This Month's Dossier

PALM OIL

The boomerang effect of the European decision

On the occasion of the 5th African Palm Oil & Rubber Summit in Accra late April, CommodAfrica, a specialized information website on West African agriculture and world commodity markets, launches its first ‘Dossier du Mois’ dedicated to the palm tree. Indeed, this oil, which is the most produced and consumed in the world, is at the forefront of news on both the world markets and West Africa. On the world markets because the decision of the European Parliament of 17 January to phase out, by 2021, the use of palm oil in transport in Europe raises a wave of reactions. In this dossier, Alain Rival, Regional Director for Insular Southeast Asia at the Center for International Cooperation in Agronomic Research for Development (CIRAD) and specialist in the oil palm sector, gives his nuanced analysis of the debate in course and tries to measure the impact that the European decision could have on a region, West Africa, for which palm oil is one of the bases of the diet. Because, one cannot be mistaken: if these West African countries are not -not any more- major players on the world stage of palm oil, decisions at the global market can have a very strong impact on their markets. With our correspondents throughout West Africa, and after recalling some figures of the fundamentals of the palm oil market, this Dossier reviews the situation in several countries: Nigeria, the largest African producer but which still remains largely in deficit; Côte d’Ivoire, n ° 2 continental, which intends to promote the «red oil», thus unrefined palm oil which contains treasures for human health and which is positioned on a gastronomic segment of the local urban markets ; Ghana, host of the Summit, No. 4 in Africa, which also set itself the goal of self-sufficiency, synonymous with jobs, foreign exchange and value-added. Finally, a quick glimpse of the situation in Burkina Faso highlights the issues and recent developments in this importing country where the logic of the regional market is playing out. The commodafrica.com team hopes you find our Dossier interesting and welcome any feedback. It is also posted on www.commodafrica.com

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Interview - A boomerang on Africa: What if Europe bans palm oil imports?

Interview

Alain Rival, regional director for Southeast Asia island countries (Cirad)

For Alain Rival, regional director for Southeast Asia island countries at the French Center for International Cooperation in Agricultural Research for Development (CIRAD) and a specialist of the oil palm sector, the European Parliament’s RED-2 decision dated January 17 2018, which aims at phasing out, by 2021, the use of palm oil in transport in Europe, will have a counterproductive effect on the whole industry.

How can the ban proposed by the European Parliament on the import of palm oil into the European Union affect West Africa? 

We entered a bad spiral. The European market is very qualitative and demanding: it is the only market (with the US and some other developed countries like Australia) that requires very standardized products for imports. If this European recommendation is passed, we will reach an extreme in control: the simple and abrupt ban of a commodity by Europe. We are now just at the beginning of the process since it is the Parliament that proposes but several European governments have voted against this decision because of its direct diplomatic and commercial consequences in the producing countries. We are at the beginning of a trilogue process between European Parliament-Governments-Commission, with a final decision expected by the end of June. 

Could you remind us what is the European Parliament’s position? 

The European Parliament wants to avoid by 2021 any import of commodities which are produced through deforestation*. Nevertheless the link between palm oil and deforestation is never direct nor automatic. Oil palm cultivation is one of the vectors of deforestation, particularly in South East Asia, but it is far from being the only one. Deforestation occurs first because of timber trade and then agricultural activities take place (or not) on cleared land. There is no evidence that any pressure on the palm oil sector will automatically result in a sizeable decrease in deforestation rates, just because vectors of deforestation are multiple and intricate: urbanization, mining activities, agriculture... If the legislator bans palm oil from the European market which is the most demanding one (for both the food and energy sectors) produced certified oil will then be downgraded and immediately absorbed by the growing Indian or Chinese markets. So the European market, which must be a model to pull the sector up, will face an immediate boomerang effect, as it will favor non-qualitative and uncontrolled markets which certainly carrying more risks of deforestation. 

For us, at CIRAD, it is much more productive to engage in a positive circle and support certification efforts by setting up support programs in the producing countries in the aim of supporting the sustainability of production systems. If the national or international certification standards that qualify products related to deforestation are not sufficient, we must not forget that it is the role of Governments to endorse the dissemination, the application and the legal control of such standards, together with their efficient enforcement. The necessary sustainability of agricultural commodity chains is an idea which made its way rather quickly in producing countries, although such standards still need some improvement in order to make them more credible and widely accepted. In Côte d’Ivoire, Ghana or Cameroon, we are facing an oil palm sector which harbors a large majority of smallholders. If such players, who are often isolated, are to enter into a virtuous circle of improvement of their agricultural practices, like the use of selected seeds or ecological intensification, we need incentives and bonuses to promote such efforts. We also need qualitative markets that recognize producers’ efforts and give an extra value to certified sustainable palm oil. If this market is shunted by unilateral political decision, producing countries will turn to customers which are much less sensitive to sustainability questions, with an impact on deforestation that will be measurable. 

The European decision will really have a boomerang effect: by totally banning a product that is certainly not free from defects with respect to deforestation - because, of course, there is no real zero-deforestation related to oil palm cultivation - but engaged in a virtuous process for nearly 15 years, we will get the opposite effect of the one sought. We believe that it is much more efficient to support smallholders and all stakeholders in the commodity chain in their efforts to achieve a credible certification level. As a research institution engaged in rural development in tropical countries, our role is to develop collaborative Research and Development programmes which results are shared common goods aimed at providing science-based evidence to promote changes in agricultural practices. 

What about the controversy on the impact of palm oil on health? 

At CIRAD, we are agronomists, not nutritionists, but some common sense arguments provided by lipid nutrition experts are worth listening to. 

Palm oil is neither better nor worse than any other vegetable oil; it is the dose that makes the poison. It tends to be widely used in agri-food because of its remarkable physical and chemical characteristics. It is a natural butter that remains solid under European temperatures, which allows to be substituted for butter very easily. It is a vegetable oil with a neutral taste and it is cheap and abundant: this explains why it is so used in processed food. 

What is the part played by palm oil in the European oilseed market? 

Europe absorbs about 10% of the world palm oil market. It is the world’s second largest importer, behind India and comparable to China and half of imports are destined to biofuels. However, what seems illogical is that the will to limit the entry of palm oil into Europe emanates from the Parliament, whereas it is the same legislator who also decides on the rate of incorporation of biofuels in the European energy mix... It is above all a political decision because the incorporation of biofuels is always linked to fiscal policies driven by a government willingness to change the country’s energy mix. It’s the snake biting its tail: if Europe does not have enough vegetable oil to meet its biofuel needs, it will have to buy it from the global market where palm oil is available in abundance. The European protectionist temptation exists and we must not be too naive: Europe is also producing vegetable oils. 

Will the West African consumer also shy away from palm oil? 

I do not have a crystal ball… but I do not feel that way. Palm oil still has a very good image in Africa, particularly in Côte d’Ivoire Cameroon and Nigeria. The «red oil», which is typical of West Africa, has become a «gourmet» product for households in urban metropolises. It is traditionally adorned with all the virtues: it is a natural product, a virgin oil loaded with carotenoids and tocopherols, which is a very good nutritional product. The refined palm oil found on African markets has nothing to do with the original red oil in terms of chemical composition and production process. It is imported in large quantities from Indonesia and Malaysia, notably by the densely populated countries from West (Nigeria) and North Africa (Egypt), which do not produce enough vegetable oils to satisfy their local consumption in full bloom. 

Which consequences may have this European measure on palm oil projects in West Africa? 

There is a definite risk of stopping a virtuous incentive mechanism for improving agro-ecological practices, recycling mill effluents, and selecting improved planting material. The oil palm is not an annual crop whose variety can be changed in the following spring. A smallholding farmer often inherits his parents’ plantation or he plants palms for his children, exploiting his palm grove over a 30-year cycle. Progress, when linked to planting material, can be rapid: when the plantation is renewed, growers have the opportunity to change for the type of seed planting material which is the most adapted to their system. Changes in agricultural practices are more gradual in time, because they are often related to the financial means of the farmer and his/her capacity to invest. Once again, if we remove palm oil from the European market which imposes both social and environmental conditions, we will remove all the incentives to change practices. We also must keep in mind that West Africa produces mainly for West Africa... 

Africa is often described as the new pioneer front for the oil palm and foreign investors have already started many projects of plantation. These new projects are also opportunities to change practices. In Africa, adopting good practices and choosing the right planting material means going from 2 to 4 t/ha/year of palm oil on the same cultivated area. Young farmers and players in the palm oil sector in West Africa are already aware of this shift in demand towards products that meet strict criteria of sustainability and traceability. In addition, foreign industrial investors (traditionally French, English or and Belgian, now Malaysian, Indonesian or Singaporean) must meet very strict criteria for ethical investment, since financial tools are now linked to good agricultural, social and environmental practices. This evolution will not directly impact the small planters’ practices at first, but if the whole sector, (including the seeds’ market) is pulled up, benefits will be shared at some stage. No farmer will refuse to buy a seed because it is too good! So even if West Africa is not a major supplier and is virtually non-existent in the certified palm oil market, its players are also aligning themselves with this evolution of good practices. 

Will West Africa, in search of productivity and mechanization, adopt large scale plantations, as in Asia? 

No, I do not believe and I do not think that this is desirable: each continent, each country has its rural and agricultural history and must invent its sustainable exploitation system: biologically, the oil palm is a robust plant that will respond favorably to very different types of cultivation systems. In addition, the «small» planters constitute a family of very heterogeneous players in terms of assets, age or expectations, thus designing smallholders’ development strategy is often tricky and any copy/paste policy from other countries or agricultural landscapes bears very few chances of success…. 

Rather, there is a trend towards projects involving large plantations and small planters. If smallholders are properly supervised, if they adopt best agricultural practices, they often achieve higher productivity yields than large estates. Governments and finance bodies are more and more inclined to set up projects in which the central part of the harvesting basin (which is the nucleus of the plantation harboring the oil mill) is managed by an industrial plantation surrounded by a population of small planters who are associated – through direct contracts or otherwise - with this industry. 

In West Africa, what complicates the scheme is the production of red oil and the self-extraction capacity of small-scale farmers, which does not exist anywhere else in the world, except in the Brazilian Nordeste. Indeed farmers, even under contract with an extraction plant, can also keep their fruits, extract the oil in a traditional way and put on the market another product - the red crude oil - which is increasingly demanded by urban elites. Therefore, the same palm fruit bunch has two outlets in direct competition during part of the year: if the purchase price by the middleman or the mill is not high enough, the small West African producer can do its own oil extraction. This competition is blurring the trade and trust agreements between the growers’ cooperatives and the mills. It will be difficult to persuade a miller to attach himself to a pool of smallholders when he knows that in peak production, when there are plenty of palm fruits and prices mechanically fall, farmers will not bring fruit bunches to the mill but will extract red oil by themselves. For small growers, this alternative is a strength because his income is no longer directly depending on a single buyer (and often to two or three middlemen). At certain times of the year, he will earn more money if he extracts and sells himself his red oil on the market of the neighboring city. 

In West Africa, is it more profitable to grow oil palm, cocoa or rubber tree? 

When comparing rubber tree and oil palm cultivation, the profitability per hectare can be of the same order in certain contexts, but in the immense majority of the cases, oil palm cultivation will bring more income, because its yield per hectare is exceptional and its requirement in workforce is comparatively lower. In South-East Asia, where you spend two days in an oil palm plantations, you will have to work for 40 days in a rice field to get the same income. The working time spared can be used for cultivating other crops including food crops, or for any other economic activities such as rural retail. In addition, the oil palm does not face endemic diseases which require massive pesticide application. 

Are new technologies emerging? 

Progress in mechanization is still marginal: it must be remembered that the palm is an herb, not a tree... Heavy agricultural machinery can hardly be passed between oil palms which root system is very sensitive to soil compaction. Most of field operations such as manuring or harvesting are still performed manually. So far, the problem of labor shortage in plantations has been shifted by importing workers from neighboring countries, who are still accepting wages offered by plantations, but for how long? 

Research work undertaken by CIRAD and the national research organizations in the major producing countries is aimed at changing this planting system towards agroecology. There is still very little data available on agroforestry-type systems that would associate the palm tree with food crops, for example. The early stages of planting during which, for 3 years, smallholders do not harvest anything, must be the subject of focused research programs associating agronomy and social sciences. 

Bénédicte Châtel 

To go further: 

Alain Rival and Patrice Levang (2014): Palms of controversies: Oil palm and development challenges. ISBN: 978- 602-1504-41-3 - DOI: 10.17528/cifor/004860 

http://www.cifor.org/publications/pdf_files/Books/BLevang1401.pdf 

 

Market - Palm oil at a glance

Market

Palm oil is the edible vegetable oil that is the most produced and consumed worldwide.

PRODUCTION

World palm oil production is dominated by Indonesia and Malaysia. However, production in Latin and Central America, and to a lesser degree in Africa, has been increasing, especially these past 10 years. Eventhough the rate of production growth has slowed compared to previous decades, it has increased by 43% between 2010/11 and 2017/18.

Some countries set up programs to develop palm oil plantations. For example, Ivory Coast launched it’s 3rd Palm Oil Plan for the period 2015-2025 with the objective of planting or replanting 200 000 hectares. Several African countries also attracted foreign investors. The case of Gabon with the Singapour group Olam is emblematic : palm oil production has almost doubled in two years.

CONSUMPTION

Population growth, higher living standards, urbanisation are factors that lead to higher consumption of vegetable oil. Palm oil is the big beneficiary as it has a price advantage, followed by soy oil.

Emerging countries pull world consumption. In developed countries, it should be stable but campaigns against palm oil could affect negatively demand. On the other hand, the progressive ban on partially hydrogenated vegetable oils, a source of trans fatty acids, in the agri-food industry could provide support.

Many manufacturers, but also traders, have set themselves the goal of sourcing sustainable palm oil (RSPO) in the short term. Today, 19% of the palm oil produced is RSPO certified.

Anne Guillaume-Gentil

Nigeria - Politicians set their sights on palm oil

Nigeria

Until independence in the 1960’s, Nigeria accounted for 43% of the global production of palm oil. Sadly today it is a net importer of the oil. The government has promised to revive the struggling industry, though its greatest challenge is the disappearance of small holder farmers ready to produce palm.

With a population of nearly 180 million people, Nigeria’s palm oil demand totals 2.86 million tons (Mt). Around 1.56 Mt of this is used for personal consumption and 1.3 Mt goes to the local industry, according to the Nigerian Bureau of Statistics in its November 2017 publication. However, Nigeria’s national production is only 970,000 t according to the USDA report.

Nigeria was the leading global producer and exporter in the 1960s, controlling more than 43% of the international market and generating 82% of its foreign revenue. Today, the former King of Africa ranks 5th in the global table of production, representing less than 2% of world supply. In 1965, Nigeria produced 156 000 t, Malaysia 138 000 t and Indonesia 123 000 t. Then came the oil boom, and with that a shift of attention to the black gold. Palm oil production began to decline as the population grew, and by the 1990s, Nigeria’s contribution to world production went from 43% to 7%. Currently, the country accounts for only 1.57% of global production and continues to import an impressive quantity.

Today Nigeria fills its palm oil deficit through importing from Malaysia and Indonesia. Recently, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, brought this to the government’s attention. In 2017, the country spent 116.3 billion naira (€262.8 million) importing Palm Oil. «With a constantly growing population, strong demand for palm oil and its derivatives coupled with the country’s declining production, Nigeria will spend even more this year purchasing palm oil,» the minister said.

 

A situation that the Nigerian economist Bismark Ridwan considers to be shameful, a true economic tragedy. Africa’s second largest economy has all the assets to be self-sufficient, it was not long ago it was the market leader in Palm Oil.

Parliament to the rescue

Faced with this ongoing issue, the Nigerian Senate took hold of the situation in February 2018 calling for Nigeria to regain its former position as the market leader in production of Palm Oil. He set up a project called «Urgent Need to Curb the Importation of Palm Oil and Its Derivatives to Protect the Palm Oil Industry in Nigeria». The author of the bill, Senator Francis Alimikhena from the Progressive Congress, estimates that 70% of the Nigerian population consumes palm oil. Such large imports is contrary to the government’s efforts to diversify the economy away from oil and petroleum products and instead focus on increasing agricultural production. At the same time, Senator Theodore Orji of the opposition Democratic People’s Party advocates the establishment of a special fund to encourage production, while the Deputy Speaker of the Upper House of Parliament Ike Ekweremadu, promised that the Senate will pass laws this year to resurrect the palm oil industry.

Scattered Production Areas

As the sector builds towards recovery, the Nigerian Institute for Palm Oil Research (NIFOR) estimates that one of the biggest challenges facing them is the issue over the dispersion of palm plantations. More than 80% of national production is spread over 1.6 million hectares managed by small holder farmers. These farmers have limited financing and no access to good seeds or technologically advanced treatment methods. The managed palm plantations, meanwhile, make up around 300 000 ha.

However, according to NIFOR, the government is making significant plans to increase planting areas and yields. Their aim is to increase production to meet domestic demand and reduce imports in the short to medium term. The authorities are developing strategies to become a major supplier of palm oil in sub-Saharan Africa and regain its position as the world leader in the palm oil market.

To do this, the federal government has collaborated with the Ministry of Agriculture and Rural Development. Together they have partnered with with the two main companies in the industry, Okomu Oil Palm and Presco. Okomu Oil began in 1976 as a pilot project of the federal government with the aim of reviving production. In 1990, Okomu Oil was privatised and on September 19, 1997, became a public limited company. Since then, the company has grown significantly, with 8,800 hectares of palm trees and an oil mill with a capacity of 30 mt per hour. Presco has plantations covering 11,760 hectares with 8,347 mature trees, they have an oil mill capable of processing 60 mt of grain per hour and a refinery capable of processing 100 t per day.

The Government wants 24 of their 36 states to produce palm oil, with each state producing 500,000 t of palm oil per year. A huge challenge no doubt.

Daouda Aliyou

Ivory Coast - The necessary marketing of red oilI

Ivory Coast

Palm oil is easily the most consumed oil in Ivory Coast and throughout West Africa. Despite this, the sector is facing challenges of sustainability and certification that are required by the multination food companies who want to increase their consumption by 2020-2025.

This year, Ivory Coast is estimated to harvest around 2.3 million tons (Mt) of palm kernels, from which it will produce more than 500,000 tons of crude palm oil, according to Abdoulaye Berte, Executive Secretary of l’Association interprofessionnelle de la filière palmier à huile de Côte d’Ivoire (AIPH). This makes the Ivory Coast Africa’s second largest producer of palm oil, second only to Nigeria. Their production methods are still dwarfed by their Asian counterparts. In Ivory Coast, some 60 to 65% of its production comes from small holder farmers who plant 175 000 hectares of palm groves, whereas in Malaysia and Asia they have vast palm grove plantations as far as the eye can see.

Promoting red oil

Two-thirds of Ivorian production is used locally in the form of oil and margarine, but also soap and cosmetics, a third of which is exported to other West African countries. Palm oil is far cheaper than groundnut oil and is therefore sold into Senegal, Burkina Faso, Mali, Niger, Togo and Nigeria. The oil marketed in both the Ivorian and regional markets is refined.

‘Unfortunately, red, unrefined palm oil, which is rich in antioxidants and nutrients is consumed primarily for traditional means or for traditional meals, so it is difficult to quantify its consumption.» Abdoulaye Berte added: ‘But, we must promote the qualities of this unrefined red oil because the irony is that we have to add vitamins to the refined palm oil, whereas we would not need to do that if we consumed the red oil as these vitamins occur naturally.’

As palm oil is produced and consumed locally and regionally, would Ivory Coast palm oil be sheltered from global controversies related to the environment and health? ‘In no way,’ retorts the executive secretary. «First of all, the Ivorian Industry is, like everywhere else, concerned by global and environmental issues. However, at the moment Ivorian oil is only being sold locally, so our short to medium term goal is to position ourselves well in these local markets and meet their requirements. Thirdly, the locally established agro- food multinationals (Nestlé, Unilever, etc.) demand certified palm oil by 2020-2025, and we will be in a

position to supply them. If Côte d’Ivoire does not want to corner itself in its own market, then the industry has to become totally sustainable. Not only do the multinationals require certified palm oil, but they are ready to support us in our other projects that promote the responsible production of palm oil.»

The European Parliament has recently launched an attack on palm oil (read Alain Rival’s interview on this issue) which has been deemed a «bad initiative», according to one expert. «It is true that these attacks will affect our regional market. For the long term benefit of palm oil, we need to improve palm oil’s image, which has been subject to attacks based on information that is not well researched or well founded. Yes, we should attack the production methods of palm oil in some countries, but we must not attack the oil itself.’

For its part, Ivory Coast is a member of the RSPO, REDD, and Tropical Forest Alliance (TFA) 2020 initiatives. «We are firmly committed to all actions against deforestation, and climate change. We want our global partners to know that we encourage responsible palm oil production, rather than trying to ban it. We have programs that need to be supported by our global partners and these partners will feel reassured if they know that we are engaged in the responsible production of palm oil.»

Bénédicte Châtel

BURKINA FASO

Free fall of palm oil imports

The palm oil market in Burkina Faso has undergone a free fall in 2017 compared to 2016. According to the Department of Customs, 31 567 276 litres of palm oil representing a custom value of FCFA 23 592 092 895 (€ 35,8 millions) were imported in 2016 as against 10 501 778 litres for FCFA 16 706 315 770 (€ 25,4 millions) in 2017, down some 33%. Yet, between 2015 and 2016, the country had registered a major increase of 109% of its palm oil imports, the volume imported in 2015 being 28 934 913 litres for a value of FCFA 14 819 573 228 (€ 22,5 millions).

One of the reasons of this drop in imports is the government’s commitment to support the palm oil sector by buying to Sonagess (Société nationale de gestion des stocks de sécurité) for specific stores and school canteens, as well as the favourable positioning of soy oil produced by SIATOL (Société industrielle de l’agroalimentaire pour la transformation des oléagineux).

Côte d’Ivoire remains, by far, the n°1 supplier to Burkina Faso, followed by Togo and Malaysia.

The most important companies that import, accordingto the Direction des Guichets uniques du commerce et de l’investissement, are as follows.

Dieudonné Edouard Sango

 

Ghana - $ 750 million needed for Ghana to become self-sufficient in palm oil

Ghana

Ghana faces major challenges to become self-sufficient in palm oil, with small holders accounting for 80% of production. A strengthened sector would mean jobs, less imports and local added value.

In spite of its growing importance among commercial plantation crops, Ghana’s oil palm industry still requires a lot more effort to bridge a widening supply gap in the industry, according to the Oil Palm Development Association of Ghana (OPDAG).

Annual production is about 244,000 tonnes (t), some 30,000 tonnes short of demand. As of January, OPDAG cautioned in its Overview of the Oil Palm Sector in Ghana :“If current production is not increased, the supply gap in Ghana is expected to increase to 127,000 t by 2024.”

“The high demand for palm oil is driven mainly by the presence of manufacturers including Wilmar Africa, producer of Frytol brand of cooking oils; Unilever which produces a wide range of detergents ; Delta Agro ; Appiah Menkah Complex, producers of detergents and vegetable oils ; PZ Company which until 2015 was producing detergents in Ghana ; Avnash Industries producers of Golden Drop vegetable oils”, Samuel Avaala Awonnea, president of OPDAG, explained in an interview.

The importance of out-growers

Ghana is a net importer of oil palm. Smallholder farmers account for 93% of total area under cultivation and 80% of output, large plantations accounting for the rest.

Before independence, palm oil production was a leading foreign exchange earner. The export of harvested wild palm fruit products started in 1820 with production growing rapidly for the commodity to account for 75% of total exports by the 1880s after the first plantations were established in 1850. However, serious State effort to develop the industry was deferred until 1960 with policies and demonstration farms among others springing up, culminating in about 330,000 ha or 1.5% of total land area of Ghana being cultivated with oil palm.

Among the major plantations in the industry in Ghana are the Ghana Oil Palm Development Co (GOPDC) with plantations in Kwae, Twifo Oil Palm Plantation (TOPP) at Twifo Ntafrewaso near Twifo Praso, Benso Oil Palm Plantation (BOPP) at Adu Bamso near Takoradi, NORPALM Ghana and Ayiem Oil Mills both in Takoradi, Juaben Oil Mills in Kumasi and Golden Star -a mining firm- which also established the Golden Star Oil Palm Plantation (GSOPP), at various locations including Wasa and Bogoso, near Takoradi.

These plantations have their own production but also work with out-growers. Most have their own milling facilities for oil extraction. For example, GOPDC, the largest plantation farms in Ghana, has 8,000 ha of its own plantation and deal with out-growers who produce on 14,352 ha ; it has a 60 t/ hour capacity oil mill. However, for BOPP, the company itself accounts for 4,738 ha with a 30 t/hour capacity mill, and its out-growers work on 1,650 ha.

The challenges

The widening shortfall in supply of raw palm oil is made up for through imports from Malaysia and Indonesia. Imports of palm oil from Malaysia increased by more than 23% in 2016, going from 163,000 t in 2015 to 203,000 t the following year. During the first three quarters of 2017, Ghana imported 213,000 t valued at $ 149.1million, accounting for 70% of total commodity imports.

As for exports, Ghana sells unprocessed palm oil to the European Union, says Samuel Avaala Awonnea, as well as finished products to West African countries such as Mali and Niger, while all the cosmetic & soaps produced from palm oil consumed locally.

According to Ghana Central Bank, in 2013, palm oil accounted for 5.92% of total exports raking in $ 45.63 million ; in 2017, it expanded to 19.32% of all exports with a value of $ 173.74 million. In the first quarter of 2018, oil palm accounted for 10.63% of total export with a value of $ 36.63 million.

Some of the challenges facing the sector include low fresh fruit bunch yields with the small-holder, land tenure issues, lack of access to most of the oil palm plantation enclaves. This leads to post harvest losses during the peak of the harvest season which also coincides with the peak of the raining season in the country.

Ghana only has one planting material producer in the country. “Some farmers have been planting seedlings of questionable source which results in low yielding crops, while transporting of seeds is also assumed as one problem farmers in some regions might be facing.”

Oil palm cultivation is still labour intensive, with old crude method of cutlass and hoe making it tedious and time consuming, not attractive to the youth and an increasing labour cost. Besides this, authorities have identified poor soil along the palm belt of the country, deficiencies in management poor supply planting and poor nutrient management among other difficulties in the sector. In addition to the agronomy difficulties, there has been bad press for raw palm oil from Ghana after the Food and Drugs Authority (FDA) identified in 2015 Sudan IV dye in quantities of the product on the local market.

What next ?

In 2012, government with support from the Agence française de dévelopment (AFD) launched an Oil Palm Master Plan to boost the Nation’s competiveness in the global and local market. One may note that AFD invested in the 3,000 ha Buabeng out-grower project near Twifo about 10 years ago. Since they do not yet have a mill, they supply to TOPP for processing.

The NGO Solidaridad has also been introducing some interventions in the oil palm sector to help maximize and sustain production.

«One of the most recent investments in the industry came from Plantation Socfinaf which is also located around the Western Region They have just started putting up their own mill and in about 10 months their mill will be ready”, Samuel Avaala Awonnea disclosed.

It is projected that the deficit would reach 19,600 t in 2030 and 272,000 t by 2050 which will require 49,400 ha and 68,000 ha of new plantations respectively .“But realistic demand deficit will reach about 309,600 t in 2030 and 514,400 t in 2050, requiring 77,400 ha and 128,600 ha respectively to meet”, the overview said. These alone are expected to create 15,480 direct jobs by 2030 and 25,720 by 2050, while 77,400 indirect jobs by 2030 and 128,600 indirect by 2050. It would require about $ 750 million in fresh investments to become self-sufficient in palm oil production.

Increase in demand, stakeholders caution, will not be met by trade alone in the long run. Local economies will need to embrace agriculture and oil palm to spur growth. Growth opportunities clearly exist for both international and local companies.

Justice Lee Adoboe

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