Oil Palm

Oil Palm is Papua New Guinea’s leading and most successful agricultural crop, generating around 40% of agricultural export earnings and providing direct income for over 160 000 rural households.  In 2008, the oil palm export revenues exceeded the K1 billion mark, and this trend has remained since. Future trends for the industry in PNG look very promising and even bigger and better outcomes are being forecasted.

Currently, the Oil Palm Industry Corporation’s (OPIC) participation along the value chain commences when it engages with landowners, both customary and state lease holders to allocate land for oil palm development. At the Fresh Fruit Bunch (FFB) processing, waste management, product storage, transportation and marketing stages; OPIC’s role is minimal and limited to information dissemination and some advisory duties.

However, due to the nature of its duties and responsibilities, OPIC needs to be well informed about what happens beyond the sale of FFB to the mills, type of customer it is serving and the overall industry characteristics. Understanding these key issues are fundamental towards an improved service delivery to the smallholder or village farmers who are their primary clients.

According to Tim Anderson in 2006, “there are limited economic possibilities for small farmers; imposed by their weak market position in a long export industry value chain, and by their weak market relationship with a large price-fixing mill. There is really no way for small and village oil palm growers to escape this subordinate relationship”.

These are real challenges that small or village farmers face, and therefore, OPIC needs to re-organize its service delivery mechanism to address these underlying difficulties.

We have assessed the current state of development and note that small growers face immense hurdles with productivity, production and capacity. OPIC must enhance its engagement with the stakeholders in the lucrative part of the value chain in the short to medium term. It should also assist in preparing the groundwork for small farmers to eventually graduate into the lucrative part of the value chain. This approach is consistent with the intention of OPIC as expressed in their draft strategic plan.


Source: Extract from Ministerial Statement