REPORT ON PROGRESS FOR SMALLHOLDER INCLUSION IN OKOMU FFB SUPPLY BASE INTERIM

REPORT

SEPTEMBER 2020

1. Target – 100,000T FFB to be sourced from smallholder farmers within the next 10 years. Farmers to be within 50km distance by road of either of Okomu’s two (2) mills.

WORK DONE SO FAR 1. Okomu OPC in partnership with MADE/2SCALE (social NGOs) is developing an inclusive business model that seeks to off-take Tenera FFB from smallholder farmers within 50km radius of its palm oil mills. Currently, the company operates at its main estate and Extension One in Ovia Southwest LGA, and Extension Two at Ovia Northeast and LGAs in , . 2. Okomu has invested up to 60 million Euros into expansion of existing oil mill from 200,000 tons FFB to 300,000 tons FFB and in addition, It has also begun construction of 30 t/hour mills which will be ready in July 2021 and expanded to 60t/hour by 2024. These expansions will be able to cover the expected increase in FFB production thus guaranteeing markets for the smallholder farmers 3. In 2019 - Farmer identification was undertaken by MADE for the purpose of knowing where farmers are located. The areas of interest included Ovia South West, Ovia North East, Uhounwonde, and Ipogba Okha.

4. 5. The number of farmers identified so far is summarized below:

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A total of 42 communities/clusters were covered in this study (26 communities/ clusters and 16 communities/clusters in Nucleus 1 and Nucleus 2 respectively). The communities covered, spanned the following LGAs within the study area: Ovia Southwest, Ovia Northeast, Uhunmwonde, , Ikpoba-Okha, and Esan West LGAs. Generally, the clusters are characterized by small-sized farm holdings of less than one hectare per household. Men dominate farming while the women were more involved in marketing of oil palm products. A few oil palm plantations can be found in the communities while the wild grooves are scattered all over the study area. 6. The primary data were collected from a total of 511 respondents in the study area. These respondents comprised 251 existing oil palm smallholders and 260 prospective (intending) oil palm smallholders. Out of the 251 existing oil palm smallholders, 164 were in Nucleus 1(Okomu EXT2) while the remaining 87 were in Nucleus 2 ( Main Okomu+ Ext 1)representing 65.3% and 34.7% respectively. Also, the 260 prospective oil palm smallholders were made up of 217 and 43 respondents in Nucleus 1 (Ext. 2)and Nucleus 2(Main Okomu+Ext1) respectively. 7. Graph showing existing smallholder farmers identified

TOTAL 251

NUCLEUS 2 87

NUCLEUS 1 164

0 50 100 150 200 250 300

8. Nuclues 1 is Ext.2 while Nuclues 2 is Main okomu

9. So far 4 cooperative farmers’ organizations have expressed interest in working with Okomu on this

10. Below are the next steps in the plan to bring smallholders into the Okomu FFB supply base

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11. The strategy to be used is to rehabilitate, and expand existing farms especially the younger areas of mostly Tenera farms , while the older areas above 25 years of Dura farms will be replanted in the first instance 12. Areas with mixed crop of more than 50% Dura but less than 20 years will also be replanted in the next 13. New areas for farmers identified within the 50km areas will be planted 14. The funding will be loans to be obtained for the farmers through commercial banks from CBN for the above activities 15. All the planting material will be from Okomu nurseries 16. Initially all tools, fertilizers will be obtained through Okomu for quality assurance and later service providers will be brought in to take up that role 17. In September 2020 a design workshop on the smallholder project for Okomu was completed and the outcomes was to continue with extra work on mapping of farmers with a consultant for which the ToR has been prepared and will be financed by 2SCALE by mid October to provide results by the end of December 2020 . 18. In addition, 2SCALE is to engage a consultant for the development of the pricing formula and has developed a Terms of Reference (TOR) for that along with Okomu. The results of such a study will be ready by middle of November 2020 19. 2scale and Okomu will validate outcomes of the design workshop before the Middle of October, 2020. 20. All things being equal Okomu will begin the process of FFB purchases by week 1 of Dec 2020 from areas around Udo 21. An SOP for FFB purchases including quality issues will be prepared by mid November 2020 22. Prepare a draft purchase agreement between Okomu and Terra Agric and farmers 23. Terra Agric will be the aggregation and purchasing organization. 24. 2SCALE will fund the training of extension agents who will provide training to farmers while Okomu will provide the training as part of its contribution 25. Part of the strategy for farmer inclusion is to ensure compliance with RSPO P&C which will be part of the training of the extension agents

Prepared By: BILLY GHANSAH Agric coordinator Okomu Oil Palm Company Plc

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