Industry needs regulation: Official

The oil palm industry in the country can bring more revenue. Apart from land shortage, regulation is needed for the industry to grow, writes Business reporter PETER ESILA

Malaysia and Papua New Guinea both started oil palm plantations in the 1960s.
Malaysia now has an annual turnover of K70 to K80 billion while PNG still sits on the K1.4 billion annual average.
Malaysia has 5.4 million hectares, Indonesia has 16 million hectares while PNG is below 200,000 hectares.
While availability of land is an issue, however, to grow the industry, regulation is needed.
Business reporter PETER ESILA spoke to Oil Palm Industry Corporation (Opic) acting general-secretary Kepson Pupita in Alotau last Saturday on the need to revive the industry beginning with the amendment of the Opic Act 1992.

Amendment of Opic Act 1992.
“Opic Act amendment is a Government agenda and the draft bill is already in place,” Pupita said.
“We have land suitable for oil palm development at 6.2 million hectares.
“If we plant all that with oil palm, we can bring in K76 billion with the current price of US$861/metric ton (K3,018.99) crude palm oil sales.
“This can pay K19 to K23 billion in taxes.
“At the moment, the industry is not regulated and is not growing quickly.
“Opic is only an extension service provider and cannot do much to manage, control and grow the oil palm sector.
“PNG’s main challenge is making land available for oil palm development.
“At this stage, investment is not conducive because of land issues.”
Pupita said one of the major challenges for the new Act was to address how the new look Opic could give development licences with one-stop land commercialisation, with landowner consent, to develop their land for oil palm cultivation and management.
“We have made submissions to which funding will be made available next year and I am very sure that this Act will go to the floor of Parliament, with our Minister who is pushing hard to review and amend the Act.
“Once that is done, Opic will have teeth to bite.
“Once this law comes in, PNG will be able to bring in a revenue similar to Malaysia.
“Every farmer can get K2,000 fortnightly. I want all public servants to go and do oil palm when they retire.
“We want to change the Act to grow the industry.
“We will look at the price so that the people are happy, if the price is good, people will work, there are things such as transport costs that is affecting farmers.
“Opic provides extension services to the farmers.
“It starts from the block to the company’s mill gate, however we just stopped half way.
“The Government and Opic need to provide transport and bring the crop to the farm gate.
“In the law, we will make sure that the authority can give licences to people, to help the landowners to register incorporated landowner group because you do not have money, the authority will bring in the money, to recognise the landowner groups, create associations and then you will have a stake in the company.
“This country will transform, agriculture and subsistence farming is the livelihood of the majority of our people.”

Opic Intervention Programme
“Over the weekend, I accompanied the Opic team to Alotau, Milne Bay, to launch two access roads for small holder farmers outside Alotau,” Pupita said.
Opic paid youths that had completed the first phase of this programme when it first started in November.
The two access roads were Kapiriuka which would support 69 small holder blocks and 58 in Baraga. Each road costs K495,000 to construct.
“We will be doing the same road and block rehabilitation in other project areas, Popondetta (Northern) and Kavieng (New Ireland) is next,”he said.
From the K50 million for the agriculture price stabilisation, Opic received, K2 million.
“For Opic, we have taken that money and put it into rehabilitating run down oil palm blocks.
“Rehabilitating blocks along the corridor of a road that the Government has already funded through the Public Investment Programme under the small holder maintenance and rehabilitation programmes.”
He said Opic had chosen to invest in small holder blocks and infrastructure with the funding and not price support that exercise would require K100 million to K200 million.
He said Opic had used funding to rehabilitate blocks and improve road access to help growers get back to growing oil palm.
“We have used K1.25 million in Alotau small holders roads and rehabilitation.
“This money will be recovered, the crop is already coming up, people are harvesting, the farm is there, you clean the block and after 10 days you get the fruit, and you take it to the mill and the farmer is paid quickly, unlike coffee or cocoa where you wait seasonally.
“In 24 months, we will make in terms of export earnings, about K1.4 million; in terms to the grower we will make around K700,000 or K800,000 just along this two roads Kapiriuka and Baraga.
“I am not talking about the entire oil palm project in Milne Bay.
“I can say that in agriculture, oil palm is the way to go and our Government needs to put more money into it because that is the commodity that can immediately transform lives.
“We have not implemented the programme in other project areas, as we go, it will be similar.
“But the most important thing is that investment in oil palm will get the most immediate return in terms of export earnings and earnings for farmers.” Pupita said the Government needed to replicate what was being done in Malaysia and Indonesia by putting resources into farming through subsidies on seedling replanting and fertiliser support.

Small holders
Forty-five per cent of the oil palm areas in Papua New Guinea are owned by small holders while the rest (55 per cent) is owned by companies the top two milling companies in the country are New Britain Palm Oil Ltd (NBPOL) and Hargy Oil Palm.
The returns for oil palm in one area are significant.
The total revenue from small holders in Alotau alone was K5.8 million in 2016.
“In 2016, growers in Alotau made K5.8 million, K3.3 million went to farmers, 57 per cent payout ratio is for us, and 43 per cent to milling process cost (milling company NBPOL) which cost K2.5 million in 2016,” Pupita said.
“In 2017, due to a price increase, we made K9.3 million.
“That was the good time, K5.3 million went to farmers, K4 million went to the milling company for them to process our oil palm.
“In 2018, we made K6.1 million, K3.9 million to farmers and K2.9 million to the company.
“Last year saw lower returns with K5 million – K2.8 million to farmers and K2.1 million to the company.”
“In 2020, up to October, we made K4.4 million, K2.5 million to farmers, K1.9 million to the company.”
Papua New Guinea’s total small holder revenues from the project areas in West New Britain (Hoskins and Bialla), Northern (Popondetta), Milne Bay (Alotau) and New Ireland (Kavieng).
“In 2016, oil palm small holders brought K384 million.
“In 2017, it was K468 million.
“In 2018, we made K427 million.
“In 2019, the price went down so we made K289 million.
“This year up to October, smallholders throughout the country made K298 million.”