LARGE SCALE PLANTATION AGRICULTURE : PANACEA FOR IMPROVING PRODUCTIVITY AND INCOME POTENTIAL OF THE OIL PALM FOR POVERTY REDUCTION IN MANYU DIVISION.

INTRODUCTION

Generally in Cameroon, the agricultural sector remains a very important component in the fight against poverty as poverty has been found to be essentially a rural phenomenon. Plantation agriculture in particular represents one of the main source of employment, and foreign exchange for the nation. Estimates indicate that a one percent growth in plantation agriculture translates to about 1.5 percent economic growth. Therefore growth in plantation agriculture plays a fundamental role in reducing poverty and can be used to spearhead national development plans. Manyu Division lies in the dense equatorial forest that is suitable for plantation agriculture and that makes up most of the South West province. It has an active and farming population of 250,000 and 220,000 inhabitants respectively and covering approximately a surface area of 18,244 Km2 and over one million hectares of arable land.

Development Challenges

The region, although well suitable for plantation agricultural production presents very unique development challenges. Agricultural production and productivity are low, economic and social infrastructure, particularly roads are lacking or are in a poor state. Both income and non-income indicators of poverty are estimated to be below the national average with about 65% of the population living below the poverty line. In this Division agriculture is characterised by subsistence farming with little or no utilisation of agricultural technology.

Socio-economic Benefits

The palm oil industry is people-oriented and brings important socio-economic benefits to the population. The spectrum of stakeholders is wide: workers, smallholders, contractors, suppliers, consultants, millers, refiners, manufacturers, traders, transporters, insurers and consumers. Each contributes their quarter to strengthen the industry in particular and the nation’s economy in general.

Production and Demand of crude Palm Oil

In 2007, it was estimated that about 161,000 hectares of land were under oil palm cultivation in Cameroon with an estimated annual production of 162,000 metric tons of crude palm oil. Industrial plantations produced 122,000 metric tons and smallholders 40,000 metric tons.

Consumption of crude palm oil, both for food and transformation exceeded production by 50,000 metric tons and as the population grows, the demand for edible palm oil is expected to increase. In addition, the demand for crude palm oil for transformation into soap, detergents, and refined oil is expanding rapidly and will require that the production capacity be increased. The impact of the blue ocean marketing strategy through the utilisation of crude palm oil for the production of bio-diesel in the world is so strong that current high prices of this commodity chain will be maintain for a sustained profitability. Therefore, the palm oil industry in Cameroon has a wide scope for expansion and will remain profitable and viable in the foreseeable future.

CONTEXT AND JUSTIFICATION

The main oil palm zones in Manyu are Mamfe, Upper Banyang, Eyumojock and the forest region of southern Akwaya. Oil palm cultivation can be classified according to farmland size into two main categories namely: (A) Smallholdings and (B) Agro-industry. The smallholdings can be further classified as follows:

(A1) Very Small Size Plantations:
These are sole proprietor plantations with farmland sizes ranging between 1 and 10 hectares characterized mainly by family labour, low inputs and low yields.

(A2) Small Size Plantations:
These are sole proprietor plantations with farmland sizes ranging between 11 and 50 hectares and characterized mainly by family and hired labour, low inputs and low yields.

(A3) Medium Size Plantations:
These are sole proprietor plantations with farmland sizes ranging between 51 and 500 hectares characterized mainly by hired labour, average inputs and medium yields.

(B1) Agro-industry:
Agro-industries have very large farmland sizes above 500 hectares. In Cameroon, areas occupied by oil palms among the major Agro-industries are SOCAPALM (25,000 hectares), C.D.C (15,000 hectares), PAMOL (10,000 hectares), SPFS (7,000 hectares), and SAFACAM (4,000 hectares). Agro-industries are characterized by the use of organized labour force, best agricultural practices for best yields and corporate financing, organization and management.

Constraints Limiting Productivity of Smallholdings in Manyu

Smallholders are not adequately exploiting their plantations and the result is low fresh fruit bunch (FFB) yields ranging averagely between 4-7 tons/ha/yr and low oil yields ranging between 0.5-1.0 ton/ha/yr because of the extreme dispersion of their plantations whereby industrial units of extraction can not be exploited. Furthermore, the potential yield of 15 tons FFB/ha/yr for smallholder plantations is not achieved because of various reasons amongst which are plantings with unadapted or voluntary oil palm planting materials, wrong cultural and agronomic practices and no fertilization of their palm trees. Most of the smallholders are resource poor lacking access to credit facilities, farm inputs like fertilizers, pesticides, farm tools, processing machines and agricultural information to improve on their productivity and competitivity.

Availability of Labour

Plantation Agriculture, especially cultivation of the oil palm is labour intensive. Labour and corporate organization has been the main constraints in the development of oil palm plantation agriculture in Manyu Division. Elsewhere in Cameroon where there is sufficient land and the agronomic and climatic conditions are favourable for plantation agriculture, the natives of the localities do not have the right attitudes of farm labourers or operatives. So investors must look elsewhere within the country or beyond to recruit farm operatives.

In the South West Province, CDC and PAMOL are household known giant plantation companies that grow the oil palm. Native South Westerners shun plantations labourer’s work. So the companies tend to elsewhere especially to the North West Province and neigbouring Nigeria to get workers. For this reason they compete to obtain the ever decreasing number of young people who are willing to offer their services to them.

Manyu Division is the only division of the former West Cameroon that does not have any of the giant Agro-industrial plantations (CDC and PAMOL). Paradoxically history holds that the first palm oil extraction machinery in the world was erected in West Cameroon by Haake (a German firm) in Mamfe and Victoria around 1909. As previously mentioned, plantations are great catalysts for the creation of wealth in the local communities where they are implanted. No doubt the buoyancy of ever-growing semi urban communities in the vicinities of these giant Plantations. Manyu Division is the only old division that has not seen a similar growth rate in population and in the creation of wealth.

Attempts have been made by few Manyu elites to develop small and medium size oil palm plantations in Manyu Division. The performance of their exploitations has been far short of their expectations. Compared to their counterparts who established small and medium size plantations of the same scale around or near CDC or PAMOL, Manyu investors are near desperation and are abandoning while their counterparts are expanding because they are doing well. The greatest constraint of the Manyu medium size farmers is the scarcity of operatives. The few available operatives like all others elsewhere in the plantations are very mobile and unreliable. Therefore to succeed in any labour intensive agricultural venture the equation of the availability of labour must be resolved. Poor management and organization of small and medium size plantations have also hindered the development of this sector in Manyu Division because the investors do not manage their estates as a business.

Corporate Organisation

A corporate plan of action for initiating development has always failed because of the lack of mutual trust. This unfortunate situation may not be unconnected to the excess republican and self-centered nature of the Manyu man with no one willing to sincerely cooperate with the other. This attitude for most of the time has resulted into individualistic large solo ventures that are short lived and collapse as the individual passes away.

Notwithstanding this constraint, many elites still strongly desire to create and develop medium size farms. Therefore a framework must be sort out for a corporate plan of action for the development of Manyu division. Why not through the incorporation of a fund by the elite for the development of a large-scale oil palm plantation.

OBJECTIVES

This paper has been elaborated into three parts designed to show the impact of the presence of a large plantation company to the local communities surrounding this agro-industrial unit; the options open for the creation of one or more in Manyu Division; and finally the project cost for the development of one thousand hectares pilot oil palm plantation that will engender a more profitable smallholder sector in Manyu Division.

PART I

SOCIO- ECONOMIC IMPACT OF A LARGE PLANTATION COMPANY TO NEAERBY COMMUNITIES: THE CASE OF PAMOL PLANTATIONS PLC

There is a popular saying that “Without PAMOL, there would be no Ndian Division” And everybody in Ndian Division, natives as well as settlers agree. There are many reasons why this saying holds true but we shall limit our discussion on a few that could be useful for Manyu investors.

DEVELOPMENT OF SMALLHOLDINGS

PAMOL for its own interest encouraged the creation of smallholdings by low income workers of its plantations and farmers of the nearby communities. Interested farmers received free improved oil palm seedlings and agreed to supply to PAMOL fresh fruit bunches. This policy started in 1976 and lasted up to 1990. With a guaranteed market the first farmers found out that compared to their small monthly salaries, income from their farms was by far higher. This encouraged many others and eventually middle level and senior staff except managers became interested and established their own smallholdings. From about 1990 everybody including PAMOL Senior Managers, Cabinet Ministers, Senior Army Officers on assignment at Ndian, Civil Servants, Business people etc became involved. From a few hectares of smallholdings of the oil palm in 1970s there are over 6000 hectares of oil palm owned by smallholders in Ndian Division. This figure (6000 ha) represents about half of the total area developed by PAMOL and C.D.C on the oil palm in Ndian Division. And as the trend continues, in about 2020 if PAMOL does not increase its hectarage on the oil palm, smallholdings shall become the number one producers of palm oil. Today there are more than 200 small and medium size oil palm smallholders who earn annual income of above three million CFA francs (3,000,000frsCFA) each. They are under no obligation to supply their crop to PAMOL.

AVAILABILITY OF LABOUR

The first smallholdings were established by skilled low income company harvesters and pruners who worked their farms themselves after official company work. Eventually middle level employees became involved and worked bigger hectarages. These smallholders engaged company trained skilled labourers after official company work hours and days. So long as this arrangement boosted the volume of fruits PAMOL received for its mills at Lobe and Ndian Estates, the company encouraged this arrangement. However abuses became widespread in 1990s when Supervisors and Managers used their influence and authority to cause company employees to work their farms at the expense of the company. To curb these abuses PAMOL undertook reforms in 1998 and caused labourers to group themselves into Common initiative Groups (CIGS) and became independent operators out of company check roll. The negotiated rates became more attractive than rates offered for the same plantation skilled operations in C.D.C, SOCAPALM and SPFS. This reform brings in a large number of skilled and unskilled persons looking for jobs in PAMOL every now and then. Although they are housed by PAMOL, their semi independence allows them to work for about 80% of the month for PAMOL who pays at the end of 30 days and 20% for the month for smallholders who pay cash daily for any job done. Apart from those who join the PAMOL CIGs, many people come to work for short periods (less than one month) knowing that they can always find daily cash jobs from smallholders.

SMALLHOLDINGS AND THE CREATION OF JOBS AND WEALTH

NDIAN DIVISION has C.D.C and PAMOL in three subdivisions – BAMUSSO, EKONDO TITI and MUNDEMBA. The rural people who live around the three estates- Illoani for C.D.C, Lobe and Ndian Estates for PAMOL are among the richest rural people in the Province. More than one thousand smallholders and oil palm mill operators earn annual income of about one million five hundred thousand francs (1,500,000 FRS) each. More than three thousand skilled harvesters and pruners earn annual income well above one million two hundred thousand francs (1,200,000 FRS CFA) each and many of these skilled harvesters and pruners have started investing in oil palm farms as their retirement security. Many other rural businesses are developing and the level of their performance can be measured by the volume of business carried out by the several micro- financial institutions operating in these communities.

POPULATION GROWTH

From less than 5000 people in Ekondo Titi town in 1970s, the population of this “rural” town today is about 30,000 inhabitants while the whole council area is 80,000 inhabitants. Villages within a periphery of 25km from the Estates of PAMOL or C.D.C are growing in population and housing in accordance with the development of smallholdings. About 90% of the ex-employees of PAMOL as well as retired civil servants who had worked in Ndian Division have settled in the Division near their farms. Almost all Ndian elites have medium size farms near the plantations and those who have retired have settled. It should be noted than many Manyu natives, ex-employees of C.D.C and PAMOL as well as retired civil servants have medium size farms in Ndian and have settled principally at Mundemba and Ekondo Titi towns, and Illoani and Bekora villages. Many would prefer to invest in Manyu Division if the enabling conditions exist.

DEVELOPMENT OF OTHER CROPS

Because of the presence of abundant labour, diversification is possible. Other crops maybe developed at medium scale: - rubber, cocoa, citrus, plantains, cassava, you have the rest.

The socio- Economic impact of PAMOL to the communities of Ndian Division demonstrates that people are willing to move to pools of work opportunities and this can best be guaranteed by a big agro-industrial company. The availability of workers facilitates the development of small and medium size exploitations of all types of crops. These exploitations create enormous wealth and villages and semi-urban communities grow rapidly. Rural exodus is curbed. Elites are more pruned to settle in the land of their ancestors after retirement. The Manyu person has a strong attachment to the land of his ancestors and given the enabling conditions he shall prefer to invest in Manyu agriculture and or agro-industry in Manyu Division than elsewhere in this country. He shall prefer to retire and settle in Manyu Division than to be brought in a coffin for burial.

PART II
OPTIONS OPEN FOR THE CREATION OF LARGE PLANTATION(S) IN MANYU DIVISION

The LEVER BROTHERS (UNILEVER PLC LONDON) had problem to obtain palm oil and palm kernel oil to make soap, the most popular brand known to Cameroonian being “LUX”. To be sure of constant supply, they floated shares in order to acquire oil palm plantations in Africa and Asia. In about 1936 they bought what became known as PAMOL in Cameroon.

Many Manyu people have a strong desire to create medium size farms in their native Manyu Division. Their problem is the uncertain availability of workers to develop their exploitations. But this problem could be solved if there existed a labour intensive agro-Industrial company in Manyu. How can the Manyu Elites cause the creation or the existence of one?

FIRST OPTION:

Lobby for an Agro-Industrial company already existing to expend its operation in Manyu Division. Or search for one foreign company to invest in Manyu Division. There is great possibility now for foreign investors to consider Manyu Division for those of them who want palm oil for the emerging Bio-fuel industries. Manyu Division is nearer the North West Province the source of many plantation labourers.

SECOND OPTION:

Manyu elites should float shares for the creation of an agro-industrial company of its own. Estate are opened along the lines of sub Divisions –not necessarily following administrative Headquarters but more centrally located so that surrounding communities may develop small and medium size farms taking advantage of the availability of workers in the Estates.

THIRD OPTION:

Elites of interested sub Division create an Agro-Industrial company and set up estates in locations considered central. In this case consideration should be given to locations with existing initiatives: - medium size holdings and or Major/renown palm oil mills or processing machinery.

PART III
COST OF DEVELOPING A 1000 HACTARES OIL PALM PLANTATION

FACT FILE;

CROP: OIL PALM (Elaeis guineensis)
CROP YIELD: 15 – 20 TONS PER HECTARE
OIL YIELD: 3 – 4 TONS CRUDE PALM OIL PER HECTARE
PRODUCTION: Begins 3-4 years after planting
TOTAL HECTARES ENVISAGED FOR THE PROJECT:
One thousand (1,000 ha) hectares for development within 2-3 years at the rate of 350-500 hectares per year with provision for extension to 5,000 hectares subsequently.

STRUCTURE OF THE COMPANY

The company will initially comprise of 1,000 hectares of land concession for oil palm development with provisions to extend to 5,000 hectares subsequently. One Division will be initially developed and two more Divisions developed subsequently to cover the 5,000 hectares.

The company will comprise a Board of Directors, a Managing Director, Management staff, field staff and field operatives. Total personnel numbers is estimated at about one hundred and fifty (150) persons for 1,000 hectares.

ESTIMATED DEVELOPMENT COST

No.
RUBRIC
COST (FCFA)
1.
LAND ACQUISITION
70 million FCFA
2.
LAND SURVEY, SOIL SUITABILITY STUDIES AND LAND CERTIFICATION
10 million FCFA
3.
PERSONNEL HOUSING
222 million FCFA
4.
HOUSING FOR OFFICES AND SOCIAL WELFARE
45 million FCFA
5.
FIELD ESTABLISHMENT COST PER HECTARE (i.e from planting to maturity at 4 years after planting)
1 billion FCFA
6.
COMPLETE 5 TONS/HOUR OIL PALM MILL AND INSTALLATION ex Malaysia
600 million FCFA
7.
ROLLING STOCK
100 million FCFA
8.
STORAGE FACILITIES
50 million FCFA

TOTAL
2.097 billion FCFA


ESTIMATED OPERATIONAL COST

No.
RUBRIC
REVENUE
1.
AVERAGE TOTAL OPERATIONAL COST PER ANNUM DURING MATURITY ( i.e. Upkeep, fertilization, harvesting and processing cost per year)
400 million FCFA

TOTAL OPERATIONAL COST/ANNUM
400 million FCFA

ESTIMATED GROSS REVENUE

No.
RUBRIC
REVENUE
1.
AVERAGE EXPECTED GROSS REVENUE PER YEAR AT MATUITY( i.e. from 4 years after planting)
840 million FCFA

TOTAL GROSS REVENUE/ANNUM
840 million FCFA

6.6 CONSULTANCY CHARGES ON DETAIL PROJECT FORMULATION, DESIGN AND WRITE-UP

The project formulation, design and write-up will involve specialists in the following domains:
An Agronomist
An Agricultural Economist/Rural Socio economist
A Mechanical/Electrical Engineer
An experienced Planter

Estimated cost for formulation, design and write-up of the project including printing of the final copies is fifteen million francs (15,000,000 FCFA). Project formulation and write-up will take at least four months.


Author: Dr. Etta Culbertson - Presented at MEDWC Eyumojock.