Oil palm master plan

Four years after government unveiled the much trumpeted multi-million oil palm master plan that has been tipped to raise the nation’s competitiveness in the crop’s production, Ekow Essabra-Mensah wants to find out what is happening to its implementation.

The palm oil sector is believed to be holding tremendous potential to create jobs and reduce poverty to fast-track the development of the economy, and is being neglected by various authorities and policymakers.

It is obvious that the non-implementation of the nation’s oil palm master plan developed in 2010 is seriously accounting for the under-production of the cash crop, thereby preventing the country from earning foreign currency and boosting its employment opportunities.

The Master Plan is a blue-print policy document spearheaded by the Ministry of Food and Agriculture with support from the Agence Francaise de Developpement. It was inaugurated in 2010 with the expectation of boosting the nation’s competitiveness in the global commodities market, and also to enable it meet local demand estimated at 295,000 metric tonnes for its manufacturing industry as well as for local consumption.

The plan was also expected to focus on access to financing, certification, land-use policy, technology transfer, and infrastructure development from the farm to the port, as well as pricing and marketing mechanisms to ensure maximum development outcomes for beneficiary communities while minimising adverse social and environmental impacts of the sector, supporting smaller businesses and alleviating poverty.

According to stakeholders in the crop’s value chain, the sector is facing challenges with government being indifferent to their concerns. “Government and policymakers do not take the activities of both large and small holder farmers seriously,” some farmers said.

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

The growers complained of lacking financial support from government and banks, inappropriate pricing for their commodity coupled with the absence of 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 of Abekwasi in the Western Region, during 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.”

Logic for developing oil palm

 

Current forecasts anticipate the country being faced with a net deficit of up to between 20,000 and 100,000 tonnes of the valued oil palm commodity, estimated at about US$35million annually, following slippages in production of the commodity.

The commodity is the fifth-largest crop in the country 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.

The country’s first international commercial trade in oil palm took place in 1820. Starting from wild harvesting, oil palm evolved into agricultural crop and plantations were established by 1850. This led to oil palm becoming the principal export of the Gold Coast.

In the 1880s, oil palm accounted for 75 percent of the country’s export revenue until it was overtaken by cocoa exports in 1911.

The downstream activities are areas of greatest opportunity for value addition into oil palm industries, but currently they are the least developed in the country. This situation must be changed for the better.

Currently, the country’s palm oil is exported mainly to neighbouring ECOWAS countries and the EU on a small scale. Edible palm oil and palm-based products are also imported into the country in significant qualities.

The above development indicates the potency of oil palm, an indigenous cash crop to the country as it is also an important local staple food. 

Projections for future supply and demand in the country indicate that the present shortfall of crude palm oil (CPO) supply will grow from 32,000 tonnes (160,000 tonnes of FFB, 8889ha, which will create about 35,555 direct jobs in oil palm plantations: assuming 20% oil extraction rate, 18 tonne/ha yields and 4 jobs/ha) to 127,000 tonnes (141,000 direct jobs from 564,400 ha) in 2024. 

Hence, there is a considerable requirement to fill this deficit. Meanwhile, the current supply gap for West Africa alone is about 450,000 tonnes per annum and is bound to increase over time -- a huge export market opportunity for the country to take advantage of. 

World-wide demand, including regional demand, is also increasingly offering the possibility of exporting oil palm from Ghana 

Favourable conditions exist in the country for expansion of both large-scale and smallholder oil palm production and processing 

In addition to the requirement for CPO, there is great potential for value added and downstream activities.

The palm oil industry is an extremely important component of many Ghanaian livelihoods ranging from small-scale growers, artisanal processors to estate labourers and large-scale mill and plantation owners 

Ghana has a very competitive location for oil palm development compared to its immediate neighbours and the top global producers. 

While developing local capacity for breeding better planting material, new high-yielding varieties developed elsewhere can be accessed through government-to-government facilitation to double the yield in Ghana. 

The industry employs over 2 million people, especially in rural areas of Ghana.  It supports the livelihoods of rural communities and by extension contributes immensely to rural wealth and employment creation. 

The potential to increase this contribution is still huge. There is growing demand for palm oil in Ghana, West Africa and around the world, for the manufacture of household and personal care products, vegetable cooking oil, and as a feedstock for biodiesel production.

The industry employs over 2 million people and supports the livelihoods of rural communities -- and by extension contributes immensely to rural wealth and employment-creation. The potential to increase this contribution is still huge. 

In view of all this potential, government must be serious with its commitment to the oil palm sector as it holds tremendous potential to create jobs and reduce poverty. Among some of the challenges are included lack of subsidised fertiliser for farmers, lack of funding, and access to land. 

Going forward

The government will have to continue playing the lead role in moving the industry forward over the next 15 years through creation of a Ghana Oil Palm Development Board (GOPDB), along similar lines to the Malaysian Palm Oil Board that was established over some years ago.

The board among other things will be expected to implement policies and development programmes to ensure viability of the country oil palm industry. 

This Board will should also be tasked to conduct and promote research and development activities relating to the oil palm industry, and to regulate, register, coordinate and promote all activities relating to the oil palm industry. 

It will also serve as the resource and information centre for publication and dissemination of information on the oil palm industry, while it develops, promotes and commercialises research findings as well as provide technical, advisory and consultancy services to the oil palm industry. 

There should be availability of loan and equity financing, which are the two main types of financing schemes available for development projects.

Government must ensure that such financing schemes become available for farmers to access toward growth of the crop. 

Donors must also continue to provide long-term loans at concessionary terms to enable the industry to grow and develop over the next 15 years.  On private financing of the agricultural component, private financing institutions must be encouraged to participate in the industry as equity partners to ensure the sector develops successfully.