Friday, November 19, 2010

Ghana’s oil palm blueprint

A new plan is being unveiled in Ghana to raise the nation's competitiveness in oil palm production, unrivalled in the sub-region, as authorities’ quick-start a multi-million oil palm development plan.

Dubbed the oil palm Master Plan, it is expected to boost the nation’s competitiveness in the global commodities market and also enable it to meet the local demand estimated at 295,000 metric tonnes for its manufacturing industry and for local consumption.

Last year oil palm processing groups projected a production output of 260,000 metric tonnes of palm oil which indicates a deficit of 35,000 metric tonnes leaving government with no option but to spend US$100 million annually on the importation of oil palm to compensate for the deficit.

The Master Plan will focus on access to financing, certification, land-use policy, technology transfer, and infrastructure development from the farm to the port, as well as pricing mechanism and marketing.

The policy document will seek to outline set of projects and programmes to be executed within the next 15 years and will become the blue print for the sector’s growth. This is aimed at maximising development outcomes for the communities while supporting smaller businesses, as well as alleviating poverty.

Joseph Baidoo-Williams, Head of Tree Crops Development Unit, Ministry of Food and Agriculture (MOFA) in an interview with BT opines that the development of the plan would make it very easy to attract donor support to enhance palm oil production.

Government has up-to-date spent 2.4 million euros on the oil palm project and is expected to release an additional one million euros on its production by close of 2010.

The country has enjoyed some support from the International Finance Corporation which to date has invested close to US$132 million in palm oil projects in West Africa, Asia, Central America and the Ukraine.

Baidoo-Williams said government has identified the palm oil sector as holding tremendous potential to create jobs and reduce poverty and as such would give the necessary support to enable it to contribute to the development of the economy.

Recent trends in world price suggest that crude palm oil when properly nurtured could easily become a major foreign exchange earner for the country.

The overarching goal for the policy framework is to achieve and sustain macroeconomic stability while placing the economy on a path of higher growth, in order to attain middle-income status by 2020 while also achieving the Millennium Development Goals (MDGs).

It is also aimed at reducing poverty through a pro-poor, export-led growth strategy based on modernizing agriculture and linking it to industry in an emerging oil and gas economy, he said.

Trade analysts say the strategy is timely as Ghana is expected to export 36,000 metric tonnes of palm oil to China next year, following the conclusion of a US$21.6 million deal between Chyuan Chya Ghana Limited and China-Africa Economic Trade Limited.

The oil palm to be exported by Chyuan Chya will mainly be purchased from small and medium-scale smallholder producers across the country

Approximately, 305,700 hectares of oil palm plantation is being cultivated nationwide and an additional 20,000 hectares of oil palm farm is needed to meet the local demand.

Current forecast suggests the ECOWAS sub regional market is being faced with an unmet demand of up to one million metric tonnes.

Malaysia, the country, which took the oil palm seeds away from Nigeria several years ago, is planning to flood the market from its silos in Ghana.

Malaysia, the world’s second largest producer of palm oil, had concluded plans to build silos on Tema Beach, in Ghana.The move by the Malaysians’ to set up a base in Ghana was to further improve its export to the Nigerian market with barrels of palm oil, the shortage of which has hit the country.

Malaysia remains the world’s second-largest exporter of palm oil after Indonesia. The two countries account for 85 percent of global production of palm oil

Baidoo-Williams disclosed that government is supporting the cultivation of 3,000 hectares of small holder farms in the Twifo Hemang Lower Denkyira and the Upper Denkyira and that 1,000 farmers have been supported in these two districts to cultivate 2,300 hectares of farm.

He explained that Twifo Oil Palm Plantation has been contracted by Agriculture ministry as as the technical operators. The company is also expected to purchase the fruits and provide extension services to the farmers.

“Government provides financial support in the form of loans to farmers for maintenance, fertilizers and planting materials. The loans to farmers are channeled through National Investment Bank of which the repayment starts after five years,” Mr. Baidoo-Williams said.

Land area cultivated by the four is barely 30 percent of the national endowment. The rest is either lying fallow or cultivated on subsistence basis by individual smallholder farmers. Oil palm is a crop that provides multiple outputs and it is the only plant whose fruit produces two types of oil- palm oil and palm kennel oil.

Oil is an input in industrial production of non-dairy creams, ice-cream powder, salad dressing, fat spread and chocolate.

The rising trend in international demand has been precipitated by increasing demand for palm oil for bio-fuel purposes.

Crude Petroleum Price determinants continue to push upwards pressure on the price, and demand for Crude Palm Oil (CPO) is steadily rising in India, China, Europe and the America for bio-fuel. In view of this development, investors have been diverting their investment portfolios into CPO.

Ghana’s major producers, Benso Oil Palm Plantation (BOPP) and Twifo Oil Palm Plantation (TOPP), Ghana Oil Palm Development and Norpalm, a Norwegian firm turn out around 80,000 tonnes per annum as against 90,000 tonnes demanded by Unilever alone.
Credit:BT Magazine

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