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Business News of Saturday, 30 April 2016

Source: news.mongabay.com

Palm oil in Cameroon – ‘a blessing or a curse’ to small-scale farmers?


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Once centered solely in Southeast Asia, the palm oil industry has been migrating to other parts of the tropical world, with western Africa particularly affected.
Cameroon’s wave of oil palm plantation development has attracted the ire of conservation and human rights groups, who say expansion has harmed forests and local communities.
But researchers say that if palm oil companies work with smallholders instead of working around them, benefits could be had for the companies and famers alike.

This is the fourth in a four-part series on palm oil in Cameroon. Read the first, second and third parts for more discussion on the topic.

There’s an upwelling of interest in agriculture in Africa. The results of traditional development approaches on the continent have lagged behind the economic boosts to the poor seen in Asia and Latin America. So scientists, development strategists, government officials and investors alike – in search of jobs, higher incomes and national budgets, and a stepping stone to gains in other areas such as health and education – have all noted the potential for leveraging Africa’s vast land resources with a crop like oil palm.

Some have called it a tsunami, warning of the effects that unbridled development could have on apes and other wildlife. Others have pointed out that massive developments have massive economic prospects for the poorest Africans, if approached in the right way. Regardless of the viewpoints, there’s little doubt that oil palm is coming to Africa and in many ways has already arrived. And nowhere is that truer than in Cameroon.

Cameroon’s leaders have set forth a plan to become a middle income, industrialized nation by 2035 specifically through business initiatives and by encouraging foreign investment. But as recently as 2007, nearly 40 percent of Cameroonians were still living at or below the country’s poverty line, according to data from the World Bank. Out in the countryside, that figure rises to 55 percent.

The question then becomes – from a development perspective, anyway – how can oil palm work for the poorest populations? In a recent study, researchers from CIRAD, CIFOR and the University of Buea in Cameroon, took a hard look at that very question, as many oil palm investors turn their sights from the palm oil production juggernauts of Malaysia and Indonesia toward Africa.

“The recent interest of large oil palm companies from Southeast Asian countries to the Congo Basin and particularly in Cameroon can be a blessing or a curse for the village plantation sector,” wrote Raymond Nkongho and his colleagues in the journal, Oil & fats Crops and Lipids. Nkongo is a professor at the University of Buea in Cameroon.

To understand the current state of small-scale oil palm farming in Cameroon, Nkongho and his colleagues talked to 176 growers, cutting across socio-economic classes, from four centers for palm oil production in the country – Eseka, Dibombari, Muyuka, and Lobe near the town of Mundemba.

They concluded that if large-scale oil palm brings smallholders into the fold, lending support for their plantations, helping them increase their yields, and providing for easier access to markets, palm oil production could realize “its full potential for poverty reduction and agricultural development.”

Conversely, they write that if “the Government allows these companies to settle while following an agro-industrial classic model with no integration of individual growers to plantation projects, family farmers, villagers and elites will be quickly marginalized because they are unable to compete with efficient agro-industries.”

It might seem that bringing a lot of independent operators under the same business umbrella would be too complicated. But Nkongho said that he believes it’s to a company’s benefit to engage local populations and keep them happy. And that sort of integration scheme isn’t actually a foreign idea in Cameroon.

Almost 40 years ago, the government of Cameroon set up a program known as FONADER, which is short for its French name, “Fonds National du Développement Agricole.” At its roots, the FONADER program, with financial backing from the World Bank, aimed to leverage the production of palm oil in Cameroon; its climate and soil is conducive for the African palm, the tree that’s the source of palm oil. In addition to industrial-scale developments by state-run companies formed between the 1890s and 1960s, Cameroon’s numerous small-scale producers were supposed to get a helping hand under the program. The companies were mandated to provide land to individuals, to help them procure the best plants for producing oil palm, and to improve and maintain roads so they could get their wares to market.

But about 12 years in, a financial crisis stymied FONADER, Nkongho said. He explained that the program’s downfall was due in part to the siphoning off of land intended for the poor to well-connected or wealthy people – what’s known as “elite capture.

In an effort to inject efficiency and economies of scale into the flagging oil palm industry, several of the country’s public companies, including “La Société Camerounaise de Palmeraies,” known as Socapalm, were privatized, again with funding from the World Bank as well as the International Monetary Fund.

Nkongho said he’s seen the difference firsthand between the privatized companies like Socapalm, and the still-public holdouts, such as the Cameroon Development Corporation and Palmol.

“With the private sector, people are forced to work,” he said. “When you go to plantations, you see that they really mean business.”

Included in this transition to private management – comprising Socapalm and several other companies now run by Belgian agribusiness Socfin of which French company Bolloré is the major stakeholder – was the stipulation that the companies invest in the development of the communities surrounding their plantations. In Socapalm’s charter, it specifies that “The private buyer shall purchase and collect ‘the total production of the village plantations within a 60-kilometer (37 miles) radius around the Socapalm plantations,’” according to Samuel Nguiffo, the director of the Center for the Environment and Development (CED) based in Yaoundé, in a report he spearheaded in 2010.

CED partnered with several other organizations to investigate how well this process was working for small-scale farmers. Nguiffo and his colleagues wrote that they knew the potential benefits to individual farmers that the support of a big company could bring.

“Thanks to this system, small planters could enjoy decreased transport costs and less strenuous work, all the while generating an income sufficient to fulfill their basic needs,” they wrote. “The privatization of Socapalm, completed under the leadership of the IMF and World Bank as part of the structural adjustment program, was supposed to inject new life to the agro-industrial company, and, [finally], to bring to local communities the promised compensations.”

However, Nguiffo and his colleagues reported that they mostly found a single-minded focus behind Socapalm’s work.

“A pure search for profits quickly became the only driving force for the development of the industrial plantations,” they reported.

In fact, when the Socapalm director general was questioned in 2007 about fixing the roads to help small producers reach more buyers, he said, “Maintenance of the collection tracks and roads is an urgent matter, and Socapalm is injecting money when and where it can expect maximum volume of palm bunches.”

Socfin’s general manager Yanick Vernet said that SOCAPALM has increased its investment in smallholder oil palm farmers. In 2015, they added premiums to the government-set price they pay farmers per ton of fresh fruit bunches, from which palm oil is ultimately extracted. This money is aimed at covering the cost of “technical support for the smallholder,” the transport of the bunches from the farms to processing or transportation hubs, and “socioeconomic development” of communities, Vernet told Mongabay in an email.

SOCAPALM increased the amount it pays farmers by around 27 percent in 2015 compared that in each of the previous three years, Vernet said. He attributes a commensurate 40 percent increase in production since 2012 to these investments by the company.

Still, when Nguiffo heard about Herakles Farms’ interest in land in Mundemba and elsewhere in the Southwest Region of Cameroon in 2009, he counseled local leaders to negotiate with the company for the long term.

“I told them, ‘Make sure that you don’t ask for money, but that you ask for the development of palm oil plantation – a small plantation for the village,’” Nguiffo told Mongabay in an interview. “Don’t ask them to give you the money to establish the plantation. Ask them to develop and the plantation and manage it for you.”

But, according to local sources, Herakles came in promising financial incentives in exchange for land to develop. Philip Wangoe is the chief of Fabe village. He told Mongabay that representatives of the company said they would pay the village 50,000 francs CFA (about $87) per month for the 47 hectares Fabe was “leasing” to the project while it was in the nursery stage. Once the land was planted, Wangoe said that figure would increase to 200,000 francs CFA ($347) per month for as long as the company was present.

“This money will last until I die, and even my children’s children will have this money,” Wangoe said.

In February of this year, however, he told Mongabay that the payments haven’t come recently. Wangoe attributed the cessation to poor financial management at Herakles, but he said he expects the payments to begin again when the company comes back to continue their work near his village.

According to Nkongho, communities affected by oil palm plantations have grown more savvy, learning from what happened with Herakles’ reported lack of transparency and unfulfilled promises and how community organizations have fought for a better stake for smallholder farmers.

In these places, Nkongho said, “They have fought and they have succeeded.”

Now, he added, “If any company is coming, the company has to be transparent in its dealings. Without that, it may have also problems.”

His research into Socapalm’s plantations near Eseka revealed that corporations are beginning to realize that working with communities makes better business sense than trying to ignore their existence or fight against them.

For example, he said, by setting aside land for smallholders and ensuring they are invested in the success of the venture, Socapalm’s has reduced the illegal harvest of “fresh fruit bunches” – the raw material for palm oil before it is milled – from the company’s primary plantations.

From an environmental perspective, Nkongho said that small-scale oil palm farmers have the land that the big agricultural companies need, especially as certification schemes laid out by groups such as the Roundtable on Sustainable Palm Oil call for the use of degraded lands for development where possible.

Nkongho and his coauthors pointed out that smallholders “impose little threat to the primary forest when compared to agro-industrial plantations.”

“The strength of the smallholder is the weakness of the agroindustry,” he said in an interview. “In the course of time, they [have come] to see the importance of smallholders.”

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