maddikonda Aswaraopeta Bhadradri kothagudem 25 Above 10 Years 9000430670
25 Garapati Rambabu OC Aswaraopeta Aswaraopeta Bhadradri kothagudem 15 Above 10 Years 7659993388
26 Kotagiri Seetarama Swamy OC Aswaraopeta Aswaraopeta Bhadradri kothagudem 40 above 15 years 9912785295
27 Meka LavaKumar OC Naramvarigudem Aswaraopeta Bhadradri kothagudem 15 above 15 years 9573293797
28 Dandu RamaRaju OC Gurralacheruvu Aswaraopeta Bhadradri kothagudem 15 above 10 years 9390178183
29 Seemakurthy Venkateswer Rao OC Aswaraopeta Aswaraopeta Bhadradri kothagudem 15 above 9908909299
30 Kondapalli Satyanarayan Reddy OC Rudrakshapalli Sathupally Khammam 10 Above 10 Years 9848253097
31 Kusampudi Narsimha rao OC Pakalagudem Sathu[palli Khammam 40 Above 10 Years 9885232221
32 Chapalamadugu Karunakar OC Pakalagudem Sathupally Khammam 10 Above 10 Years 9440448889
33 Dasari Diwakar Reddy OC Rudrakshapalli sathupalli Khammam 22 Above 10 Years 9949282255
34 Bonagiri Veera Ragavaiah OC Pakalagudem Sathupalli Khammam 13 Above 10 Years 8008000288
35 Malireddy Manasa OC Siddaram sathupalli Khammam 11 10 years and 1 year 9666854964
36 Bheemreddy Krishna reddy OC Siddaram Sathupalli Khammam 20 Above 10 Years 9848779974
37 Thumboor Maheswer Reddy OC Sadasivunipeta sathupalli Khammam 12 Above 10 Years 9553589919
38 Chava Koteswer Rao OC Pakalagudem Sathupalli Khammam 11 Above 10 Years 9951175689
39 Yaruva Venkat Ramiredy OC Gourigudem Sathupalli Khammam 9 Above 10 Years 9618664404
40 Annasani Bapooji OC Pakalagudem Sathupalli Khammam 30 abobe 10 Years 9701465970
41 Vempati Laxminarayana OC Pakalagudem Sathupalli Khammam 20 Abobve 10 years 9440408356
42 B.Rami Reddy OC Korlagudem Kallur Khammam 3.5 Above 10 Years 7989943942
43 Kokalla Bramaji Rao OC Tallapenta Penupalli Khammam 14 Above 10 Years 9963552391
44 Surasani Narsireddy OC Pandurangapuram Paloncha Badradri Kothagudem 10 Above 10 Years 9394621543
45 Julapalli Gopal OC Gumpena Chandrugonda Khammam 4.00 Less than 5 Years 9490238415
46 Gudimetla Bixapathi BC Marrigudem Chandrugonda Khammam 0.80 Less than 5 Years 9618450909
47 Pallagani Laxmi OC Telijerla Chandrugonda Khammam 2.00 Less than 5 Years -
48 Pallagani Susheela OC Telijerla Chandrugonda Khammam 2.00 Less than 5 Years 7731961646
49 Kalinga Pedda Seethaiah OC Marrigudem Chandrugonda Khammam 2.00 Less than 5 Years 9177064254
50 Paddam Venkanna ST Marrigudem Chandrugonda Khammam 2.00 Less than 5 Years -
51 Mechhu Savithari ST Marrigudem Chandrugonda Khammam 0.21 Less than 5 Years 9177533395
52 Paddam Srinu ST Marrigudem Chandrugonda Khammam 1.20 Less than 5 Years 8374954122
53 Paddam Kannaiah ST Marrigudem Chandrugonda Khammam 1.00 Less than 5 Years 8374954122
54 Gaddam Gopalu ST Marrigudem Chandrugonda Khammam 1.20 Less than 5 Years -
55 Paddam Mutyalu ST Marrigudem Chandrugonda Khammam 0.80 Less than 5 Years -
56 Banoth Venkateswarlu ST Annapureddypalli Chandrugonda Khammam 3.68 Less than 5 Years 8187882499
57 Banoth Kamala ST Annapureddypalli Chandrugonda Khammam 3.18 Less than 5 Years 8187882499
58 Paddam Parvathi ST Marrigudem Chandrugonda Khammam 1.20 Less than 5 Years 8374954122
59 Paddam Krishna ST Marrigudem Chandrugonda Khammam 1.20 Less than 5 Years 8374954122
60 Vardaboina Babu BC Jennaram Enkoor Khammam 3.63 Less than 5 Years 9948361789
Total 984.6

16
2.3 Data Analysis and the Insights gathered from the Survey
 We have surveyed around 60 farmers/ Oil Palm grower from various villages of Bhadradri
Kothagudem and Khammam districts.
o “Oil Palm Grower” means a person who cultivates Oil Palm whether by himself or
by his own servants or by hired labour or by members of his family or by his tenants
and includes Oil Palm Growers‟ Co-operative Society, but not a member thereof, and
a Company as defined in section 3 of the 3 Companies Act, 1956.
General details:
 The Oil Palm plantation is male-dominated.
Count of surveyed farmers:
o Male - 54
o Female - 6
 Average of Oil Palm plantations is around 10 years.
Count of surveyed farmers:
o Above 5 years – 20
o Above 10 years – 34
o Above 15 years – 4
o Above 20 years – 2
 They belong to OC, BC and SC/ST categories.
Count of surveyed farmers:
o OC - 40
o BC - 6
o SC/ST – 14
 From the farmers and from the data of total farmers with respect to total land under Oil Palm
plantations in Telangana State, we got to know that average landholding size around 5 acres.
 Average Annual Household Income is around 5 lakh rupees.

Question relating to the federation:

 The new Oil Palm growers are influenced through friends/relatives/neighbours and the push
from government, which has taken initiatives to educate prospective farmers with the benefits
of Oil Palm cultivation.
Count of surveyed farmers:
o Friends/relatives/neighbours – 52
o Employees of the federation – 2
o On your own – 1
o Others, Government Push - 5

17
  By being associated with the federation Oil Palm growers have access to seedlings, fertilizers,
training provided though extension officers from the factory.
Count of surveyed farmers: Yes
o For marketing of produce / selling produce 60
o To get quality inputs 55
o Any other, (please specify) – Training 40
 These Oil Palm farmers are associated to Telangana State Cooperative Oilseeds Growers
Federation Limited. They directly sell their FFB to the Factory Zone they are assigned to.
o “Factory Zone” means an area assigned to a factory under section 11 of THE
TELANGANA OIL PALM (REGULATION OF PRODUCTION AND
PROCESSING) ACT, 1993.
o “Oil Palm Growers‟ Co-operative Society” means a Society registered under 4 the
Telangana Co-operative Societies Act, 1964, which has among its objects and functions
the cultivation and sale of Oil Palm FFB by its members, and includes the Federation
of any such Societies.

Questions related to agricultural produce

 Intercropping: In the early stages of Oil Palm cultivation i.e., 0-3 years, Oil Palm growers
prefer banana, Maize, Vegetables and Flowers and as they mature i.e., 5-30 years, they are
advised by the federation to take up shade tolerant crops like cocoa, banana, elephant foot yam,
pepper and ginger etc. and the farmers are showing specific interest in Cocoa. As, it has been
found as an ideal companion crop without affecting Oil Palm yield.
Count of surveyed farmers:
o Vegetables/ chili/Flowers - 22
o Banana - 10
o Cocoa - 23
o Maize – 5
 All the farmers have Oil Palm cultivation as their main occupation and they rely on
intercropping for their secondary source of income.
 All the farmers responded saying, based on the supply of FFB to the factory, the payments are
made directly to the registered farmers bank account the coming Wednesday. There is a
very less/ no chance of malpractice as the payments are digitally transferred.
 All the farmers responded the following:
o The Oil Palm promoting companies or farmers organizations like TSOILFED are
arranging Fresh Fruit Bunches (FFB) collection at village centres. The developed
matured fruit bunches only shall be harvested or cut from the main palm with “chistels”

18
 which are specially made for the purpose and generally there are 12 - 16 Fruit Bunches
per plant initially weighing 5 – 6kgs each and later there will be about 10 – 12 FFB per
plant weighing 25 -30kgs (Average) and in cases each bunch may weigh 50kgs also
based on the plant maintenance. The fruit bunches shall be harvested and sent to
processing unit within 24 hours of harvest to have better oil quantity and recovery and
the fruit collection centres are under operation at villages in Telangana State.
 All the farmers responded that they are provided with the receipt of the procured FFB with the
payment details. All these details are stored in their SAP database.
 Majority of the sample surveyed growers are rated following services as follows:
o Collection of produce/crop – Satisfied or Highly Satisfied
o Payment of produce/crop – Satisfied or Highly Satisfied
o Procedure for weighing of produce – Satisfied or Highly Satisfied
o Notified price paid for produce/crop - Neither Satisfied Nor Dissatisfied
o Time taken in selling of produce/crop – Satisfied

Questions related to federations help to grow Oil Palm plantations

 Surveyed farmers/growers have listed these products/services provided by the federation:
o Training - 45
o Technical Assistance - 50
o Seeds/Saplings - 60
o Credit - 0
o Inputs(Pesticides/Fertilizers) - 48
 Federation through National Food Security Mission - Oil Palm (NFSM-OP) is majorly
providing the following assistance:
o For seedlings/saplings
 90% subsidy i.e., 1 hectare requires 143 saplings @ ~Rs. 91 each
 Out of 143x91= Rs.13013 around 90% i.e., Rs. 12000 is given as subsidy
o Inputs/ fertilizers
 Every year the growers are given Rs. 5000 for the initial 4 years, overall giving
a total amount of Rs. 20000
o Intercrops
 Every year the growers are given Rs. 5000 for the initial 4 years, overall giving
a total amount of Rs. 20000
o Drip irrigation
 Per Hectare they provide a % subsidy on the total cost
 100% to SC/STs

19
  90% to BC
 80% to OC/ General
 Federation have a centralized nursery in 53 acres at Ashwaraopet and more Oil Palm saplings
area raised by importing sprouts from M/s Compact Seeds and Clones, Costa Rica for
distribution to farmers.
 Majority of the growers procure/buy Agro-chemicals from federation, consumer goods from
retail shops/outlets/private dealers.
 The quality of inputs provided are of fair price and good quality.
Count of surveyed farmers:
o Fair Price - 28
o Good Quality - 14
o Easy Availability - 15
o Exact Quantity - 3
 Majority of the farmers have the contact numbers of the extension officers of the assigned
factory. They are neither satisfied or dissatisfied with the service.
Count of surveyed farmers:
o Around 44 farmers have the contacts of the EOs and 34 of them are neither satisfied or
dissatisfied with the service.
 Majority of the sample surveyed growers rated following services as follows:
o Quality of inputs - Satisfied
o Timely availability of inputs - Satisfied
o Prices of inputs – Indifferent or dissatisfied
o Weighing system of different inputs/feed - Satisfied
o Location of mode from where you buy product – Indifferent

Questions if you avail additional services from the federation:

 Growers have availed the following additional services from the federation
Count of surveyed farmers:
o Camp/ training facility though factory’s extension officers - 44
o Procurement directly from the farmers without the intervention of any middle man - 60
o Soil testing facilities - 41
o Transportation charges - 49
 No separate farmer contracts as the growers are directly associated with a Factory Zone
specified by the government(State). Farmers response was also same.
 The fruit bunches shall be harvested and sent to processing unit within 24 hours of harvest
to have better oil quantity and recovery and the fruit collection centres are under

20
 operation at villages in Telangana State. So the growers don’t have to worry about the storage
of the FFBs.
 Majority of the sample surveyed growers rated following services as follows:
o Federation provides ready market to farmers – Satisfied or Highly Satisfied
o Federation has helped in eliminating exploitation by private traders – Satisfied
o Federation is playing multi-faceted role for you – Satisfied
o Federation has proper grievance handling mechanism – Neither satisfied nor
dissatisfied
o Federation always informs the farmers regarding doses and usage of inputs – Neither
satisfied not dissatisfied
o Federation has helped in improving crop production - Neither satisfied not
dissatisfied
o Federation provides general information regarding trends and prices - Neither satisfied
not dissatisfied
o Federation arranges proper training camps regarding better cultivation of the existing
and new crops - Neither satisfied not dissatisfied
 Growers who are located far have to bear the cost of the transportation till the collection centres.
Around 24 farmers raised this issue.
 Growers strongly believe that the prices in non-peak seasons is high compared to the peak
seasons and feels exploited. Around 29 farmers raised this issue.
 They are also not aware of any sustainable practices related to Oil Palm cultivation are not
aware of the limits on fertilizers/ pesticides to be used in order not to disturb the environment.
Around 57 farmers have heard of this term.
 On a scale of 1-5, farmers recommendation to others:
Count of surveyed farmers:
o Rated 1: 2
o Rated 2: 3
o Rated 3: 8
o Rated 4: 32
o Rated 5: 15
 Growers believe they have very low bargaining power when dealing with the federation,
as they don’t have a farmers’ association(FPO) to cater the needs, such as:
o Rural Credit: Co-operatives can provide loans at cheaper interest rates and have
benefited the rural community. After the establishment of co-operatives, the growers
will be able to come out of the grip of money lenders.

21
o Role in agricultural progress: They serve as a link between the federation and the
government. High yielding seeds, fertilizers, etc. can be demanded by the growers
through the cooperatives.
o Encourages thrift: Cooperative societies encourage the habit of savings and thrift
among their members. They provide loans only for productive purposes and not for
wasteful expenditure.
o Fair price and good quality: Co-operative societies buy and sell in bulk quantities
directly from the producers or to the consumers. Products are processed and graded
before they are sold. Bulk purchases and sales ensure fair prices and good quality.
o Social benefit: Co-operative societies have played an important role in changing social
customs and curbing unnecessary expenditure. The profits earned by the co-operatives
have been used for providing basic amenities to the society.

22
3. BUSINESS PLAN FORMULATION
Here we aggregate all the problems identified by TSOILFED’s executives and the insights gathered
from the survey of Oil Palm growers to come up with a feasible, viable and economic business plan.
We can conclude the following as the major pain points faced by TSOILFED and Oil Palm growers
that need to be addressed:

 To have create a 2-tier structure of co-operatives through farmer group organizations, this will
cater the following problems
o Poaching of FFB by other competitors, this is mainly because the growers work
individually and are not a part of any group(FPO/Co-operative)
o Growers believe they have very low bargaining power when dealing with the
federation, as they don’t have a farmers’ association(FPO) to cater the needs, such as:
 Rural Credit: Co-operatives can provide loans at cheaper interest rates and
have benefited the rural community. After the establishment of co-operatives,
the growers will be able to come out of the grip of money lenders.
 Role in agricultural progress: They serve as a link between the federation and
the government. High yielding seeds, fertilizers, etc. can be demanded by the
growers through the cooperatives.
 Encourages thrift: Cooperative societies encourage the habit of savings and
thrift among their members. They provide loans only for productive purposes
and not for wasteful expenditure.
 Fair price and good quality: Co-operative societies buy and sell in bulk
quantities directly from the producers or to the consumers. Products are
processed and graded before they are sold. Bulk purchases and sales ensure
fair prices and good quality.
 Social benefit: Co-operative societies have played an important role in
changing social customs and curbing unnecessary expenditure. The profits
earned by the co-operatives have been used for providing basic amenities to
the society.
 Growers strongly believe that the prices in non-peak seasons is high compared to the peak
seasons and feels exploited. Growers want higher price on their FFB.
 There is strong need for educating growers to help them identify the best practices of Oil Palm
cultivation to increase and sustain their yield.
 The sustainability challenges facing the palm oil sector are well known and are under increasing
scrutiny. As the growers are not aware of any sustainable practices related to Oil Palm
cultivation are not aware of the limits on fertilizers/ pesticides to be used in order not to disturb
the environment.

23
With further discussion on these problems with Smt. K Nirmala, IAS, Managing Director, TSOLFED,
we decided to go ahead with the process to attain RSPO certification which is a one-stop solution
to all the problems faced by TSOILFED and the Oil Palm growers.

A copy of the official project onboarding letter is attached as ANNEXURE-I

The letter shows the official approval given TSOILFED, to initiate the project to obtain RSPO
applicable certification.
This project includes the following:
 Secondary Research on RSPO Certification
 A pre-analysis to ensure that the farmers are ready for certification
 Initiation the process to attain RSPO certification in TSOILFED’s Oil Palm plantations

24
4. IMPLEMENTATION OF THE PROJECT TO INITIATE RSPO CERTIFICATION
4.1 Secondary Research
4.1.1 What is the Roundtable on Sustainable Palm Oil(RSPO)?
In response to the urgent and pressing global call for sustainably produced palm oil, the Roundtable on
Sustainable Palm Oil (RSPO) was formed in 2004 with the objective of promoting the growth and use
of sustainable Oil Palm products through credible global standards and engagement of stakeholders.
RSPO is a not-for-profit association that unites stakeholders from seven sectors of the palm oil industry
- Oil Palm growers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and
investors, environmental or nature conservation NGOs and social or developmental NGOs - to develop
and implement global standards for sustainable palm oil.
Such multi-stakeholder representation is mirrored in the governance structure of RSPO such that seats
in the Executive Board and project-level Working Groups are fairly allocated to each sector. In this
way, RSPO lives out the philosophy of the "roundtable" by giving equal rights to each stakeholder
group to bring group-specific agendas to the roundtable, facilitating traditionally adversarial
stakeholders and business competitors to work together towards a common objective and make
decisions by consensus.
The RSPO has developed a set of environmental and social criteria which companies must comply with
in order to produce Certified Sustainable Palm Oil (CSPO). When they are properly applied, these
criteria can help to minimize the negative impact of palm oil cultivation on the environment and
communities in palm oil-producing regions.
The RSPO has more than 4,000 members worldwide who represent all links along the palm oil supply
chain. They have committed to produce, source and/or use sustainable palm oil certified by the RSPO.

4.1.2 Why should we choose RSPO certification?

There is global demand for sustainable palm oil and in India also many companies like HUL, RB, P&G,
AAK KAMANI & others are committed to use sustainable palm oil only. The demand for sustainable
palm oil is on increasing trend considering the environmental risks associated with palm oil cultivation.
By becoming a RSPO certified member one can contribute constructively towards promoting the
growth and use of sustainable palm oil to protect people, planet and prosperity. Moreover, membership
demonstrates a first step towards commitment to sustainable palm oil.

4.1.3 Benefits of RSPO certification/trademark:

Usage of the RSPO Trademark is advantageous in various ways:

 RSPO members make up a large part of the world’s palm oil that is produced and sold in the
global market. As all the members are bound to accept RSPO certification on each other, the
value of the status is quite universal. It represents a seal of commitment to sustainability and
transparency.

25
 It enables companies to demonstrate that they're responsibly protecting the environment,
improving social and labour practices in Oil Palm plantations, as well as positively assisting
with wildlife conservation.
 It provides an opportunity to differentiate a product from others, as it enables consumers to
easily identify those brands and products that are sourcing sustainably produce palm oil.
 It is a way to boost demand for sustainable palm oil and increase market uptake, thereby
incentivizing growers in producing countries to keep up their standards and level of
commitment.
 In the long run, both producers and users will benefit economically from the higher demand for
sustainable palm oil.
 The majority of bigger FMCG companies, especially from Europe are committed to buying
certified palm oil. For example, Unilever, Reckitt Benckiser, etc are buying certified palm oil.
 Final buyers are willing to pay for certified oil, refineries are also willing to pay to the CPO
producers. This chain has to fully establish in India but is emerging.
 The premium/credits of $5-25$ (approximately INR of ~Rs. 370 to ~Rs. 1860) per ton the mill
would obtain by selling RSPO certified palm oil. As of today, the actual premium is 10 dollars,
that too for Mass Balance.(can get max. of $25 for 100% certified palm oil, which termed as
“Identity Preserved”)
 The demand for local production has been increased as our government is focusing on self-
reliant production of edible oils to reduce heavy imports from Malaysia and Indonesia.
 It’s a dual benefit to the farmer in terms of higher yields and at the same time higher prices for
the produce as its RSPO certified (RSPO Credits).

26
4.2 Primary Research
The major stakeholders for the initiation of RSPO Certification:

The following highlights the phases of interaction happened to initiate RSPO certification with their
date followed by minutes of the meeting.

4.2.1 Interactions Phase-I: Meetings to understanding about RSPO certification form the direct
stakeholders involved
28th September 2020: On-call interaction with Shri. Anil Kishore Devalapally VP, TransGraph
Consulting Pvt.ltd

Agenda: To know about RSPO certification and their the principles and criteria to attain it.

Attendees: Shri. Anil Kishore Devalapally and Nadikuda Ravi Kiran

Summary of the Discussion:

Shri. Anil Kishore Devalapally has briefed on the following:

 About RSPO certification and their the principles and criteria to attain it.

27
 o Certain laid out principles and criteria that are properly documented

 Role of different stakeholders such as

o RSPO: RSPO has certain criteria and principles to be followed to the farmers.
o Group Manager (TSOILFED/ Consultants): There has to be a Group
Manager,(TSOILFED can be one), who will monitor how the entire farmers are
maintaining with respect to the specified standards of RSPO.
o Consultant Firm: They take care of what needs to be done to get the RSPO
certification and conduct the training sessions on behalf of RSPO. It is not possible for
RSPO to come and speak with farmers directly, so they employ consultants(or RSPOs’
dedicated team) who will train the Group Mangers’ dedicated team of Extension
Officers.
o Auditors ; They are responsible for Surveillance Audit for farmers and Auditing of the
Mill.

Next Steps:

Shri. Anil Kishore Devalapally to introduce Shri. Kamal Prakash Seth, Country Head, RSPO India.

30th September 2020: Phone interaction with Anil Kishore Devalapally VP, TransGraph Consulting
Pvt.ltd and Kamal Prakash Seth, Country Head, RSPO India.

Agenda: To introduce Shri. Kamal Prakash Seth and his role in RSPO.

Attendees: Shri. Anil Kishore Devalapally Shri. Kamal Prakash Seth and Nadikuda Ravi Kiran

Summary of the Discussion:

Shri. Anil Kishore Devalapally has introduced to Kamal Prakash Seth and got a brief about RSPO’s
goal and mission for expansion in India.

Next Steps:

Shri. Kamal Prakash Seth will send an invite for a Virtual Meet to discuss more about RSPO
certification.

1st October 2020: Virtual Meet with Kamal Prakash Seth, Country Head, RSPO India.

Agenda: To know about RSPO certification in detail.

Attendees: Shri. Kamal Prakash Seth and Nadikuda Ravi Kiran

Summary of the Discussion:

Shri. Kamal Prakash Seth has briefed on the following:

28
  RSPO’s vision, mission, and goals in India.
 Process to achieve RSPO certification
o Types of standards followed
o Certification of the Mill
o Cost of RSPO membership for the Mill
o Certification of the group of farmers
o Formation of Farmer Produced Organizations(FPOs) can be a way to train, monitor,
and certify the group of farmers.
o Auditing process for the Mill and Plantations and the costs associated with it.
 RSPO Smallholders Support Fund will bear the plantation audit(Surveillance Audit) cost for
the initial 5 years or till the time the plantations can spend on their own.
 Process for the farmer groups’ membership on RSPO website: Once the mill is certified, and
the certified group of farmers or FPOs should have to create a Group Membership on RSPO’s
website and tag themselves to Mill/Group Manager to which they supply their produce or
associated with.
 License given to the RSPO Certified Mills
o Mass Balanced License
o Segregated License
o Identity Preserved
 Demand for RSPO certified Palm Oil

Next Steps:

For me to interact with TransGraph Consulting to understand the basic action plan for RSPO
certification.

4.2.2 Interactions Phase-II: Meetings to plan an action-plan for RSPO certification

16th October 2020: On-call interaction with Anil Kishore Devalapally VP, TransGraph Consulting

Agenda: To understand the steps involved or action plan for attaining RSPO certification.

Attendees: Shri. Anil Kishore Devalapally and Nadikuda Ravi Kiran

Summary of the Discussion:

Shri. Anil Kishore Devalapally has briefed the following:

 Explained the brief steps involved in the action plan of RSPO certification
o Giving of a mandate before the initiation
o Drafting of a yearly plan
 Targeting villages/mandals to initiate the certification

29
  To decide which type of certification we’ll be going with i.e., overall
certification or a phased certification based on the farmers' distance to the mill
 Identifying the villages/mandals with progressive farmers.
 Preparation of training material and schedule to initiate the process of certification
 Initiating the process of certification
 Understanding the farmers' response
 Monitoring and maintaining documents for the purpose of Audit
 Pre-Audit
 Final-Audit
Next Steps:
Briefed the summary of the discussion with Smt. Nirmala garu. We have then decided to request
TransGraph Consulting for an action plan with estimated costs to attain RSPO certification.

23rd October 2020: On-call interaction with Anil Kishore Devalapally VP, TransGraph Consulting.

Agenda: To request TransGraph Consulting for an action plan with estimated costs to attain RSPO
certification.

Attendees: Shri. Anil Kishore Devalapally and Nadikuda Ravi Kiran

Summary of the Discussion:

Requested an action plan with the estimated costs to attain the RSPO certification by considering the
following:
 Considering both Sunk and Non-sunk costs
 Time and effort to appoint the Extension officers
 Consulting fee charged by TransGraph Consultancy
 Membership/Auditing costs for both the Mills and the Farmers
 To also highlight the returns TSOILFED will get after getting certified.
o The expected premium per ton of certified CPO produced
o Break-even period and realisation of the profits
Next Steps:
Scrutinized the action plan given by TransGraph consulting and briefed the details to Smt. Nirmala
garu. We have decided to request for a commercial proposal for RSPO certification with 500
progressive farmers holding a land of around 1600 acres in Telangana State.

4.2.3 Interactions Phase-III: Requesting a commercial proposal for RSPO certification

29th October 2020: On-call interaction with Anil Kishore Devalapally VP, TransGraph Consulting.

30
Agenda: To request for a commercial proposal for RSPO certification with 500 progressive farmers
holding a land of around 1600 acres in Telangana State.

Attendees: Shri. Anil Kishore Devalapally and Nadikuda Ravi Kiran

Summary of the Discussion:

Clarified few doubts on the previously given action plan, estimated costs, and returns. Then, requested
for a commercial proposal for RSPO certification with 500 progressive farmers holding a land of around
1600 acres in Telangana State.

 Briefed the expectation of TSOILFED for this commercial proposal and to provide a
quotation/estimate for commercial proposal for the above activities considering the following:

o Time to be invested
o Manhours required
o Expected no. of days of field work
o Team members to be involved
o The type of training manuals to be provided,
o And, also understanding the adaptability of the training of RSPO training/ standards
with the existing practices.
Next Steps:

 To scrutinize the commercial proposal provided by TransGraph Consultancy for the

certification of 500 farmers in Telangana State.
 To have a feasibility analysis – to identify the progressive farmers/growers associated with
TSOILFED. For this purpose, Smt. Nirmala garu has introduced me to Shri. B. Rajasheker
Reddy, Retd. Manager(Oil Palm Development), who has great knowledge of Oil Palm
cultivation and an expert in this field. He will help to identify the farmers growing Oil Palm
organically.

4.2.4 Interactions Phase-IV: Feasibility Analysis – To identify the Progressive Farmers, and to
understand more about the Auding Process
12th November 2020: On-call interaction with Shri. B. Rajasekhar Reddy, Retd Manager (OPD),
TSOILFED.
Agenda: To identify the progressive farmers/growers associated with TSOILFED to go ahead with the
process of certification.

Attendees: Shri. B. Rajasekhar Reddy and Nadikuda Ravi Kiran

Summary of the Discussion:

31
Briefed Shri. B. Rajasekhar Reddy with the previous discussion on RSPO principles and criteria, and
the checklist to be followed during the auditing process.

Shri. B. Rajasekhar Reddy has been tracking the farmers who are practicing organic Oil Palm
cultivation. The features of the farmers are as follows:

 These farmers/growers are associated with TSOILFED and are growing Oil Palm organically
by using recycling of Agro-waste, applying Jeevamrutham , Biological Control Methods, and
using shredded fibre as Mulching.
 As these farmers/growers are already practising organic farming or sustainable practices, they’ll
be TSOILFED’s progressive farmers to achieve the highest level of RSPO certification i.e.,
Milestone-B.

Next Steps:

When discussing the details of the progressive farmers with Smt. Nirmala garu, we wanted to know
more about the auditing process and the certification bodies associated with RSPO. To have an
interaction with Shri. Kamal Prakash Seth to understand the process of auditing.

13th November 2020: Discussion with Shri. Kamal Prakash Seth, Country Head, RSPO India.

Agenda: To know more about the auditing process and the certification bodies associated with RSPO.

Attendees: Shri. Kamal Prakash Seth and Nadikuda Ravi Kiran

Summary of the Discussion:

Shri. Kamal Prakash Seth has briefed the following:

 RSPO has received interest from BSI Group, Control Union, and NEPCON Certification
Bodies for certification in India.
 The following table provides the details of these RSPO Certification Bodies accredited by the
Assurance Services International (ASI)
Name of Certification Body Contact Information Accreditation
Nicholas Cheong Suite 29.01, Level 29, The
Gardens North Tower, Mid Valley City
Lingkaran Syed Putra Kuala Lumpur 59200
BSI Services Malaysia Sdn Bhd RSPO P&C & SCCS Worldwide
Malaysia Phone: +603 9212 9638 Email:
nicholas.cheong@bsigroup.com Website:
bsigroup.com.my
Dayangku Mazrianah Pengiran Mahmuddin,
OFFICE B-3-1, Block B, Pusat Perniagaan
Prima Klang, Jalan Kota/KS 1, Klang,41100,
Control Union Certifications (Malaysia) Sdn. Bhd. RSPO P&C & SCCS Worldwide
Selangor, Malaysia, Email:
dmazrianah@controlunion.com, Website:
controlunion.com
Tammy Coe, Filosoofi 31, Tartu 50108,
Estonia, Phone: +372 7380723, Email:
NEPCon OÜ trading as Preferred by Nature RSPO P&C & SCCS Worldwide
info@preferredbynature.org, Website:
preferredbynature.org

32
  As of now, Indian auditors are not trained to audit as per the ISH 2019 standard that
RSPO will be using for the certification of farmers.
Next Steps:
To have a meeting with Smt. Nirmala garu and Shri. Anil Kishore Devalapally at TSOILFED’s Head
Office, to discuss the budgets associated given commercial proposal given by TransGraph Consulting
for the process of certification.
4.2.5 Interactions Phase-V: Initial Negotiations and Budget discussions between TransGraph
Consulting and TSOILFED
18th November 2020: Interaction with Smt. K Nirmala, IAS, MD, TSOILFED and Shri. Anil Kishore
Devalapally at TSOILFED’s Main Office.
Agenda: To discuss the budgets associated given commercial proposal given by TransGraph
Consulting for the process of certification.

Attendees: Smt. K Nirmala, Shri. Kamal Prakash Seth, and Nadikuda Ravi Kiran

Summary of the Discussion:

Smt. K Nirmala, Shri. Kamal Prakash Seth has discussed the budget negotiations such as:
 investment costs associated with certification
 funding from other stakeholders such as RSPO/WWF-India
 duration needed to attain RSPO certification
 process/schedule to attain the process certification
 demand for RSPO certified Palm Oil in India
 expected returns and the future of RSPO in India
Next Steps:
Prepared the budget required for TSOILFED to go ahead with the process of certification. To interact
with Shri. Anil Kishore and Shri. Kamal Prakash Seth to understand the extra costs involved in the
training program, distribution of profits, estimated premium and funding to be sponsored by RSPO.
23rd and 24th November 2020: On-call interactions with Shri. Anil Kishore, VP, TransGraph
Consulting and Shri. Kamal Prakash Seth, Country Head, RSPO India.

Agenda: To understand the extra costs involved in the training program, distribution of profits,
estimated premium and funding to be sponsored by RSPO.

Attendees: Shri. Anil Kishore Devalapally, Shri. Kamal Prakash Seth, and Nadikuda Ravi Kiran

Summary of the Discussion:

Shri. Anil Kishore Devalapally, Shri. Kamal Prakash Seth has briefed on the following:

 Extra costs TSOILFED have to incur during the training program such as

33
 o gathering of farmers at a convention hall for the purpose of training
o their logistics to the training spot
o food facilities at the facility
o cost of teaching best management practices
 Procedure to distribute the profits earned from selling RSPO certified palm oil to the
farmers/growers
 Approximate price of premium of Mass Balanced/ Segregated/ Identity Preserved in India
 Direct role of RSPO in this funding and their interest as a direct stakeholder
Next Steps:
From the discussion, we got to know that RSPO has a plan to start a pilot project which includes 100%
funding from RSPO/WWF-India towards Training and Consulting fee. Smt. Nirmala garu has suggested
me to interact with RSPO/WWF-India for the inclusion Of TSOILFED in their Pilot Project.

4.2.6 Interactions Phase-VI: Final Negotiations with RSPO/WWF-India/TransGraph

Consulting, and Future Steps for TSOILFED
4th December 2020: Virtual Meeting: Pilot project discussion between TSOILFED / RSPO / WWF-
India For The Inclusion Of TSOILFED

Agenda: Inclusion Of TSOILFED in their Pilot Project sponsored by RSPO/WWF-India.

Attendees:

 Shri Kamal Prakash Seth, Country Head - India, RSPO

 Shri Narendra Mohan, Manager - Forestry Commodities (Sustainable Business), WWF-India
 Shri Ashwin Selvaraj, Head of Smallholder Programme, RSPO
 Nadikuda Ravi Kiran, NCDC Intern, IIM-Lucknow, on behalf of TSOILFED(under the
guidance/accountable by Smt. K Nirmala, MD, TSOILFED)
Duration of Meeting: 60 minutes

Summary of the Discussions:

Shri Kamal Prakash Seth and Shri Narendra Mohan, has assured the following:

 The Roundtable on Sustainable Palm Oil(RSPO) and WWF-India(World Wide Fund - India),
agreed to give assurance for the inclusion of TSOILFED in their phase two of the pilot project,
which most probably starts from July 2021.
 RSPO/WWF-India has proposed some approaches for TSOILFED to be a part of RSPO
Certification before the start of phase two of pilot project in July 2021. These approaches are
suggested for initiating RSPO’s certification from January 2021.
o Approach-1: Through TransGraph Consultancy

34
 o Approach-2: RSPO's Training Academy
o Approach-3: Funding from RSPO/WWF-India

Next Steps:

 To handover the project to TSOILFED for the execution of the assured pilot project with
RSPO/WWF-India.

35
5. PROPOSED BUSINESS MODEL
5.1 Proposed Business Model-I: Inclusion of TSOILFED in their Phase Two of the Pilot
Project
The Roundtable on Sustainable Palm Oil(RSPO) and WWF-India(World Wide Fund - India), agreed to
give assurance for the inclusion of TSOILFED in their phase two of the pilot project, which most
probably starts from July 2021. The following covers a few facets of this project:
 RSPO and WWF-India will sponsor 100% of the Training Cost and Consultation Fee.
The program includes:
1. Secondary research on RSPO standards
2. Initial discussion with mill officials
3. An initial field study with Extension Officer - for gap analysis and for firming up
villages
4. Gap analysis report
5. Training manuals preparation and training program finalization
6. Training of extension officers
7. Consulting/Training team training in villages and farmers to impart the practical
experience of certification
8. Work on group certification - meetings with senior management and executioners of
group certification
9. Extension Officers to cover all the villages and farmers individually
10. Monitoring by Consulting/Training project team
11. Pre-certification audits by the RSPO team
12. Final Report
 Project's Worth: The same project to certify 4000 farmers of Radhika Mills and Nava Bharath
in the Andhra Project is currently in progress. The cost of the total project sponsored/funded by
RSPO and WWF-India is around 40 lakhs. The phase two pilot project will be on the same
scale.
 TSOILFED’s Expectations: TSOILFED can expect around 2000(approx. estimate) of their
farmers to get certified by the end of Year-1(July-22) of the project. This can be achieved
through training of around 40-50 Extension Officers of TSOILFED by RSPO/Consulting firm.
This model is called the "Training the Trainers Model".
 The certification planned to achieve during this process is Milestone-B of RSPO certification,
which is of the highest kind and will yield the highest amount of premium.

36
5.2 Proposed Business Model-II: Approaches Suggested for Initiating RSPO’s
Certification from January 2021
RSPO/WWF-India has proposed some approaches for TSOILFED to be a part of RSPO Certification
before the start of phase two of pilot project in July 2021. These approaches are suggested for initiating
RSPO’s certification from January 2021.
 Approach-1: Through TransGraph Consultancy
o To ask TransGraph Consultancy to include TSOILFED's 10 Extension Officers to be a
part of RSPO's phase one of their pilot project, which will commence the training of
the Extension Officers of Radhika Mills and Nava Bharath in the Andhra Project in
January 2021. Commercial and implementation feasibility will be between TSOILFED
and TransGraph Consulting.
 Approach-2: RSPO's Training Academy
o RSPO will provide training on RSPO standards through the RSPO Trainers Academy.
It’ll be a week classroom of classroom training for the extension officers. It won’t cover
gap study, field research, and any handholding procedures.
o As there is a problem with international travel, RSPO can arrange for this training the
in last months of first half of 2021. (most probably between April-2021 and June-2021)
 Approach-3: Funding from RSPO/WWF-India
o There is a limited possibility of funding to be provided by RSPO/WWF-India i.e.,
consulting/training fee. This is a complicated process and depends on the donors of
either organization and the approval process for funds takes great deal of time.

37
6. DETAILED STEPS IN PROJECT EXECUTION IRRESPECIVE OF BUSINESS
MODEL
Once the business model is decided, the following describes the detailed steps on how the process of
RSPO certification can be executed.

6.1 Place Work

In the districts of Telangana state with the selected list of progressive farmers/growers.

6.2 Scope of Work

The larger objective of certifying all the palm oil producers under TSOILFED but it can be achieved in
a phase wise manner, beginning with certification of selected list of farmers. Before the final
certification process, it is important to ensure that the farmers are ready for certification. Accordingly
the scope of work under this project is:

6.2.1 Objective of the project

To prepare the selected list of progressive farmers/growers to be eligible for certification as per RSPO
ISH Standards.

6.2.2 Scope of Work

 Gap analysis of selected Oil Palm small holders with respect to ISH standards of RSPO
 Classifying farmers into 3 categories – who would be meeting requirements either under :
o Base line Certification
o 50% certification or
o 100% certification
 Target to identify & prepare farmers/growers who are close to 100% certification after the
discussion with Mill officials & extension officers
 Training the farmers through extension officers of mills, with an objective of fulfilling the gaps
and make the farmers certification-ready
 Invite RSPO to conduct pre-audits towards the end of the project

6.2.3 A Phased Approach to Attain RSPO Certification

The development of the overall process of the RSPO Certification has been guided by the need to strike
a balance between promoting greater inclusion of smallholders and ensuring that core sustainability
requirements are upheld.

The Principles, Criteria and Indicators (PCI) of the RSPO Certification are comprised of
four principles, 23 criteria, and 58 indicators organised along the RSPO Impact areas:

People, Prosperity, and Planet.

The Principles and Criteria are discussed below:

38
Principle 1: Optimise productivity, efficiency, positive impacts and resilience

Criteria:

1. Smallholders establish a legal entity that has the organisational capacity to comply with the
RSPO ISH Standard.
2. Smallholders have capacity to effectively manage their farm.
3. Smallholders implement good agricultural practices (GAP) on their farms.

Principle 2: Ensure legality, respect for land rights and community wellbeing

Criteria:

1. Smallholders have legal or customary rights to use the land in accordance with national and
local laws and customary practices.
2. Smallholders have not acquired lands from indigenous peoples, local communities or other
users without their free, prior and informed consent, based on a simplified FPIC approach.
3. The right to use the land is not disputed by indigenous peoples, local communities or other
users.
4. Smallholder plots are located outside of areas classified as national parks or protected areas, as
defined by national, regional or local law or as specified in National Interpretations.
5. For new plantings, smallholders do not clear or acquire any land without obtaining the free,
prior and informed consent (FPIC), of local communities and indigenous people, based on a
simplified FPIC approach.
 Do any smallholders within the group have plans for new plantings of oil palm? If
none, SKIP

Principle 3: Respect human rights, including workers’ rights and

Criteria:

1. There is no use of forced labour.

2. Children are not employed or exploited. Work by children is acceptable on family farms, under
adult supervision and when not interfering with education programmes. Children are not
exposed to hazardous working conditions.
3. "Workers’ pay complies with minimum legal requirements, mandatory industry standards as
defined by national law or collective bargaining, whichever takes priority in local regulations.
Are there workers on the farm? If no, SKIP "
4. Workers understand their rights and freedom to file a complaint to group manager or relevant
third parties, including RSPO.
Are there workers on the farm? If no, SKIP

39
 5. Working conditions and facilities are safe and meet minimum legal requirements.
6. There is no discrimination, harassment, or abuse on the farm
Are there workers on the farm? If no, SKIP

Principle 4: Protect, conserve and enhance ecosystems and the Environment

Criteria:

1. High Conservation Values (HCVs) on the smallholder plot or within the managed area and
High Carbon Stock (HCS) forests identified after November 2019 using the simplified
combined HCV-HCS approach are managed to ensure that they are maintained and/or
enhanced.
2. Where the existing smallholder plot has been planted and cleared after November 2005 or is on
an area identified as HCS forests after November 2019 up to the eligibility period, a remediation
and compensation process appropriate for smallholders based on Land Use Change Analysis
(LUCA) will be applicable (Reference preamble).
3. New plantings of independent smallholders, since November 2019:
• Do not replace any HCVs
• Do not replace any HCS forests as defined by the simplified combined HCV-HCS
approach
• Are not on steep slopes (more than 25 degrees or as in NI)
• Are not on peat areas of any depth.

Do any smallholders within the group have plans for new plantings of oil palm? If none,
SKIP

4. Where smallholder plots exist on peat, subsidence and degradation of peat soils is minimised
by use of best management practices.
• Do any smallholders within the group have existing plots on peat? If no, SKIP
5. Plots on peat are replanted only on areas with low risk of flooding, saline intrusion as
demonstrated by a risk assessment.
• Do any smallholders within the group have plans for replanting plots that are located
on peat? If no, SKIP
6. Fire is not used on the oil palm plot for preparing land or for pest control, nor open fire for
waste management on the farm.
7. Riparian buffer zones are identified and managed to ensure they are maintained and/or
enhanced.
8. Pesticides are used in ways that do not endanger health of workers, family, communities or the
environment.

40
 9. The group and smallholders manage pests, diseases, weeds and invasive introduced species
using appropriate techniques, including but not limited to Integrated Pest Management (IPM)
techniques.

Role of each standard element:

The certification system for the RSPO ISH Standard consists of three phases; Eligibility, Milestone
A and Milestone B, where each phase has its own requirements for assessing compliance, claims that
the smallholder can make, as well as benefits for the smallholder.

At each phase, compliance of the group is assessed through a field based audit by an accredited
Certification Body. The accredited body has a checklist of the above principles, criteria and their
respective indicators according to the conditions of that respective country. Indicators for the ISH
Standard are cumulative - it is a requirement to meet all of the Eligibility indicators to comply at
the first stage. At Milestone A, smallholders are required to comply fully to both Eligibility and
Milestone A indicators. Finally, 100% of Eligibility, Milestone A and Milestone B indicators must
be met for compliance at Milestone B.

Phase 1: Eligibility

Eligibility is the entry level for the RSPO ISH Standard. At this stage, the smallholder group has to
demonstrate compliance to the eligibility indicators during a field based audit by an accredited
Certification Body. All individual members of the group have to meet all eligibility indicators.

Phase 2: Milestone A

In the second phase, the smallholder group need to demonstrate continual improvement and progress to
meet 100% of the Milestone A indicators, while also maintaining compliane with 100% of the
Eligibility indicators. Similar to the first phase, an accredited Certification Body has to conduct a field-

41
based audit. Groups must be able to demonstrate that the Milestone A indicators are met within a
maximum of two years from certification at Eligibility phase.

Phase 3: Milestone B

The smallholder group are expected to achieve full compliance during the third and final phase, which
is the Milestone B phase. A field-based audit of the group is conducted by an Certification Body. All
the individual members have to meet 100% of the Milestone B indicators, and also maintain compliance
with 100% of the Eligibility indicators and Milestone A indicators.

RSPO adaptability for Telangana State Oil Palm growers:

In Telangana, Oil Palm growers are marginal and small with an average landholding size of around 5
acres. Growers have a very low bargaining power when dealing with the procuring firms, as they don’t
have common voice/ Union/ farmers’ association(FPO) to address their needs.
They are not aware of the Best Management Practices in Oil Palm cultivation and there is a strong need
for educating the growers. The Best Management Practices will in economic incentives such as
premium pricing and farm yield improvements.
Growers are not trained in fertilizer, herbicide and pesticide applications and handling. There is no
standard amounts of herbicides they use at their farms, they generally apply based on their experience
from similar types of crops such as Mango. Based on the preliminary research done by RSPO and
TransGraph consulting, growers use more than global permissible limits of these chemicals resulting in
degradation of their health and safety. The externalities generated are thereby impacting environment.
Impact of RSPO on the life of Small and Marginal Oil Palm growers:
RSPO certification has a particular emphasis on independent smallholders livelihood and focuses on
social, economic and environmental aspects of their development. Many case studies around the world
provides sufficient evidence to conclude that RSPO certification has positive impacts on the social and
economic wellbeing of smallholders, as well as the surrounding environment they live in.
 The main motivations for getting certified were associated with economic incentives such
as premium pricing and farm yield improvements. The certification to bring both parties,
the independent smallholders and the plantation company, to work closely together. The
company provides complimentary extension services and credit for fertilizer purchase. The
smallholders enjoy significant reduction in the cost of fertilizer because the company helps
them to organize bulk fertilizer purchases.
 There are indications that certified smallholders benefit from higher economic returns
compared to non-certified smallholders. The difference in mean annual household income
for certified smallholders is almost 25% more than their noncertified counterparts.

42
  The certified smallholders are very optimistic about the environmental benefits of RSPO
certification. Post-certification farm practices are more environmentally friendly, with better
waste management and lower amounts of pollution.
 Certified smallholders are better trained in fertilizer, herbicide and pesticide applications
and handling. Proper handling and storage of chemical inputs, apart from optimizing use and
ensuring the health and safety of the farmers, would minimize the externalities generated by its
application to the environment.
 RSPO certification could be a catalyst of improving social wellbeing. RSPO certified
smallholders leads to positive changes in their social wellbeing. This is also largely due to the
commitment to improving social amenities in the local communities, such as access roads, and
healthcare.
 Beyond certification, extension services are paramount. Continuous education and support
will be provided to the smallholders to constantly improve their productivity and to help achieve
maximum benefits of the certification.
6.2.4 Detailed Steps in project
To attain the above discussed RSPO’s Principles and Criteria, the Training firm will follow the
following steps:

1. Secondary research – referring the required documents, viz.,

 RSPO Independent Smallholder Standard, 2019

 Certification Systems Document, 2020
 RSPO Principles & Criteria 2018
 RSPO ‘Free Prior and Informed Consent’ guidance document 2015
 Local & National related laws

Training firm will initially spend one weeks to initiate discussions, do in person visits, seek their
willingness and to check their resources (extension officers). The mill should allocate
resources(extension officers) which depends on the number of farmers selected for certification,
dedicatedly for this project, who would work under the supervision of the dedicated consulting/training
firm assigned by RSPO/WWF-India.

2. Identification of small holders, that will be going for certification:

Steps in firming up the final list of farmers:

2.1. First step would be, ranking of villages, based on (inputs from Mill extension officers)

 Palm oil area in the village (higher acreage – higher ranking)

43
  Responsiveness of farmers in the village for any initiatives (qualitative assessment in
consultation with mills)
 Villages with progressive package of practices (for ex. If any village is practising organic
farming only or any other sustainable practices)
 Growth of Oil Palm acreage over the years (quantitative data) and expected growth
(assessment)
 Proximity to the mill

2.2. Next step would be selection of farmers in the chosen villages on the basis of inputs from the Mill
extension officers. Farmers/Growers will be selected, based on :

 Land holding - A mix of small, medium and large farmers (as per classification in the state of
Telangana State)
 Village leaders – opinion leaders and a group of farmers that follow them
 Since ISH is a phase-wise certification process, with three phases of baseline, 50%(Milestone-
A) and 100%(Milestone-B), Consulting/Training firm assigned by RSPO/WWF-India, will put
efforts to firm up villages and farmers, who are closer to the last stage i.e 100%. While this is
the final objective, the gap analysis will focus on classifying gaps into groups of three, i.e. how
much percentage of the villages (and farmers) are falling into each stage.
 Assessment will be conducted by consulting/training firm assigned by RSPO/WWF-India, as
per the RSPO guidelines.

2.3. Mapping the farmers location

 Obtaining data base from the mill or we will guide extension officers to collect the same from
each farmer ( wherever possible, we will obtain google maps)

3. Gap analysis along with Mill extension officers

 Gap analysis survey will be done though (Focus Group Discussions)FGDs and in total a good
amount/necessary number of FGDs will be conducted covering minimum 10 to 12 farmers in
each FGD.
 All other stake holders will be surveyed for gap analysis on a sampling basis, which includes
mill extension officers, legal experts on palm oil, agronomic experts, researchers and thought
leaders.
 Gap analysis survey will be done along with extension officers though FGD Mode, to assess:
o Assess awareness and responsiveness of farmers towards sustainability
o Identify gaps with respect to compliance of RSPO ISH standards,
o Devise training plan based on the findings

44
 o Representation will be from small, medium and large farmers and with representation
from women farmers
o Preparation and finalization of response sheet for FGD with Mill officials and RSPO
team. Analysis of the collected data & Identifications of the Gaps against the RSPO
ISH.

4. Gap study report to be submitted to TSOILFED

 Gap analysis report, summarising the challenges, opportunities and next phase of action by
Consulting/Training firm assigned by RSPO/WWF-India.

5. Preparation of Training manual and Outreach Plan

 Training manuals will be converted into local language i.e., Telugu

 Modes of Training to be used :
o Power Point Presentations – Where Consulting/Training firm assigned by
RSPO/WWF-India, trains Trainers
o Work sheets – what to observe when they meet groups of farmers and individual
farmers and the checklist
o Brochures – to be distributed to each farmer
o Each brochure to be in local language – Telugu, consisting of what needs to be done
and how in a detailed step wise manner.

6. Training the trainers and group managers

 Training to Mill extension officers and Potential group managers. Detailed training will be
given to mills regarding :
o RSPO ISH certification norms – covering what is RSPO & their standards: Initial
training about RSPO standard -Three training programs at Mill
o How to provide training to small holders – 4 training program at Mill
o Imparting knowledge and how to become a group manager – with senior management
of the mills – 2 discussions at mill
o Imparting practical experience to extension officers of how to train farmers– Practical
field training to extension officers – 5 Training program in 5 villages
o Developing Standard Operating Procedures on steps to be followed by Group
Managers
 Duties of extension officers
o In association with project team of Consulting/Training firm assigned by RSPO/WWF-
India, participate in Gap analysis, understand the RSPO ISH standards and be prepared
for the larger training and enrolment of farmers

45
 o Conduct impactful training to farmers – both in groups and reaching out to each farmer,
so that farmers agree to comply and put to practice RSPO standards
o Collect details of each farmers as per designed formats, which will include among other
attributes, locations of farmers.
o Provide details of each farmer, location, google maps (wherever possible) and
readiness for certification- from the total extension team, we should get details of 60
farmers per week.
 Duties of group managers
o Either a mill will act as a group manager or an entity formed along with farmer leaders
will act as a group manager.
o Responsible for maintaining the internal record (of the practices being followed by
farmers in the group) and managing the group.
o Runs a program to support prospective members achieve certification standards
o There will be formal agreement between the group manager and the members (farmers)
o Develop group marketing system to encash FFB credits, which the certified
Independent small holders are eligible for certification.

7. Monitoring the training programs

 The total training program, led by Consulting/Training firm assigned by RSPO/WWF-India,

and conducted by the extension officers, will reach out to all the selected villages and selected
farmers in those villages
 Consulting/Training firm assigned by RSPO/WWF-India will monitor, review, amend
wherever needed and present progress reports to TSOILFED.

8. Finally , roadmap for next steps ( for actual certification)

 Learning from the project and Developing certification plan

 Roadmap of how to go about certifying the set of farmers
 Roadmap to expand certification to the total area of TSOILFED – whether the same model and
efforts would suffice or would certifying a larger area require a different model?

6.2.5 Team and project structure

The project will be headed by business consulting head of the Consulting/Training firm assigned by
RSPO/WWF-India. TSOILFED will provide the extension officers as per the requirements needed to
cater the number of farmers selected for certification.

46
6.2.6 Project Timelines
RSPO certification is a complex process and approximate time of 3 to 3.5 months are required to train
the extension officers and farmers, and another 6 months to document the activates carried out in the
fields as per RSPO ISH Principles and Criteria.

6.2.7 Auditing to Attain RSPO Certification

 For an Oil Palm mill to be RSPO certified and reap the benefits of selling certified Palm oil
(earning RSPO credits) the Mill need to crush certified FFB obtained from the certified palm
oil growers and the Mill facility also need to obtain RSPO applicable certification. It’s a two-
step process as given below:
First Step: RSPO Certification for Farmers
 RSPO does not certify individual farmers and it is a group certification. The process is as
follows:
1. Farmers need to make a group and will select the group manager who will be responsible
for using the credits earned by the farmers as per the mutual consent of all the group
members.
 A group manager can be someone with a deep understanding of the RSPO system
and willing to spend resources and time to maintain all the records and regularly
submit to RSPO Head Quarters.(TSOILFED’s Extension Officers/RSPO Experts)
2. Farmer will use the standard package & practices of cultivation developed by the RSPO
team and from the experience of other countries, a significant increase in yields of FFB is
expected using the RSPO techniques.

47
 3. There is a complete process and a lot of documentation is required at each stage and the
actual benefits of RSPO certification (RSPO credits) will be given once the farmer will
qualify for the stage 3 certification level (Milestone 3).
4. After all the above is done, the farmers are ready to go for certification then a third-party
audit team approved by RSPO will visit the farmer and fields and conduct the audit process
and award the certification if found everything in order.
 The auditors have a formula of conducting sample audits: which is square root of # of
farmers. In a day they can approximately cover 6 farmers and their audit fee is 400
Euros per day. And their overall cost depends on the # of days of the audit.
5. The process of farmer certification beginning from creating awareness, all training
programs, record preparation, group manager getting fully involved, and finally, the whole
process can take any time from 6 months to 11 months. (depending upon the # of farmers
and extension efforts that we are willing to put forward)
Second Step: How to go for RSPO Certification for the Mills
 This is like a supply chain certification system for the Palm Oil mill. The procedure is as
follows:
1. Applicants must submit an application to the RSPO Secretariat using the online
membership application form at http://www.rspo.org/members/apply.
2. The RSPO Secretariat reviews the application form, documentation, and undertakes
background research about the applicant to confirm the correct membership requirements
(e.g. category, sector, and group membership).
3. Concurrently, the RSPO Secretariat will post the application on the RSPO website for 2
weeks for public comments, and send the membership fee invoice to the applicant for
payment.
4. An application shall be submitted for approval if the public comments' period has been
completed, required documents' received, and the membership fee is fully paid. The Chief
Executive Officer (CEO) of RSPO has the authority to approve the application.
5. If any issues are encountered during the public comments and internal review process, the
RSPO Secretariat will approach the applicant for clarification.
6. Once approved, the RSPO Secretariat will send the Membership Confirmation letter to the
new member and their membership profile will be published on the RSPO website.
7. The membership application process will take approximately 4 weeks to 6 weeks.
 The current RSPO membership cost (for a duration of two years):
o If the mill produces <500MTs then the cost is €100
o If the mill produces more than 500MTs the cost will be €2000

48
7. FUTURE EXPANSIONS
 Formation of Farmer Produced Organizations(FPOs) can be a way to train, monitor, and certify
the group of farmers.
 The certification of farmer groups takes place in a staggered manner i.e.,
o Phase I – Year 1 : 500/2000 Farmers (Business Model 2/1)
o Phase II – Year 2: 2000/5000 Farmers (Business Model 2/1)
o Phase III – Year 3: All the other Farmers(Year 3)

7.1 Phase-I: Certification of Mill and Certification of the Plantations of Existing and the
Most Progressive Farmers with an Estimated Target of 500/2000 Oil Palm Growers
Two Months for

 Hiring/Appointing of Extension Officers by the Group Manager(TSOILFED)

Three/Four Months for

 Training of Extension Officers by Training/Consulting firm and RSPO

 Selecting the most progressive farmers and understanding the GAP in current
practices
Six Months for

 Training of farmers by allocated Extension Officers

 Implementation of these practices by farmers in their plantations.
Two Months for:

 Membership Cost for Mill

 Auditing of the Mill
 Auditing of Plantations
 Audit verification by RSPO

7.2 Phase-II : Certification of the Plantations of Other Farmers in a Staggered

Approach with an Estimated Target 2000/5000 Oil Palm Growers
Six Months for

 Training of farmers by allocated Extension Officers

 Implementation of these practices by farmers in their plantations.
Two Months for:

 Membership Cost for Mill

 Auditing of the Mill
 Auditing of Plantations

49
  Audit verification by RSPO

7.3 Phase-III: Certification of the Plantations of Other Farmers in a Staggered

Approach with an Estimated Target of Certifying All the Oil Palm Growers Associated
with the Federation
Six Months for

 Training of farmers by allocated Extension Officers

 Implementation of these practices by farmers in their plantations.
Two Months for:

 Membership Cost for Mill

 Auditing of the Mill
 Auditing of Plantations
 Audit verification by RSPO

50
8. FINANCIAL ANALYSIS OF THE BUSINESS
8.1 Proposed Business Model-I: Inclusion of TSOILFED in their Phase Two of the Pilot
Project
The Roundtable on Sustainable Palm Oil(RSPO) and WWF-India(World Wide Fund - India), agreed to
give assurance for the inclusion of TSOILFED in their phase two of the pilot project, which most
probably starts from July 2021. The following covers a few facets of this project:
 RSPO and WWF-India will sponsor 100% of the Training Cost and Consultation Fee.
The program includes:
1. Secondary research on RSPO standards
2. Initial discussion with mill officials
3. An initial field study with Extension Officer - for gap analysis and for firming up villages
4. Gap analysis report
5. Training manuals preparation and training program finalization
6. Training of extension officers
7. Consulting/Training team training in villages and farmers to impart the practical experience
of certification
8. Work on group certification - meetings with senior management and executioners of group
certification
9. Extension Officers to cover all the villages and farmers individually
10. Monitoring by Consulting/Training project team
11. Pre-certification audits by the RSPO team
12. Final Report
8.1.1 Objective
To prepare 2000 farmers to be eligible for certification as per RSPO ISH Standards

8.1.2 Extension Cost to be borne by TSOILFED

 The process of farmer certification beginning from creating awareness, all training programs, record
preparation, group manager getting fully involved, and finally, the whole process can take any time
from 6 months to 11 months. (depending upon the number of farmers and extension efforts that we
are willing to put forward)
Cost Calculations:
 Total number of farmers = 2000
 Number of extension officers required = 25
 Estimated number of farmer visits required for training = 4
 Estimated number of farmers covered in a day = 4
 Estimated number of total man-days required = 2000

51
 Cost per man-day = Rs. 25,000/ 25 = Rs. 1000 (Rs. 25000/- is EO estimated monthly salary)
 Travel cost per man-day = Rs. 500

TSOILFED's Extension Cost

Costing Details INR 32,00,000
Total Man-days Required 2050
Total Travel-days Required 2000
Total Cost for Man-days @ INR 1000 per day ₹ 20,50,000.00
Total Cost for Travel-days & INR 500 per day ₹ 10,00,000.00
Miscellaneous Expense @10%, for the Purpose
Maintaining Records, Organizing meetings with farmers
and others ₹ 1,50,000.00
Total Cost ₹ 32,00,000.00

8.1.3 Auditing costs for Farmers and the Mill

Cost of Surveillance Audit

 The auditors have a formula of conducting sample audits: which is square root of # of farmers. In a
day they can approximately cover 6 farmers and their audit fee is 400 Euros per day. And their
overall cost depends on the number of days of the audit.
Number of sample audits: square root(2000) ~ 22 farmers ~ 8 days
Cost for auditing: Number of days * 400 Euros per day = 8 * 400 Euros ~ INR 3,00,000

Auditing for Mill and Farmers

Costing Details INR 6,96,000
Total Number of Farmers 2000
Surveillance Audit for Farmers ₹ 3,00,000.00
Membership Fee for Mill(2000 Euros)
20 November: 1 Euro = INR 88 ₹ 1,76,000.00
Audit Cost for the Mill(2500 Euros)
20 November: 1 Euro = INR 88 ₹ 2,20,000.00
Total Cost ₹ 6,96,000.00

*Audit cost for Mill – Estimate is proposed by TransGraph Consulting Pvt Ltd.

52
8.1.4 Details of the overall cost to be incurred by TSOILFED for RSPO Certification
TSOILFED has to incur a total cost of Rs. 38,96,000 as their extension costs and for the purpose of
auditing of farmers and the mill.

TSOILFED - Budget Required for RSPO Certification

TSOILFED's Extension Cost
Training in villages for Costing Details INR 32,00,000
farmers to impart practical Total Man-days Required 2050
experience
Work on Group Total Travel-days Required 2000
Certification Total Cost for Man-days @ INR 1000 per day ₹ 20,50,000.00
EO to cover all villages and Total Cost for Travel-days & INR 500 per day ₹ 10,00,000.00
farmers Miscellaneous Expense @10%, for the Purpose
Monitoring Maintaining Records, Organizing Meetings with
Documenting farmers and Others ₹ 1,50,000.00
Total Cost ₹ 32,00,000.00
Auditing for Mill and Farmers
Costing Details INR 6,96,000
Total Number of Farmers 2000
Surveillance Audit for Farmers ₹ 3,00,000.00
Auditing Costs Membership Fee for Mill(2000 Euros)
20 November: 1 Euro = INR 88 ₹ 1,76,000.00
Audit Cost for the Mill(2500 Euros)
20 November: 1 Euro = INR 88 ₹ 2,20,000.00
Total Cost ₹ 6,96,000.00
TSOILFED's Total Budget ₹ 38,96,000.00

8.1.5 Calculation of Premium on the Production of Certified CPO

Estimation of the Total Certified CPO to be Produced

Total Certified CPO Produced

Number of Farmers 2000
Average Landholding per Farmer (acre) 5
Total Landholdings under Certification(acre) 10000
Average FFB Yield Per Acre (ton) 12
Total FFB Produced/Processed(ton) 120000
Oil Extraction Rate(OER) 18.50%
Total Certified CPO Produced(ton) 22200

53
8.1.6 Returns Vs Premium
For RSPO certified oil, premium/credits of $5-25$ (approximately INR of ~Rs. 370 to ~Rs. 1860) per
ton the mill would obtain by selling RSPO certified palm oil. As of today, the actual premium is 10
dollars, that too for Mass Balance.(can get max. of $25 for 100% certified palm oil, which termed as
“Identity Preserved”)

Returns on Certified CPO Produced

Expected Premium
Premium($) $ 5.00 $ 10.00 $ 15.00 $ 20.00
Premium(INR)
20 November:
1$=INR 75 ₹ 375.00 ₹ 750.00 ₹ 1,125.00 ₹ 1,500.00
Returns for
Total Certified
CPO of
22200 tons ₹ 83,25,000.00 ₹ 1,66,50,000.00 ₹ 2,49,75,000.00 ₹ 3,33,00,000.00

8.1.7 Cost-Benefit Analysis

Once certified, TSOILFED can generate a profit of Rs. 1,27,54,000(One Crore Twenty Seven
Lakhs) at the end of phase two of RSPO/WWF-India sponsored pilot project.

Cost Benefit Analysis for RSPO Certification

Expected Premium
Premium($) $ 5.00 $ 10.00 $ 15.00 $ 20.00
Premium(INR)
20 November:
1$=INR 75 ₹ 375.00 ₹ 750.00 ₹ 1,125.00 ₹ 1,500.00
Returns for
Total Certified
CPO of
22200 tons ₹ 83,25,000.00 ₹ 1,66,50,000.00 ₹ 2,49,75,000.00 ₹ 3,33,00,000.00
Costs Incurred
(TSOILFED's
Budget) ₹ 38,96,000.00 ₹ 38,96,000.00 ₹ 38,96,000.00 ₹ 38,96,000.00

Estimated Profit ₹ 44,29,000.00 ₹ 1,27,54,000.00 ₹ 2,10,79,000.00 ₹ 2,94,04,000.00

8.1.8 Future Projections

When we project the execution of RSPO certification to all the existing Oil Palm growers in the
federation for a period of next 10 years, TSOILFED can generate a profits of more than Fifty Crores
Rupees after all the deduction of investments and incurred costs. The below table shows the
projections for the same.

54
 OILFED's Audit Audit
Number # of Membership
Year Cost of Training Extension Cost for Cost for Total Costs Returns Profits
of Mills Cost for Mill
Costs Farmers Mills
Farmers
Year 1 2,000 RSPO/WWF- India 32,00,000 3,00,000 1 2,00,000 2,20,000 39,20,000 83,25,000 44,05,000
Year 2 5,000 - 48,00,000 4,20,000 2 2,00,000 4,40,000 58,60,000 2,08,12,500 1,49,52,500
Year 3 8,000 - 48,00,000 5,30,000 2 - 4,40,000 57,70,000 3,33,00,000 2,75,30,000
Year 4 10,000 - 15,00,000 5,90,000 2 - 4,40,000 25,30,000 4,16,25,000 3,90,95,000
Year 5 12,000 - 15,00,000 6,50,000 3 2,00,000 6,60,000 30,10,000 4,99,50,000 4,69,40,000
Year 6 14,000 - 15,00,000 7,00,000 3 2,00,000 6,60,000 30,60,000 5,82,75,000 5,52,15,000
Year 7 16,000 - 15,00,000 7,50,000 4 4,00,000 8,80,000 35,30,000 6,66,00,000 6,30,70,000
Year 8 18,000 - 15,00,000 7,90,000 4 - 8,80,000 31,70,000 7,49,25,000 7,17,55,000
Year 9 20,000 - 15,00,000 8,30,000 5 2,00,000 11,00,000 36,30,000 8,32,50,000 7,96,20,000
Year 10 22,000 - 15,00,000 8,80,000 5 2,00,000 11,00,000 36,80,000 9,15,75,000 8,78,95,000
Total 3,81,60,000 52,86,37,500 49,04,77,500

Assumptions:

 Cost of training is sponsored by RSPO/WWF-India. Once the training in the first year is
completed, TSOILFED’s extension officers can train the other officers in subsequent years.
 TSOILFED’s extension costs are based on the number of farmers to be executed that particular
year.
 Surveillance Audit cost: The auditors have a formula of conducting sample audits: which is
square root of number of farmers. For example, in a day they can approximately cover 6 farmers
and their audit fee is 400 Euros per day. And their overall cost depends on the number of days of
the audit.
 Membership Fee for Mill is 2000 Euros and it expires every 5 years.
 Audit Cost for the Mill will be around 2500 Euros and it has to be audited every year.
 As we already know, CM K Chandrashekhar Rao suggested increasing Oil Palm cultivation to
8.14 lakh acres in the State. And in coming years, TSOILFED is expecting an area expansion of
around 4000 Ha every year i.e., inclusion of around 2000 new Oil Palm growers every year.

55
8.2 Proposed Business Model-II: Approaches Suggested for Initiating RSPO’s
Certification from January 2021
The most probable approach out of the thee suggested is to prepare 500 farmers to be eligible for
certification as per RSPO ISH Standards through TransGraph Consulting Private Limited.

8.2.1 Objective
To prepare 500 farmers to be eligible for certification as per RSPO ISH Standards

8.2.2 Commercial quote given by TransGraph Consulting

The following is the commercial proposal given by TransGraph Consulting to take up the following
activities to make the farmers/growers and the mill eligible for RSPO certification.

1. Secondary research on RSPO standards

2. Initial discussion with mill officials
3. An initial field study with Extension Officer - for gap analysis and for firming up villages
4. Gap analysis report
5. Training manuals preparation and training program finalization
6. Training of extension officers
7. Consulting/Training team training in villages and farmers to impart the practical experience of
certification
8. Work on group certification - meetings with senior management and executioners of group
certification
9. Extension Officers to cover all the villages and farmers individually
10. Monitoring by Consulting/Training project team
11. Pre-certification audits by the RSPO team
12. Final Report

Quote by TransGraph Consultation

Costing Details INR 6,30,000
Total Man-days Required (days) 90
Total Travel-days Required (days) 80
Total Cost for Man-days @ INR 4000 per day ₹ 3,60,000.00
Total Cost for Travel-days & INR 3000 per day ₹ 2,40,000.00
Material Costs: Cost of printing 1000 brochures, Conversion of
₹ 30,000.00
standards into local language, and other miscellaneous expenses
Total cost ₹ 6,30,000.00
8.2.3 Extension Cost to be borne by TSOILFED
 The process of farmer certification beginning from creating awareness, all training programs, record
preparation, group manager getting fully involved, and finally, the whole process can take any time

56
 from 6 months to 11 months. (depending upon the # of farmers and extension efforts that we are
willing to put forward)
Cost Calculations:
 Total number of farmers = 500
 Number of extension officers required = 5
 Estimated number of farmer visits required for training = 4
 Estimated number of farmers covered in a day = 4
 Estimated number of total man-days required = 500
 Cost per man-day = Rs. 25,000/ 25 = Rs. 1000 (Rs. 25000/- is EO estimated monthly salary)
 Travel cost per man-day = Rs. 500

TSOILFED's Extension Cost

Costing Details INR 8,80,000
Total Man-days Required 550
Total Travel-days Required 500
Total Cost for Man-days @ INR 1000 per day ₹ 5,50,000.00
Total Cost for Travel-days & INR 500 per day ₹ 2,50,000.00
Miscellaneous Expense @10%, for the Purpose
Maintaining Records, Organizing meetings with farmers
and others ₹ 80,000.00
Total Cost ₹ 8,80,000.00

8.2.4 Auditing costs for Farmers and the Mill

Cost of Surveillance Audit

 The auditors have a formula of conducting sample audits: which is square root of # of farmers. In a
day they can approximately cover 6 farmers and their audit fee is 400 Euros per day. And their
overall cost depends on the # of days of the audit.
Number of sample audits: square root(500) ~ 22 farmers ~ 4 days
Cost for auditing: Number of days * 400 Euros per day = 4 * 400 Euros ~ INR 1,50,000

Auditing for Mill and Farmers

Costing Details INR 5,46,000
Total Number of Farmers 500
Surveillance Audit for Farmers ₹ 1,50,000.00
Membership Fee for Mill(2000 Euros)
20 November: 1 Euro = INR 88 ₹ 1,76,000.00
Audit Cost for the Mill(2500 Euros)
20 November: 1 Euro = INR 88 ₹ 2,20,000.00
Total Cost ₹ 5,46,000.00

57
*Audit cost for Mill – Estimate is proposed by TransGraph Consulting Pvt Ltd.

8.2.5 Details of the overall cost to be incurred by TSOILFED for RSPO Certification
TSOILFED has to incur a total cost of Rs. 20,56,000 as their extension costs and for the purpose of
auditing of farmers and the mill.

TSOILFED - Budget Required for RSPO Certification

Includes Quote by TransGraph Consultation
Costing Details INR 6,30,000
Total Man-days Required (days) 90
Secondary Study Total Travel-days Required (days) 80
Field Study with Extension Total Cost for Man-days @ INR 4000 per day ₹ 3,60,000.00
Officers Total Cost for Travel-days & INR 3000 per day ₹ 2,40,000.00
Gap Analysis
Training of EO Material Costs: Cost of printing 1000 brochures,
Conversion of standards into local language, and ₹ 30,000.00
other miscellaneous expenses
Total cost ₹ 6,30,000.00
TSOILFED's Extension Cost
Training in villages for Costing Details INR 8,80,000
farmers to impart practical Total Man-days Required 550
experience
Work on Group Total Travel-days Required 500
Certification Total Cost for Man-days @ INR 1000 per day ₹ 5,50,000.00
EO to cover all villages and Total Cost for Travel-days & INR 500 per day ₹ 2,50,000.00
farmers Miscellaneous Expense @10%, for the Purpose
Monitoring Maintaining Records, Organizing Meetings with
Documenting farmers and Others ₹ 80,000.00
Total Cost ₹ 8,80,000.00
Auditing for Mill and Farmers
Costing Details INR 5,46,000
Total Number of Farmers 500
Surveillance Audit for Farmers ₹ 1,50,000.00
Auditing Costs Membership Fee for Mill(2000 Euros)
20 November: 1 Euro = INR 88 ₹ 1,76,000.00
Audit Cost for the Mill(2500 Euros)
20 November: 1 Euro = INR 88 ₹ 2,20,000.00
Total Cost ₹ 5,46,000.00
TSOILFED's Total Budget ₹ 20,56,000.00

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8.2.6 Calculation of Premium on the Production of Certified CPO
Estimation of the Total Certified CPO to be Produced:

Total Certified CPO Produced

Number of Farmers 500
Average Landholding per Farmer (acre) 5
Total Landholdings under Certification(acre) 2500
Average FFB Yield Per Acre (ton) 12
Total FFB Produced/Processed(ton) 30000
Oil Extraction Rate(OER) 18.50%
Total Certified CPO Produced(ton) 5550

8.2.7 Returns Vs Premium

For RSPO certified oil, premium/credits of $5-25$ (approximately INR of ~Rs. 370 to ~Rs. 1860) per
ton the mill would obtain by selling RSPO certified palm oil. As of today, the actual premium is 10
dollars, that too for Mass Balance.(can get max. of $25 for 100% certified palm oil, which termed as
“Identity Preserved”)

Returns on Certified CPO Produced

Expected Premium
Premium($) $ 5.00 $ 10.00 $ 15.00 $ 20.00
Premium(INR)
20 November:
1$=INR 75 ₹ 375.00 ₹ 750.00 ₹ 1,125.00 ₹ 1,500.00
Returns for
Total Certified
CPO of
5550 tons ₹ 20,81,250.00 ₹ 41,62,500.00 ₹ 62,43,750.00 ₹ 83,25,000.00

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8.2.8 Cost-Benefit Analysis
Once certified, TSOILFED can generate a profit of Rs. 21,06,500 (Twenty One Lakhs) at the end of
pilot project with TransGraph Consulting.

Cost Benefit Analysis for RSPO Certification

Expected Premium
Premium($) $ 5.00 $ 10.00 $ 15.00 $ 20.00
Premium(INR)
20 November:
1$=INR 75 ₹ 375.00 ₹ 750.00 ₹ 1,125.00 ₹ 1,500.00
Returns for
Total Certified
CPO of
5550 tons ₹ 20,81,250.00 ₹ 41,62,500.00 ₹ 62,43,750.00 ₹ 83,25,000.00
Costs Incurred
(TSOILFED's
Budget) ₹ 20,56,000.00 ₹ 20,56,000.00 ₹ 20,56,000.00 ₹ 20,56,000.00
Estimated Profit
(With Extension
Costs) ₹ 25,250.00 ₹ 21,06,500.00 ₹ 41,87,750.00 ₹ 62,69,000.00
Estimated Profit
(Without Extension
Costs) ₹ 9,05,250.00 ₹ 29,86,500.00 ₹ 50,67,750.00 ₹ 71,49,000.00

8.2.9 Future Projections

After the certification of 500 farmers is completed, TSOILFED can join the phase two of “The
Roundtable on Sustainable Palm Oil(RSPO) and WWF-India(World Wide Fund – India” the
pilot project, which most probably starts from July 2021. This has been already mentioned above as
Proposed Bu0siness Model – I and the financials are already discussed in this report.

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9. CHALLENGES AND LIMITATIONS

 The study approximates the number of farmers that will get associated with this initiatives. Actual
results will depend upon real time data.
 The study insights are based on the estimate of an extrapolated sample of surveyed
farmers/growers. There is a lack of reliable and concrete primary survey from the field.
 The projections are based on the data received from the discussions with RSPO and TransGraph
Consulting. They are an extrapolation of the commercial proposals given by TransGraph
Consulting.
 The major effort is in terms of training. Since this is a new exercise, the training needs can vary
significantly and the efforts can be huge.
 Training cost depends on the extent of extension that we need to put in. This is little subjective.
 From the mill side, the extension cost is a sunk cost. RSPO certification training is best done
along with the existing work, rather than appointing additional extension officers for the purpose.
Farmers will listen better from those extension managers who regularly visit them.
 The proposed business model is subjected to actual funds received from the RSPO and WWF-India
 The study was limited by resources in terms of manhours and finances

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10. RECOMMENDATIONS
10.1 For TSOILFED
1. I would suggest TSOILFED to go with ahead with the phase two of the pilot project, which
starts from July 2021, where RSPO and WWF-India will sponsor 100% of the Training Cost
and Consultation Fee for the certification of around 2000+ Oil Palm growers within a year.
2. And, to avail the benefit of RSPO's Training Academy where RSPO will provide training
on RSPO standards. It’ll be a week classroom of classroom training for the extension officers.
It won’t cover gap study, field research, and any handholding procedures. As there is a
problem with international travel, RSPO can arrange for this training the in last months of
first half of 2021. (most probably between April-2021 and June-2021). This will make
TSOILFED executives and employees familiar with the principles and standards of
RSPO certification.

10.2 For NCDC

RSPO is currently working with TransGraph Consultancy to train the extension officers and these
extension officers intern train the farmers. This process is currently happening with Nava Bharath and
Radhika Mills in Andhra Pradesh. RSPO wants to cover all the mills in the next 0 to 5 years i.e., to
bring all the 50,000 – 60,000 farmers across the country under its certification.

I would suggest NCDC to be the entity to get associated with RSPO to help Oil Palm growers,
producers and every stakeholder in the supply chain to get RSPO certified.

The RSPO certification can aid NCDC to expand its scope of doing greater good for the county, such
as:

 To address the sustainability challenges in palm oil expansion such as of land conversion, forest
loss and habitat destruction.
 For RSPO certification, farmers have to form FPOs. NCDC can include these FPOs as a part
of setting up and promotion of 10,000 FPOs in the country by 2023-24.
 To support Chief Minister K Chandrashekhar Rao plan of increasing Oil Palm cultivation to
8.14 lakh acres in the Telangana State.

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11. ANNEXURES
Annexure-I: Copy of the Official Project Onboarding Letter

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Annexure-II: Abbreviations
AAK KAMANI - AAK, formerly AarhusKarlshamn, is a Swedish-Danish company

AP – Andhra Pradesh

APOILFED – Andhra Pradesh Cooperative Oilseeds Growers’ Federation Limited

BC – Backward Classes

EO – Extension Officer

FFB – Fresh Fruit Bunch

FPO – Farmer Producer Organization

HUL - Hindustan Unilever Limited

IAS - Indian Administrative Service

ICDS - Integrated Child Development Services

MGNREGA - Mahatma Gandhi National Rural Employment Guarantee Act

MMT – Million Metric Tons

MTD - Metric Tonnes Per Day

MTs – Metric Tonnes

NCDC - National Cooperative Development Corporation

NDDB - National Dairy Development Board

NSFM (OP) - National Food Security Mission (Oil Palm)

OER – Oil Extraction Rate

OPD – Oil Palm Development

PDS – Public Distribution System

P&G - Procter & Gamble

RB - Reckitt Benckiser

RSPO - Roundtable on Sustainable Palm Oil

SC – Scheduled Caste

SIP - SAHKAR MITRA Scheme on Internship Program

ST - Scheduled Tribe

TS – Telangana State

TSOILFED - Telangana State Cooperative Oilseeds Growers’ Federation Limited

WWF-India - World Wide Fund for Nature-India

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Annexure-III: Contact Details of All the Involved Stakeholders
NCDC:

Mentor: Smt. K. Thejovathy, Regional Director, NCDC Hyderabad, Contact: 9701452909

TSOILED:

Cooperative Head: Smt. K. Nirmala, IAS, Managing Director, Contact: 9000039401

Supporting Stakeholders:

 Shri. Sudhakar Reddy, General Manager, Contact: 9849913126

 Shri. B. Rajshekher Reddy, Retired OPD Manager, Contact: 9849913095

RSPO:

Stakeholder: Shri. Kamal Prakash Seth, Country Head, RSPO India, Contact: 8800715553

TransGraph Consulting Private Limited:

Stakeholder: Shri. Anil Kishore Devalapally, Vice President, Contact: 9701777641

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Annexure-IV: Photographs during Project Visits
The following are the pictures during my visit to Khammam, Mancherial districts.

The following are the photographs of my visit to Vijaya Oil Packing Station, Hyderabad.

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The following photographs are taken from the visits to the Oil Palm plantations of Shri. Balka
Suman, Member of Legislative Assembly (MLA) member in December 2018 elections at
CHENNUR (SC) Constituency.

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12. REFERENCES
 What is Oil Palm – Oil Palm India Ltd. (n.d.). Oilpalmindia. http://oilpalmindia.com/what-is-
oil-palm/
 National Cooperative Development Corporation - NCDC. (n.d.). NCDC.
https://www.ncdc.in/index.jsp
 NSFM-Oil Palm - Horticulture Department, Telangana State (n.d.). horticulture
http://horticulture.tg.nic.in/OilPalm/Downloads/NFSMOilPalmImpGuidelines.pdf
 :: Andhra Pradesh Co-Operative Oil Seeds Grower’s Federation Limited :: (n.d.).
APOILFED. http://www.apoilfed.com/
 Telangana State Cooperative Oilseeds Growers Federation Ltd.About Us | Telangana State
Cooperative Oilseeds Growers Federation Ltd. (n.d.). TSOILFED. http://tsoilfed.com/
 THE TELANGANA OIL PALM (REGULATION OF PRODUCTION AND PROCESSING)
ACT, 1993 (n.d.). indiacode
https://www.indiacode.nic.in/bitstream/123456789/8084/1/act_3_of_1993.pdf
 RSPO Smallholders (n.d.). RSPO. https://rspo.org/smallholders
 Welcome to WWF-India. (n.d.). WWF India. https://www.wwfindia.org/
 About Us l Commodity Price Risk Management Solutions- TransGraph. (n.d.). TransGraph.
https://www.transgraph.com/AboutUs.aspx

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