How Hargy Oil Palms boosted its palm oil production in Papua New Guinea

It may not have involved rocket science, but Hargy Oil Palms Ltd has experienced significant success in boosting palm oil yields in West New Britain. However, Chief Executive Graham King believes the success of agriculture in PNG will ultimately depend on secure land tenure and foreign investment.

Hargy Oil Palm’s Graham King

When Graham King arrived at Hargy Oil Palms Ltd in Bialla, West New Britain in 2008, he found that smallholders supplying the business were doing poorly in terms of production levels and quality. So, he instituted a series of reforms.

‘We had 527 kilometres of roads used by our smallholders. No government investment,’ he told PNG’s first-ever agricultural conference in Port Moresby in late 2017. ‘So we started working on road maintenance.

‘We invested in 16 Volvo trucks with electronic scales, each worth K1 million, and set up a standard pick up schedule so the growers were confident that the trucks would be there to pick up fruit and ensure weekly direct payments.’

Hargy also set up an interest-free credit scheme to supply smallholders with fertiliser, tools and seedlings. This is paid back through a 30 per cent deduction from fresh fruit sales.

‘We invested in a new K100 million mill to take all the new produce from our own new plantings and small holders.’

Yields, however, went down, and returns proved inadequate.

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So, each Tuesday, King visited smallholder blocks. He found that there was poor harvesting, poor upkeep of plants and fertiliser was ‘sitting under their houses’.

There were no tools and ‘no visits by Oil Palm Industry Corporation (OPIC) extension officers.’

Learning from cocoa

In 2014, Hargy executives decided to persuade the smallholders about the benefits of a privately-run advisory service.

They took a small group of farmers to Kokopo to see NGIP Agmark’s privatised engagement system used to rehabilitate the East New Britain cocoa industry after the devastation caused by the cocoa pod borer pest.

Having the support of the smallholders, they then persuaded the OPIC Board to approve a private extension service for growers at Bialla.

‘There’s no rocket science in this.’

‘The first thing we did was to change the name from Extension Officers to Agricultural Advisers. We have re-hired many ex-OPIC employees. They are really good agricultural advisers; they just needed the leadership and advice on how to do their job.

‘We ensure they make daily visits to small block holders, set up performance targets and monitor them at regular training meetings.

‘There’s no rocket science in this. It’s field days, section meetings and regular block visits.’

Other measures included block rehabilitation contracts, fertiliser delivery and application contracts. Hargy appointed local grower committees, whose representatives would look after the 100-plus growers in a small holder section. They pass on information to the growers and pass data back to Hargy.

‘Three years on, Hargy is producing some very tangible results.’

King said Hargy put a lot of money into sorting out land titles, customary land use agreements, and addressing the lack of financial literacy with regular, widespread training.

Tangible results

Hargy Oil Palms. Source: Hargy

Three years on, Hargy—part of Belgium’s SIPEF agricultural group—is producing ‘some very tangible results’, including increased harvesting frequency and a turnaround in yields.

‘This year, we’ll break 20 tonnes a hectare for our smallholders, up from [less than] 15 tonnes a hectare 10 years ago.’

One of the impacts King notices is the impact on women in the blocks due to the advisory work being done with the lus frut mama scheme, whereby women are paid to collect the loose fruit that falls from the bunches on harvest.

‘This year, it’s up to 21–22 per cent of production. So the frequency of harvesting means they’re getting that loose fruit. They’re selling it and we’re teaching them how to use the money.’

King says, based on the October 2017 results, the smallholders in Bialla stand to earn over K70 million in the 2017 season.

Land tenure

King warns that the main issue ‘continues to be land tenure’.

Without secure land tenure, you can have no investment in agriculture, King claims. ‘The government has designed schemes such as the SABL scheme, which has been dogged by controversy, ‘as it has been mightily abused’, he told Business Advantage PNG.

‘There must be major foreign investment.’

‘Voluntary Customary Land Registration (VCLR) is a way of giving title to landowners, but these titles are of limited use because financial institutions refuse to recognise them as security for loans.

‘We have been working with the Lands Department and the various smallholders to gain owners copies of titles for smallholders, but this is an area that has long been neglected. So the process is difficult.’

If commercial agriculture is to take its rightful place as the premier sustainable industry and foreign exchange earner in PNG, King believes there must be ‘major foreign investment around the nucleus estate models’.

‘This model works extremely well in the oil palm industry and can work just as well in many agricultural commodities.’

Comments

  1. Graham you had tackled various issues on the ground with your personal involvement and followed by your team.Now the results exhibit the positive improvements in handling the sensitive issues among the small holders and congratulations to you and team.Fabulous work.

  2. Patricia Noya says:

    Surrounding communities also play a major role in the production of the company. Therefore, there must be openness and transparency in all dealings with the surrounding communities in order to identify the social and environmental impacts that are affecting the production of the company. Hargy Oil Palm boosted it’s production because Graham King actually identified the problem, got down to the root and rectified it.

  3. Vincent B Kautu says:

    Very positive results Graham, am impressed with what you have achieved during the pas 7-8 years. Keep up the great work. You and your staffs has archived and keep looking at areas to benefit the locals and empower women and youths within the Bialla and its surrounding areas. During our time Hargy was not performing well and not properly managed and its sad to say this as a local manager from the area. Well done
    Vincent

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