386 Rebuilding West Africa’s food potential
The future of the palm oil production in Ghana rests with the smallholder productivity increase as estate
farms currently comprise about 25 percent of cultivated land. Smallholder producers and processors
are optimistic about expanding in the future. They see the need for expansion to produce oil palm and
other products. Their reasons to expand their production and processing activities are to meet the high
demand from exporters and to increase their income from processing.Analyses from the field work on inclusion of the smallholders, however, suggests that management
and governance in the nucleus-outgrower model are not strong. There are no viable farmer-based
organizations (FBOs) that interact with an estate on a sustainable basis and no sense of belonging
to the estate, because they have no strong motivation to participate. Smallholders complain of
increasing costs of inputs supplied (fertilizer) and the erosion of profits. It is also an issue that there is
no platform for fixing of FFB prices along with arbitrariness in fixing the percentage of FFB income for
loan repayments.Pressed as to why their interest in this model had diminished, the smallholder farmers, particularly
the former outgrowers, explained that their contract was on a co-financing basis. It was unclear what
should occur once their loans were paid. They indicated that the number of palm oil mills has increased,
a competitive market for smallholder produce has developed and many smallholders now sell their
produce to mills offering the highest price even though they may be under a legal obligation to sell to
the nucleus estate.A major focus of the agribusiness chain actors in the oil palm industry for smallholder farmers in Ghana
is on providing inputs and increasing productivity through enhancing farmers’ knowledge and skills and
their access to local and international markets. However, there is a growing awareness that smallholder
farmers face particular constraints that need holistic support to be successfully addressed. Mechanisms
that assist smallholder farmers in decision-making, understanding and accessing markets, agricultural
knowledge and information systems, science and technology and equal opportunities for gender
participation in the industry may transform the role of the smallholder for the rapid expansion needed.The government recognizes that the key role of the smallholders requires concerted government and
private business coordination. The current national plan for development of the oil palm industry is
premised on the private sector-led initiative facilitated by the government through outgrower schemes.
The main strategy is to link outgrower schemes through a technical operator (TO) such as TOPP and
BOPOP (see Figure 8) to enable smallholder farmers to sustain their production. Figure 8 provides
a model that is likely to meet aspirations of all the stakeholders. Outgrowers (OUT) are enabled by
government facilitation, which is key for meeting the public objective of capacity building of farmers.
The technical operator (TO), who is simply the nucleus/estate, is guaranteed continuous supply of FFB
through facilitation by a financial operator (FO).