Small Holder Agriculture Development Project Loan

I wish to support the letter by the people of Oro, Papua New Guinea who oppose the World Bank’s loan for oil palm through the Small Holder Agriculture Development Project.

This is to register our concern that the Small-holder Agricultural Development Project (SADP) Loan approved in May this year (2008) has been hijacked by the Oil Palm Plantation Companies in Papua New Guinea to push for the expansion of oil palm rather than expend it in areas that will enable greater economic benefits for the agricultural dependent rural masses of Papua New Guinea. We object to the loan being spent on oil palm expansion for various reasons.

To substantiate our argument, firstly oil palm is not the only option for active participation in the cash economy for the rural population as is the view of our Government and the multinational oil palm companies operating in our country. The various assessments have been focused on oil palm rather than alternatives. In the Northern Province, the assessment teams held discussion only with the stakeholders in the oil palm industry. These consultations also failed to convene meetings with non oil palm growers in oil palm growing areas. Therefore, the views presented to support the loan submission do not reflect a broad cross section of the community.

Having had not consulted non oil palm growers, there were important lessons learnt from previous loans that are not captured and therefore the focus on smallholder oil palm expansion is likely to replicate the existing socio-economic problems further with more serious negative impacts. Some of these problems are the result of structural injustices by transnational corporations such as Cargill.

Structural injustices include the procurement and supply of farm maintenance goods to small holders thus entrapping them in vicious cycles of debts to the milling companies. There are facts to indicate that the oil palm companies have no interest in our welfare other than to increase productivity for their palm oil mills hence profit directly from the loan by pushing it down our throats that planting oil palm is the best option for us. The social assessment report also points out that part of the loan is to be used to maintain roads which is currently under a tax exemption agreement between the Higaturu Oil Palms Ltd and the Oro Provincial Government.

They use the argument that with oil palm there is a guaranteed market access. It is however not so. About 400 block holders, recipients of previous World Bank loan under the Oro Expansion Program from 1993 to 2002 have to carry their fruit for more than a kilometer to have it picked up. Only a small portion of the population is involved while there are many who are engaged or would rather engage in other agricultural activities.

There are many who are and are still repaying development and maintenance cost to the Higaturu Oil Palms Ltd a subsidiary company of Cargill. They were led to believe that when they plant oil palm they would have road infrastructure to access local markets for other crops and commodities as well. There are now some oil palm blocks with no road access and this promise of easy access to markets has just been a bad dream. In fact a promise that the PNG Government had made on behalf of the oil palm companies. If any roads were built most are in a state of decadence and inaccessible by vehicles other than farm tractors.

There are also Oil palm blocks developed from the ADB loan era, (1979 to 1989), who still have not realized the dreams of a multi bedroom mansion and cars of their choice. These loans have been inherited by their children.

Secondly, we are of the view that for this SADP Loan to benefit more agricultural dependent families the government should focus on developing and maintaining road access to rural communities to enable greater participation by the bulk of the population.

For instance there are more than 5000 coffee producers from the Afore District of the Northern Province who have the capability of producing thousands of tones of organic coffee annually, however lack supporting infrastructure. Is it not feasibly to put some of the SADP loan money into rebuilding and enabling required infrastructure to get the people from the Afore District to release these immense economic potential that is now locked due to bad infrastructure. Will this not boost the local economy and support the PNG Government’s export driven under its Medium Term Development Goals, (MTD)?

There is also a huge potential for a beef industry in the province, as well as the options to enable other rural Papua New Guineans to venture into commercializing various organic crops therefore object to the view that oil palm is the best option for a cash income.

Any further expansion of oil palm will not be in the best interest of the nation as it will have serious negative effects on our social and terrestrial environment. It has already contributed to major losses of forests and biodiversity in our country bringing with it social and environmental problems which the oil palm companies have refused blatantly to accept responsibility.

We are aware of the fact that the World Bank is very well informed of the issues as a direct impact by the oil palm industry however sees it fit to grant another loan to the GoPNG in the pretence of agriculture development as a strategy to alleviate poverty whilst the fact remain the multinational corporations profit from the loans while we repay these loans.

In fact the previous World Bank loan for the Oro Expansion Oil Palm Project in Oro province has done quite the contrary from reducing poverty. Some of our people have suddenly become landless who will pioneer a class of poor. This is something we have not known since our ancestors.