Oil Palm

Oil Palm in PNG

Oil palm was first introduced to PNG in 1945, but was not adopted as a large-scale cash crop until the 1960s. PNG now has five major plantations, established through loans provided by major lenders such as the World Bank and the Asian Development Bank. All oil palm in PNG is grown under the Nucleus Estate Smallholder Scheme, whereby a central company and plantation contracts small farmers to supply them with oil palm fruit. The structure of the Nucleus Estate Smallholder Scheme and the nature of oil palm itself are raising serious concerns amongst oil palm growers and PNG civil society alike.

Environmental Implications

Biodiversity - Oil palm is a land-intensive industry, and any expansion in PNG will almost surely mean the clearing of forest. With the loss of the forest, primary or secondary, habitat for PNG plants and animals also shrinks. The vast majority of PNG native plant and animal species are unlikely to survive long in an oil palm plantation.

Land degradation - The clearing of land to plant oil palm results in erosion of top soils with the rains. Further, oil palm sucks enormous amounts of nutrients from the soil. Combined, the erosion and the nutrient depletion mean that the land will be virtually useless for other plants (native or agricultural) after the oil palm plantation is abandoned.

Pollution - As is the case with most crops of only one species, oil palm is very vulnerable to pests. Large quantities of pesticides and herbicides are required to maintain the plantation. Fertiliser is also used on a large scale to meet the nutrient needs of the palms.

Waterway degradation - Soil, fertiliser, pesticides and fertiliser all run into the rivers with the rains, with the potential to harm both river species, and at the mouth, local marine environments especially fringing coral reefs.

Social Implications

Loss of livelihood and lifestyle - The growing, collecting and hunting of food is an important part of PNG culture. Women sell goods in the village markets, a valued time for socialising with other village women. When customary lands are converted to oil palm many of these age-old traditions are obsolete. Without land for farming, families become dependent on the wage from the plantations to buy food from expensive supermarkets. Some men feel also pressure, to spend their wages on drinking and gambling, which can cause family disputes.

Cultural and family breakdown - Often not everyone in the community is in agreement with oil palm projects. Sometimes, customary land boundaries are crossed in the establishment of oil palm plots. In other instances disputes arise form the conversion of land which has been traditionally used for communal benefit, to uses which benefit only those working for the company. This sudden introduction of a cash economy introduces stark inequalities amongst villagers. Further downstream other communities bear the brunt of waterway pollution, another source of communal conflicts.

Economic Implications

Local - Landowners and smallholders in existing oil palm project areas are unhappy with the low return from their labour and once productive land. It is very important for growers to make a minimum amount from their plantation, however, as they are heavily indebted to the oil palm company which helped them set up.

The company and the PNG Rural Development Bank provide seedlings, expertise, tools, fertilizers, and other necessary equipment as a ‘loan’ which the growers must repay with interest when the palm matures. Fluctuating prices for palm oil on the international market, however, can hinder repayment greatly.

National - Large scale agribusiness such as oil palm in PNG are based on the ‘economic liberal’ theories touted by the World Bank and the Asian Development Bank. When oil palm is in high demand on the international market, it can be a profitable crop. However PNG’s oil palm industry is dominated by foreign business and much of the profit made on PNG land disappears offshore. PNG’s own profit making is hindered by the tax breaks given to companies and debts from the loans it takes to establish the plantations.

Despite this, oil palm has been hailed as the way to economic growth for PNG by the money-hungry PNG government. In 2003 Prime Minister Somare declared new tax breaks for oil palm companies wishing to establish plantations in PNG. Senior Government officials have announced plans for expansion of oil palm plantations in nearly every province in PNG. This has created fear amongst informed landowners many of whom are campaigning alongside PNG and international NGOs such as ACF to stop further oil palm expansion in PNG.