Palm oil production has the potential to play a major role in economic development of Papua New Guinea. Industry development now underway in PNG shows that the returns on investment for local communities involved in palm oil plantations or smallholder systems can be high.

Oil palm seedlings. Credit: R H Group

This is particularly important for PNG, where over 80% of the population is located in rural areas known to suffer from high levels of poverty. The growth of the palm oil industry in PNG has already had a significant effect on economic development and poverty alleviation. Palm oil has been PNG’s largest agricultural export earner since 2000. Since 2005, palm oil exports have increased by 159%.

Palm oil projects can bring economic and social development to remote rural areas. Research shows that, in the last 15 years, palm oil has recorded the greatest increase in real income out of PNG’s major crops including cocoa, copra and coffee. In fact, smallholder annual returns from palm oil in PNG are now almost twice PNG’s minimum wage and close to 10 times those taken from cocoa production.

Today, around 166,000 Papua New Guineans live in rural households that produce palm oil, while many others derive incomes from peripheral activities. In addition, close to 16,000 people are directly employed in palm oil processing. This makes the industry second only to the public service in terms of formal employment and marginally ahead of the forest industry.

The Sigite Mukus Integrated Rural Development Project

Rimbunan Hijau PNG (R H) has been investing in the PNG economy for over twenty years. R H was once primarily a forestry operator, but the group has diversified into sectors such as retail and property, media, transport and shipping. R H employs close to 7700 people across the country.

In the last 15 years, palm oil has recorded the greatest increase in real income out of PNG’s major crops including cocoa, copra and coffee.

Now, R H has moved into the palm oil industry, through the Sigite Mukus Integrated Rural Development Project in Pomio, East New Britain. The project, currently in the development stage, is an approved area for agriculture development of 42,000 hectares, with 31,000 ha allocated for oil palm development. Three oil palm mills with corresponding crude oil bulking stations will be constructed near the coast, within pumping distances of jetties built to receive transport barges.

Pail oil seeds. Credit: R H Group

Over 500 Papua New Guineans currently work at the Pomio project, developing a new nursery of close to a million seedlings, and in ongoing timber and agriculture operations. R H estimates local employment will increase to more than 3000 over the next three years. The benefits of the Pomio project are already beginning to filter through the community, with increased incomes for those employed by R H boosting the local economy.

Transport infrastructure investment

R H plans to develop new transport infrastructure as well as education and health facilities over the coming years. R H has already begun construction of a road network to connect the project area with rural villages and nearby urban centres.

Alongside the road projects, construction of a base camp complete with electricity, water, VSAT and a mobile phone tower is already underway. This camp will be the first of a number of new facilities constructed by R H in the district.

First published in Made in PNG 2012