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Palm Oil Development in Cameroon

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Palm Oil Development in Cameroon THIS PUBLICATION HAS BEEN PUBLISHED IN PARTNERSHIP WITH: REPORT APRIL 2012 Oil Palm Development in Cameroon An ad hoc working paper prepared by David Hoyle (WWF Cameroon) and Patrice Levang (IRD/CIFOR) C r e d i t : P . L e v a n g Smallholder palm oil production provides many job opportunities (Mbongo, Littoral, Cameroon) Biography David Hoyle is the Conservation Director for WWF Cameroon. A trained socio- economist; he has been working in natural resource management in Cameroon for WWF and also WCS for over 7 years. www.panda.org Patrice Levang is a researcher at IRD (Institut de Recherche pour le Développement, France), presently seconded to CIFOR (Centre for International Forestry Research) in Yaoundé, Cameroon. Agro-economist by training, his research has mainly been focusing on the agricultural colonization –organized and spontaneous- of the forest margins of the Indonesian archipelago. Since October 2010 he relocated to Cameroon where he studies the livelihoods impacts of forest conversion. www.ird.fr www.cifor.org CONTEXT Palm oil ( Elæis Palm oil, with an annual global production of 50 million tons, equating to 39% of world production of vegetable oils, has become the most important guineensis ) is a plant vegetable oil globally, greatly exceeding soybean, rapeseed and sunflower native to the (USDA, 2011). More than 14 million hectares of oil palm have been planted countries bordering across the tropics. Palm oil is a highly profitable product for the producers; the Gulf of Guinea. the industry is worth at least USD 20 billion annually. Palm oil is a common Extracted from the cooking ingredient in the tropical belt of Africa, Southeast Asia and parts of Brazil. In addition to palm oil extracted from the pericarp, Elæis guineensis pulp of the fruit, also produces palm kernel oil extracted from the endosperm which is mainly palm oil is rich in used in the cosmetics industry. Palm kernel waste (after the oil has been fatty saturated acids, extracted) is also used as animal feed and in co-firing in electricity generation. and solid at room In 2011, Malaysia (18.7 M tons) and Indonesia (25.4 M tons) count for 87% of temperature. As all the world’s palm oil production of 50 million tons, with very few other countries producing even one million tons – see figure 1. In Africa the main vegetable oils, palm producers are Nigeria, DRC, Ghana and Ivory Coast. Cameroon currently oil does not contain (2010) produces an estimated 230,000 tons annually (MINADER, pers. cholesterol. comm.) and is the World’s 13th largest producer ( www.indexmundi.com ). Oil palm can produce high yields when grown under the right biophysical conditions (Better Crops International, 1999): • High temperatures all year round, between 25-28° C; C r e d • Sufficient sunshine: at least 5 hours of sun per day; i t : D . • High precipitation: evenly distributed rainfall 1,800 – 2,400 mm / year H o y without dry spells for more than 90 days. Higher rainfall can be tolerated l e as long as soils are well drained; • Soils: prefers rich, free draining soils, but can also adapt to poor soils with adequate use of fertilizer, and Palm Tree Elaeis guineensis • Low altitude: ideally below 500m a.s.l. 3 Many regions in Cameroon meet these required biophysical conditions particularly the southern forest zone. South-West, South and Littoral are the most attractive regions for investors. Figure 2: Biogeographical regions of Cameroon (Source: IRAD and Cameroon Statistics Directory – 2000.) Under good ecological conditions a well-managed oil palm plantation can produce up to 7.2 tons of crude palm oil (CPO) (and 1.5 ton of palm kernel oil (PKO)) (Caliman, 2011), although the industrial average is closer to 4.0 tons CPO/hectare. For comparison, rapeseed, soybean, sunflower, and maize - crops often heralded as top biofuel sources - generate only 0.7, 0.4, 0.5, and 0.2 ton per hectare on average, respectively. In comparison to Southeast Asia, current yields are extremely low in Cameroon, roughly 2.3 tons CPO / ha / year in the agro-industry 1 and 0.8 ton CPO /ha / year in smallholdings. Principal drivers of oil palm expansion Over the past few years the global demand for palm oil has significantly increased and has gained a significant market share against other less accessible and more expensive vegetable oils, such as soy. This expansion is due to increased consumption in China, India and other emerging Asian economies where palm oil is used extensively as a cooking oil. Currently, global palm oil demand exceeds supply, a trend that is likely to continue into the foreseeable future, making it particularly attractive for investors. 1 2 There is variation in yields across the The same trend is observed in Cameroon, a net importer of palm oil . different companies, the average yields vary Moreover, increasing regulations preventing the clearing of forests, land between 1.0 t and 3.9 t CPO/ha/yr. shortages, increased scrutiny of land acquisitions and the hopes raised by the 2 In 2010, the output gap was 50,000 t, for an Reduced Emissions from Deforestation and Degradation (REDD) mechanism estimated total production of 230,000 t. 3 in the major producing countries of Malaysia and Indonesia, is encouraging Pressure from international investors is not limited to the palm oil sector in Cameroon. A large Asian companies to diversify their production areas and to heavily invest recent study of the ILC (International Land in Central Africa. Coalition) provided an update on major 3 agro-industrial projects worldwide. Cf. Cameroon is a target country for several reasons , including the presence of Anseeuw, W., L. Alden Wily, L. Cotula and good biophysical conditions (see above); availability of cheap land; political M. Taylor (2012). “Land Rights and the Rush stability and the willingness of the Cameroonian government to develop its for Land: Findings of the Global Commercial Pressures on Land. Research Project”. ILC, agricultural sector. Finally, the country is closer to the traditionally high value Rome. www.landcoalition.org markets of Europe and North America where palm oil is used in manufactured goods rather than as a cheap cooking oil. 4 PALM OIL DEVELOPMENT IN CAMEROON Industrial production of palm oil is not new to Cameroon. The first commercial plantations were established in 1907 under the German colonial administration in the coastal plains, around Mt. Cameroon and Edea. The crop was further developed under the Franco-British regime until 1960 when it had reached an estimated production of 42,500 tons. After Independence, the government of Cameroon took over the production of palm oil with the creation of public sector companies like Société des Palmeraies (which later became SOCAPALM), PAMOL and CDC. According to the Ministry of Agriculture and Rural Development (MINADER), Cameroon produced 230,000 tons of crude palm oil in 2010, across an estate of approximately 190,000 hectare. Production of palm oil in Cameroon is distributed across three plantation types or scales: • Agro-industrial plantations (58,860 ha producing 120,000 tons); • Supervised smallholder plantations (35,000 ha producing 30,000 tons), and • Independent smallholdings (occupying an estimated 100,000 ha producing approximately 80,000 tons of palm oil 4 ). The Government of Cameroon’s Rural Sector Development Plan proposes an increase in palm oil production to 300,000 tons in 2015 and 450,000 tons in 2020. This can be achieved primarily through increasing oil production yields, as well as potentially increasing the area under oil palm production and by increasing oil extraction rates. The Government’s plan is focused mainly on the area under production targets and not on yields or any environmental or biodiversity impacts. Currently, agro-industrial palm oil plantations and the industrial transformation of palm oil in Cameroon are carried out by five large companies: The French group Bolloré has three companies including - SOCAPALM (28,027 ha), SAFACAM (4,870 ha) and the Swiss Farm (3,793 ha); the other two companies belong to the State: CDC (12,670 ha) and PAMOL (9,500 ha). C r e d i t : P . L e v a n g 4 Estimates of the area and production of independent smallholdings made by MINADER are really a crude estimate, as no reliable data exist. Smallholder oil palm nursery (Mbongo, Littoral, Cameroon) 5 C r e d i t : D . H o y l e Large scale industrial plantation, CDC (Tiko, South-West region, Cameroon) Industrial palm oil production is an integral element in the government’s growth, employment and poverty reduction policies. The 1994 New Agricultural Policy of MINADER states that there is a need for increased investment in agro-industry through privatization of existing public institutions and the creation of new agro-industrial plantations, including oil palm. Therefore, the industrial production of palm oil is a national priority initially to meet domestic demand and secondly, for export. Current expansion of palm oil in Cameroon Due to increased global demand for palm oil and suitable conditions for oil palm development, Cameroon has witnessed a sharp rise in investor enquiries seeking land to plant oil palms since 2009. It is believed that at least 6 companies are currently trying to secure over 1 million hectare of land for the production of palm oil in the southern forested zone 5 . These include: Sithe Global Sustainable Oils Cameroon (SGSOC) is a locally registered company in Cameroon, owned by Herakles Farms, (affiliate of Herakles Capital), based in New York USA. Herakles Farms acquired 100 percent ownership of SG Sustainable Oils from Sithe Global, an affiliate of the Blackstone Group, in 2009. Since 2009, SGSOC has been trying to secure a large tract of land in the range of 100,000+ ha in the SW Region of Cameroon to develop a large oil palm plantation.
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