Accra, Ghana. Solidaridad West Africa signed a 4 year agreement with The Netherlands Embassy in Accra for the development of a Sustainable Oil Palm Program. The agreement with a value of € 12 million falls under the new policy of the Dutch Ministry of Development Cooperation, which focuses on food security. Hans Perk, Solidaridad West Africa Director, is pleased with the agreement: “It is important that we invest in this sector to ensure the future of oil palm in this region, prevent poverty and the negative effects on the environment. It is also important in order to keep the palm oil affordable for the regional consumers. If the small and medium sized enterprises are able to produce more efficiently, major expansions; which often come with social exclusion and deforestation, won’t be necessary and that’s an important step.”
Through this program Solidaridad will be able to improve the efficiency and productivity of the small and medium-sized enterprises (SME), in the oil palm sector through the development, testing and up-scaling of “Best Management Practices.” The knowledge gained will be made available to stakeholders in the West African region through a regional expertise center.
Apart from stakeholders in palm oil businesses, other role-players private investors and financial institutions which fund the sectors’ development. If the Small & Medium Enterprises (SME) sector in West Africa is successful some of the USD 800 million that pays for palm oil imports can be diverted to rural value chains. The main components of the program are -the funding of SME pilot businesses with a match funding facility, facilitating access to finance with developing performance indicators and training to financial institutions. The creation of a regional expertise center, to make knowledge accessible and thus fill information gaps with a research challenge fund, also forms part of the programme. Furthermore it will give impetus to the expansion of the Roundtable on Sustainable Palm Oil (RSPO) certification in the region and development of guidelines for the SME sector. Monitoring the environmental performance of the West African Oil Palm sector, will also be of priority.
Local Palm Oil Sector
Palm oil which originally comes from West Africa forms an essential part of the local diet for consumers. The sector however is characterized by low productivity both in farming and milling, and plagued by social and environmental degradation. It is estimated that around 4 million hectares of agricultural land are currently planted with oil palm yielding 3-5 Metric Ton of Fresh Fruit. In contrast to the sector in South East Asia oil palm plantations in West Africa are around 2 ha. The production at farm level is at about 30% of the potential and the efficiency of milling is as low as 20% of the production capacity.
Poor equipment, ill planned facilities, the lack of access to affordable finance, poor agricultural practices and lack of expertise are some of the main causes which results to low productivity and the high costs of production. Palm oil has become less and less affordable to the urban poor.
Opportunities for the sustainable development and better productivity in the SME oil palm sector in West Africa can improve the livelihoods of farmers in the region, while simultaneously decreasing the pressure on land in South East Asia and large scale expansion in West Africa.