Business News of 2014-01-31

The sorry state of oil-palm growers

Large-scale oil palm growers in the country have threatened to abandon their farms for the cultivation of rubber and other cash crops if government does not end its neglect of the industry.

Growers complain of lacking financial support from government and banks, lack of appropriate pricing for their commodity, no input subsidies or state-sponsored extension services -- all of which combine to deprive them of a decent livelihood from the crop.

“In the oil palm sector, farmers experience very little help from government. There are no extension officers to provide training to any farmer. Nobody tells us what to grow, how to farm, how to get higher productivity or learn new farming and agronomic techniques. We are left alone in the business, unlike farmers of cash crops such as cocoa and rubber,” said Kwame Adentwi, an oil palm farmer in Abekwasi in the Western Region, in an interview with the B&FT.

“If this continues we will convert our farms into the cultivation of rubber, which is more lucrative and can earn us decent livelihoods.”

Oil palm is the fifth-largest crop in Ghana in terms of area planted after cocoa, maize, cassava and yam. Approximately 305,758 hectares of plantation is being cultivated nationwide, with an additional 20,000 hectares needed to meet local demand.

In 2012, oil palm processing groups projected a production output of 260,000 metric tonnes, and a deficit of 35,000 metric tonnes that is met by imports.

More than 80 percent of the crop is grown by private small-scale farmers who mostly use unimproved planting materials, leading to the very low productivity of farms.

Oil palm from Ghana is exported mainly to neighbouring ECOWAS countries and the EU on a small scale. Edible oil palm and palm-based products are also imported into the country in significant quantities.

“We are being cheated always by the big companies who buy the produce from us. There is no regulatory body to speak for us like the cocoa sector. We need financial support in the form of loans for farm maintenance, fertilisers and planting materials,” Mr. Adentwi said.

He spoke to the B&FT during a training programme organised by Solidaridad, a global investor in sustainable agricultural supply chains, to educate oil palm farmers on new farming techniques to increase productivity and profitability.

The programme, the “Sustainable West Africa Palm Oil Project”, assembled oil palm farmers and millers at Twifo Praso in the Western Region.

Three years ago, the government published an oil palm master-plan that set out a strategy to boost production and farmers’ competitiveness, but growers say the words have not been followed by actions.

Current forecasts suggest the ECOWAS market faces an unmet demand of up to one million metric tonnes of the crop.

In Africa, where production was 1.75million metric tonnes in 2009, Nigeria accounts for about half of the output; followed by Côte d’Ivoire with 16 percent; Cameroon and DRC with 10 percent each; and Ghana accounting for 6 percent. Côte d’Ivoire is the only net-exporter of the crop in the region.

Ghana’s first international commercial trade in oil palm took place in 1820. Starting from wild harvesting, oil palm evolved into an agricultural crop and plantations were established by 1850.

In the 1880s, the crop accounted for 75 percent of export revenue until it was overtaken by cocoa in 1911. Global production of oil palm is estimated by the United States Department of Agriculture at 50.28 million metric tonnes in the crop-year ending September 2011. Africa’s share has dropped from about 27 percent in 1980 to 3 percent in 2011.

Indonesia and Malaysia are the top-two growers, accounting for 85 percent of world production.

Source: B&FT
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