Seminar 13 Mar 2013 - Session 4 - Oilpalm Indonesia-Cameroon-Colombia_ by PLevang and LFeintrenie

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The development of oil palm cultivation followed very different paths across continents. Originating from Central Africa where palm oil was first collected from the wild in the forest, oil palm has …

The development of oil palm cultivation followed very different paths across continents. Originating from Central Africa where palm oil was first collected from the wild in the forest, oil palm has since become a typical agro-industrial crop especially in South-East Asia and Latin America. More recently smallholders have increased their share in the production, while with some differences. Nowadays the problem that the oil palm sector faces is no longer related to either choose agro-industries or smallholders, but to find the best way to associate agro-industries and smallholders in mutually beneficial schemes. Examples from Indonesia, Cameroon and Colombia show the limits and opportunities of such associations.

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  • 1. Oil palm agro-industries and smallholders across continents:examples from Indonesia, Cameroon and Colombia Patrice Levang (IRD/CIFOR) Laurène Feintrenie (CIRAD)
  • 2. Outline1. Palm oil sectors in: Indonesia, Colombia & Cameroon2. Lessons learnt from oil palm development in Indonesia3. Lessons learnt from oil palm development in Cameroon4. Opportunities for future development in Colombia
  • 3. Palm oil global market Palm oil production in 2011 1,600 24,001 1,400 22,001 1,200 20,001 1,000 800Palm oil production (1000 t) 18,001 600 16,001 400 14,001 200 12,001 0 10,001 8,001 6,001 4,001 2,001 1http://www.indexmundi.com . Source: United States Department of Agriculture
  • 4. Indonesia palm oil production Colombia palm oil production Cameroon palm oil production 28,000 900 200 Production CPO Production CPO Production CPO 26,000 Imports CPO Imports CPO Imports CPO 180 800 Exports CPO 24,000 Exports CPO Exports CPO Production KPO Production KPO Production KPO 160 22,000 700 Imports KPO Imports KPO Imports KPO Exports KPO Exports KPOPalm oil (1000 t/year) 20,000 Exports KPO 140 600 18,000 Palm oil (1000 t/year) Palm oil (1000 t/year) 120 16,000 500 14,000 100 12,000 400 80 10,000 300 60 8,000 6,000 200 40 4,000 100 20 2,000 0 0 0 Source: United States Department of Agriculture; http://www.indexmundi.com
  • 5. Share of the oil palm Indonesia 100% harvested area 90% 80% Oil palm harvested area 70% 60% PBS private 8,000,000 50% 40% PBN government 7,000,000 30% Harvested area (ha) Smallholders PBS private 20% 6,000,000 10% PBN government 0% 5,000,000 1983 1967 1971 1975 1979 1987 1991 1995 1999 2003 2007 4,000,000 Smallholders 3,000,000 2,000,000 1,000,000 0 1983 1967 1971 1975 1979 1987 1991 1995 1999 2003 2007http://ditjenbun.deptan.go.id , consulted on 04/04/2012
  • 6. Colombia 450,000 Based on data from SISPA, 2011. 400,000 Share of oil palm planted area depending on the size of the 350,000 plantationOil palm plantations (ha) > 200 ha 100% 300,000 90% > 200 ha alliances 80% 250,000 70% alliances 0-200 ha 60% 0-200 ha 200,000 50% 40% 150,000 30% 20% 100,000 10% 0% 50,000 1999 2010 - 1999 2010
  • 7. Cameroon 100% 90% 80% Agroindustrial estates 70% Small and Medium holders 60% 180,000 Agroindustrial estates 50% 40% 160,000 Small and Medium holders 30% 20% 140,000 10% 0% Harvested area (ha) 120,000 100,000 80,000 Share of oil palm growers in Cameroon 60,000 40,000 20,000 0 > 100haEmmanuel Ngom, Communication at the South-South exchange ‘Sharing what works insustainable and equitable oil palm development’, held by CIFOR in Bogor, 21-27 Sept 2011.
  • 8. Plan1. Palm oil sectors in: Indonesia, Colombia & Cameroon2. Lessons learnt from oil palm development in Indonesia3. Lessons learnt from oil palm development in Cameroon4. Opportunities for future development in Colombia
  • 9. Nucleus Estates and Smallholders (NES): • 7 ha of land against 2 ha of oil palm, technical advice, land title and credit • The credit covers planting costs, production costs and infrastructures • A cooperative manages the smallholdings Econom ic results of 2 ha of oil palm under plasm a schem e Kuam ang Kuning area (Bungo, Jam bi) 6 000 Gross added 5 000 value Planting in 1998 Economic results (€/year) Net 4 000 Income In 2006, 3 000 reimbursement Debt 2 000 completed 1 000 0 98 99 00 01 02 03 04 05 06 07 08 19 19 20 20 20 20 20 20 20 20 20Feintrenie L, Chong WK, Levang P. 2010. Why do farmers prefer oil palm? Lessons learnt from Bungo district, Indonesia. Small-Scale Forestry, 9(3): 379-396.
  • 10. Comparison of land uses profitability For min, max and average prices (2008-2009) Return to land (€/ha) Return to labor (€/manday) 4,500 50 4,000 45 3,500 40 35 3,000 30 2,500 25 2,000 20 1,500 15 1,000 10 500 5 0 0Feintrenie L., Schwarze S. and Levang P. 2010. Are local people conservationists? Analysis of transition dynamics from agroforests to monoculture plantationsin Indonesia. Ecology & Society, 15 (4): 37. [online] URL: http://www.ecologyandsociety.org/vol15/iss4/art37/
  • 11. Plan1. Palm oil sectors in: Indonesia, Colombia & Cameroon2. Lessons learnt from oil palm development in Indonesia3. Lessons learnt from oil palm development in Cameroon4. Opportunities for future development in Colombia
  • 12. Cameroon Location of oil palm production area (based on Bakoumé and Abdullah, 2005) French group Bolloré 3.5 t/ha 5 CPO 1 3 Publiccompanies 4 2 t/ha 2 CPO
  • 13. FFB and red oil production by 700 smallholders 600 500 400Costs and incomes (€/year) 300 200 Indonesia: 800 to 2 900 €/yr 100 0 -100 Years after planting -200 -300 Small scale mills: -400 Costs of FFB production Artisanal red palm oil: Income FFB -500 African food, soap, fuel. Income red oil -600 Extraction rate: -700 Based on Emmanuel Ngom. 2011. Around 15% (Tenera fruits)
  • 14. Nucleus Estate & Smallholders scheme: Why does it work in Indonesia and not in Cameroon?1968 : SOCAPALM : development company : 4 mills, 5 industrial plantations1978 : FONADER : development bank : credit to develop smallholdings – FONADER, provided a plantation credit to smallholders through SOCAPALM, CDC et PAMOL Ltd – SOCAPALM, CDC & PAMOL ruled the smallholdings development project providing technical advice, inputs and planting material – Smallholders had to sell all their production to SOCAPALM, and pay back the credit (interest rate of 9%) – Planted area: around 70% of estates industrial plantation, 30% of contracted-smallholdings for out-growers• Reasons of failure of the NES scheme: – No dependence of Cameroonian smallholders vis-à-vis companies (small scale mills and other agro-industrial mills around looking for FFB supply) – No reimbursement of the credits (bankruptcy of FONADER) – Lack of trust in FONADER (high interest rate, long term credit, no transparency for credit reimbursement,…)
  • 15. Enterprise Cameroon oil Concession Year Region Investment future? Company Homeland palm development : What source group asked (ha) promissedSithe Global Sustainable Herakles 100 000 350 Hoyle and Levang, 2012 USA (73 000 2009 South-West Millions http://e360.yale.edu/Oils Company Farms secured) US$ http://af.reuters.com/ (SG SOC) Ocean 200 Hoyle and Levang, 2012 GoodhopeAsia Holdings GMG Singapore 50 000 2011 division, Millions http://www.journalducam South US$ eroun.com 140 000 ha Indonesia-Malaysia Indian Biopalm owned, 200 000 Ocean 1800 Hoyle and Levang, 2012 Siva (50 000 2011 Millions> 1Mha http://www.journalducam Energy Indonesian division secured) US$ eroun.com registered Deforestation Centre, Sime South, Land grabbingLevang, 2012 Darby Malaysia 600 000 2011 Littoral, Hoyle and South-West 250 000 ha Indonesia, 300 000 ha Malaysia High social costs Nkam and PalmCo 100 000 2012 Littoral Hoyle and Levang, 2012 Smart Holdings 25 000 2012 Hoyle and Levang, 2012
  • 16. Plan1. Palm oil sectors in: Indonesia, Colombia & Cameroon2. Lessons learnt from oil palm development in Indonesia3. Lessons learnt from oil palm development in Cameroon4. Opportunities for future development in Colombia
  • 17. Oil Palm Agro-industry in Colombia 2010 Oil palm has been planted in Colombia Zona Norte for over 50 years 114.986 has Growth of the Planted Area 1961-2010 Zona Central (Thousands of Ha) 112.986 has 400 In production Under development 350 Zona Oriental 158.404 has 300Miles de hectáreas 250 200 150 100 Zona Occidental 15.636 has 50 0 1961 1964 1967 1970 1973 1979 1982 1985 1988 1994 1997 2000 2003 2009 1976 1991 2006 Source: SISPA, July 2011 Source: SISPA, July 2011 17
  • 18. Productive Strategic AlliancesOil palm is an inclusive businessin Colombia:• Strategic Alliances are apartnership betweenentrepreneurs (as operator), withsmallholders associated farmersand facilitators•1 in 4 hectares planted with oilpalm over the last decade involveproduction alliances• 109 alliances established as of2008• 5,391 smallholders 18
  • 19. Opportunities for ColombiaSmallholdings are representing now 19% of total planted area in Colombia and they are to stay a major actors of oil palm development:• Alliance scheme of development allowed the recent development of smallholdings and now smallholders are about 5400 in Colombia. => Good experience from Indonesia and bad from Cameroon about plantation credit can be valorised in order to maintain the opportunity of credit for new smallholders.• Colombia is one of the pioneers for implanting oil palm plantations on planted pasture and grassland => no deforestation, Carbon storage, but research is needed to get information about indirect changes of land uses. => ecological intensification should be a good way of research to improve the soil fertility in such situations. Exchange and partnership with other experiences on degraded land will be interesting. (Source : Pacheco 2012 : Soybean and oil palm expansion in South America)
  • 20. Conclusion: Lessons learnt, risks and opportunities• 3 options for FFB production: – Large-scale plantations – Out-growers contracts – Smallholders’ independent plantations• Sustainable oil palm development requires: – Compliance to RSPO certification, Free, prior and informed consent – Transparency on any negotiation of concession, and on management of credits – Invest in increasing FFB productivity of smallholdings – Favor FFB production by smallholders and CPO/KPO extraction by industries – AI : skills, productivity, capacity of investment