Smallholder farmers engaged in oil palm cultivation generate an average K450 million a year in fresh fruit bunches. There is potential for more with about 6.2 million hectares of land available. Oil Palm Industry Corporation general secretary KEPSON PUPITA spoke to Business reporter PETER ESILA in Popondetta, Northern, about the oil palm industry.
Question: What is Oil Palm Industry Corporation or Opic?
PUPITA: Opic was established under the Opic Act 1992 to replace the extension service of the Department of Primary Industry (Department of Agriculture and Livestock) smallholder oil palm extension service. Its core functions are to:
- PROMOTE and encourage increased productivity of palm oil through efficient extension services to smallholder farmers, pests and disease management;
- COMPILE relevant data; and,
- COLLABORATE with Government and industry agencies including growers and the private sector.
Opic has project offices in Bialla, Hoskins, Kavieng, Popondetta and Alotau.
It is principally financed by FFB (fresh fruit bunches) levy (smallholders and voluntary matching payment from milling companies).
Oil palm was introduced by the Germans to PNG in the 1890s.
But commercial cultivation began in the late 60s with the establishment of five oil palm plantations, New Britain Palm Oil Limited (NBPOL), at Hoskins in 1968, Higaturu Estate, Popondetta in 1975, Hargy Estates in Bialla in 1978, Milne Bay Estates in 1985 and Poliamba Estates, New Ireland in 1988.
What is the current state of the oil palm industry and its contribution to the economy?
Palm oil is PNG’s major agriculture export, generating on average K1.2 billion in revenue a year.
Export revenue from oil palm is equivalent to around 47 per cent of PNG’s total agriculture exports.
About 20,049 households are engaged in oil palm cultivation to generate income, which supplements and sustains their subsistence livelihoods. Milling companies such as NBPOL and Hargy also provide formal employment to hundreds of PNG people.
The smallholder farmers engaged in oil palm cultivation generate on average K450 million each year in FFB.
How is Opic promoting increased productivity?
It is implementing two public investment programmes: the smallholder roads maintenance and block rehabilitation programme and the research and development programme.
Opic is also implementing the price support intervention programme (oil palm component) parked under the DAL.
The smallholder road programme was the key medium-term development plan (MTDP) investment initiated in 2018 to rehabilitate and upgrade the worst portions of smallholder oil palm roads in WNB, New Ireland, Northern and Milne Bay, thereby improving access to markets for oil palm, other cash crops such as cocoa as well as social services such as health and education.
The total project cost of the smallholder roads programme is K65 million (2018-2022).
K27 million was invested from 2018 to 2021, that is 42 per cent.
In terms of the overall physical progress, 200km of roads was set to be rehabilitated per MTDP 3, PNG Opic has rehabilitated 196 km from 2018 to 2021, that is 98 per cent.
Price support programme;
PNG Opic received K2 million in 2020 under the K50 million price support programme parked with the Department of Agriculture and Livestock. Activities undertaken last year included:
- K314,197.22 on rehabilitation and maintenance of an office building in Kavieng project area, New Ireland;
- K110,108.08 on rehabilitation and maintenance of run down blocks in Kavieng;
- K309,890 on rehabilitation and maintenance of run down blocks in Milne Bay;
- K188,369.67 on administration costs;
- K364,282.60 price support and intervention travel and accommodation;
- K713,153.18 unspent (2020)
Some of the blocks were completely cut off.
Farrmers have neglected their blocks for 10 to 15 years and it was hard to rehabilitate the blocks. We were seeking ways to encourage the farmers to go into the blocks.
Contracts were given to youths to rehabilitate the blocks. We started the project in Alotau and it went very well.
Just two weeks after cleaning the blocks, we saw fruits coming up.
So we started identifying more blocks in Kavieng, Northern and rehabilitating those rundown blocks. Out of the K2 million I have rehabilitated 851 hectares of palm blocks in the three project areas of Milne Bay, Northern and New Ireland.
It benefited 456 block holders.
I did an analysis on the return on investments on the K2 million that I spent.
Based on the current average yields that we are doing at 11 tonnes per hectare per year, based on the current FFB price which is around about K541 per metric tonne and the current oil extraction rate of 20 per cent with the current price of crude palm oil, from the 851 hectares that we have rehabilitated, we can rake in K9.32 million in the next 12 months in terms of export earnings.
And out of that, using the current figures, including FFB price of K529.89 (mill gate price on Saturday) we can pay in the next 12 months K5.74 million (for farmers).
That is just from the K2 million that was given.
In all projects, they received two motobikes each with around K220,000 spent on all the motorbikes. Hoskins got four, Milne Bay got three, Bialla two, Kavieng two.
Popondetta received a ten-seater vehicle for K150,000 to be used by the manager.
From 2019 to 2020, there was a K20 million increase in take-home pay for the farmers in the project in total.
With the intervention and road rehabilitation, I expect an increase earning to K60 million.
Any final comments?
The Coronavirus (Covid-19) is affecting the country but if you look at agriculture, there is no stop to it.
The Government and Minister for Agriculture John Simon strongly believe that agriculture is the way forward.
In the future, oil palm will be the lead export earner.
I can confidently say that because it is already happening in Malaysia (5.6 million hectares) and Indonesia (16 million hectares).
Our fruit per bunch is high, our soil is very fertile. We have about 6.2 million hectares of land suitable for planting oil palm.
We have a lot of land in the Sepik plains, Markham Valley, Ramu plains, Transgogol, Musa Valley in Northern.
In the next 20 to 30 years, if we use 6.2 million hectares, we are going to raise well over K120 billion in terms of export earnings. It is achievable.
We will continue to grow oil palm on savanna land.
We are selling our oil to Europe at premium and we can double the income.