The oil palm industry has multiple untapped value adding opportunities that can be captured by:
Investing in efforts to close the yield gap alone can fully address the continent’s dependence on foreign palm oil. However, this would require concerted efforts from governments, research institutions, private financiers, and extension officers to insure the proper understanding and utilization of improved seeds and agronomic practices.
There are large opportunities for small-scale millers to invest in improved oil extraction machineries. For example, a $12,500 to $13,500 investment in efficient oil extraction machineries could increase OER efficiency by a range of 15-46%.
A strategy to promote oil palm cultivation would have to promote outgrower schemes whereby small farmers have a stronger association with processing units. Considering the high liquidity constraint that saddles most oil palm farmers, these schemes are an effective mechanism to stimulate palm oil production, particularly as difficulties in the access of land constitute an obstacle to substantial expansion of oil palm plantations.
Capturing downstream value addition opportunities (specialty fat, oleochemical, biodiesel,etc.) will necessitate strong participation of private sector actors given the high financial commitment that most African governments have failed to meet. African governments need to explicitly provide avenues for facilitating the participation of private investors in this industry by making more land available for large-scale plantations. This can be done by:
Some of the stringent quality control requirements imposed by European markets can be addressed by introducing a palm oil marketing board. A highly interventionist approach to regulation and support of the palm oil sector can reduce risk and volatility for players, especially palm oil farmers, and can be an effective means for improving and maintaining quality. As an example, the Ghana Cocoa Board is considered successful in ensuring the generally higher quality of Ghanaian cocoa beans versus other major producers such as Côte d’Ivoire. However, this needs to be offset against the challenge and cost of developing and maintaining an effective and transparent sector bureaucracy.Download publication (PDF, 4.0 MB)