FACULTY OF AGRICULTURAL SCIENCES

DEPARTMENT OF AGRICULTURAL AND BIOLOGICAL SCIENCES

NAME: ANYOLE EMMANUULL

REG/ NO: S19B26/008

COURSE: BASE 4:1

COURSE UNIT: PERENNIAL AND PLANTATION

LECTURER: MS. MARY

Qn. 1

Palm oil, a kind of edible vegetable oil, which is derived from the pulp of the fresh palm fruit in
its various forms, has become the leading vegetable oil produced globally, accounting
for one quarter of global consumption and nearly 60% of international trade in vegetable oils
(World Bank, 2010).

In Uganda, we first experimented growing oil palm in Ssese islands in the 1970s but commercial
farming only started in mid-2000s. Figures from the National Oil Palm Project (NOPP) of the
ministry of Agriculture indicate that the country needs to grow at least 100,000 hectares to meet
current national demand.

In Kalangala, only 11,346 hectares have been planted and another 7,500 hectares are under
cultivation or planned in Buvuma. Oil palms take four years to mature and last between 18-25
years after which they have to be cut and replanting starts again

An agricultural value chain is defined as the people and activities that bring a basic agricultural
product like the oil palm from obtaining inputs and production in the field to the consumer,
through stages such as processing, packaging, and distribution.

There are two primary channels for palm oil production and consumption in Uganda and that is
to say the domestic channel and imports. In addition, there is the channel of the byproduct, crude
palm kernel oil (CPKO), and its final products, mainly soap but it also possible to make
margarine, vegetable oil and shortening, creamers, chocolate and ice cream.

Oil Palm Value Chain.

1. Labour market

On-Farm Labour: Farm labourers are not hired on a formal or regular basis instead using
family labour or a reciprocal system of labour sharing with neighboring farmers. The majority of
family members of farming families typically contribute, in some way, to on-farm labour.
However, this is informal work interspersed with other household duties and is not considered a
full-time labour substitution.

Processing fresh fruit Bunch (FFBs): The fresh fruit bunch consists of fruit embedded in
spikelets growing on a main stem. Manual threshing is achieved by cutting the fruit-laden
spikelets from the bunch stem with an axe or machete and then separating the fruit from the
spikelets by hand. Children and the elderly in the village earn income as casual labourers
performing this activity at the factory site.

Processing Kernels: On farmers processing own palm oil, small scale processing can easily
cause environmental degradation as a result of failure to treat the effluent that comes out of
processing. Both oil spills and palm kernels that are not easy to process using small scale
processing facilities can be a big source of environmental degradation.

In Uganda, Henan Glory Company is good at providing customers with a full set of palm oil /
palm kernel oil processing equipment solutions, which includes design and manufacturing,
installation and debugging, technical training, after-sales service and so on.

Soap Making: Scarcity is the mother of ingenuity; we have always been told. When things are
scarce, human beings quickly learn to adopt alternatives. For many Ugandans who grew up
during the 1970s and 1980s, when household communities were scarce, they learnt to improvise.

Today, the price of crude palm oil has gone up because of many reasons. First, the invasion of
Ukraine and Russia, according to Reuters, has halted the supply of sun oil, an alternative to palm
oil.

The beauty of this though is that farmers in Kalangala are laughing all the way to the bank just
because a kilogram of oil palm fresh fruit bunches is going for Shs 1,238 compared to last
month’s Shs 1,137. Since September 2019, prices of oil palm fresh fruit bunches have increased
by 166 per cent from Shs 465.

Wholesale/Retail: Fresh fruit bunch processors and Crude palm oil Middlemen sell to Crude
palm oil Retailers in Kalangala town or other smaller regional markets. Most of these Crude
palm oil Retailers are women who sell palm oil alongside their other fresh produce. Soap
Producers are both wholesalers and retailers.

They wholesale to customers in Kampala, they sell blocks of soap to women (Soap Retailers)
who retail smaller amounts into the market in Buvuma and sell a minority as retail from their
shopfront. In total approximately 100 people derive their income from wholesaling or retails
Crude palm oil or soap products.
Extended value chain: The quantities of palm products produced in Buvuma is small and
therefore its effect on the extended value chain, while not zero, is minimal. A hectare of palm
in Uganda can yield 3-4 tonnes of crude palm oil per annum, which cannot be matched by
oilseeds. No transporters or input suppliers derive their main income from palm products. Truck
owners do transport soap to Kampala but this is a small revenue stream. Equally input suppliers
(fertilizer, farm machinery, among others.) service the palm oil sector but they do not rely on this
sector alone for income.

2. Inputs

There is significant potential for the provision and application of inputs in the palm oil sector in
Uganda. At present, low input use hampers productive yields. Although the hybrid tenera variety
has improved yields, it is grown marginally, by less than 3% of farmers, and presumed to require
greater management including fertilizer and irrigation to achieve potential yields. The proper use
of agricultural inputs could dramatically increase yields.

Seeds: Use of high-quality planting materials is the bedrock of a successful palm oil industry.
Established palm oil plantations require high-yielding seedlings for replanting and replacement
of old trees lost to disease or drought, while nascent industries require trees to expand area under
high yielding plantation. Large plantations in other countries often run their own nurseries and
supply to smallholder farmers through sale or credit.

Although many smallholder palm oil producers are aware of the existence of improved palm oil
varieties, they may not recognize the value of increased yields (perceived as more labor-
intensive) or be sceptical due to previous failures. Further, those that recognize the value of
improved varieties do not have the finance to purchase new varieties nor the appropriate
knowledge needed to properly manage them.

Industry-wide practice is to import pre-germinated seed from a commercial breeder to be

nursery-raised for 12 months. The 12-month old seedlings are then strong enough to survive
transplanting into the field. There are currently no oil palm seed suppliers in Uganda because
there are less than 10 recognized breeders suppling seeds to all commercial plantations in the
world.
It is the industry standard with seed procurement, planting, and distribution, timing is everything.
Seedlings should be transplanted into the field in the beginning third of the rainy season
(December to January). This timing for transplant is ideal in terms of soil water content for quick
root establishment and growth. In Uganda, the ideal planting date is early December; new seeds
must be planted in the nursery greenhouse, as well as 12-month-old seedlings planted on farms.

Irrigation: Palm oil production in Kalangala is primarily rain-fed. Although many farmers
manually irrigate vegetable crops during the dry season, this is only on a small scale near rivers
and wells and is hence, very labor-intensive. There are no irrigation headworks in Lake Victoria
nor on any of the many rivers and tributaries that supply the lake. Irrigation is not practiced for
palm oil production.

Numerous shops sell irrigation equipment in Kampala, yet none are targeting palm oil producers
nor providing specialised irrigation for palm oil. Small petrol-powered pumps cost around Shs.
300,000 and are readily available. These pumps typically last for two years and consume around
1 litre of petrol per hour depending on the conditions.

Larger pumps are available from speciality suppliers in Kampala. All required assorted
sprinklers, pipes, and connectors are also available. Plenty of irrigation suppliers are present that
could respond quickly if demand increased. However, irrigation is not a widely practiced activity
for any crop, so specialised support or knowledge is not widespread.

Seed Change has tried to promote irrigation use. However, the cost of providing the design of
irrigation scheme was high (site visits, discussion with farmer, discussion with suppliers) and
uptake was low. Farmers would appreciate the advice given but would not purchase the irrigation
equipment through Seed Change due to underestimating the cost, delaying for several months
while they saved the money, or sourcing products themselves from other suppliers once they
knew what they needed. An integrated contract from Seed Change for installing/providing
installation is not considered feasible at this time.

Fertilizer and pesticide: Fertiliser costs in Kampala are in line with retail fertiliser costs around
Uganda. There are several bulk suppliers in Kampala, but they do not carry all fertilisers required
for palm plantations. Potassium Chloride (KCl), for example, is very challenging to procure
locally. These palm specific fertilisers can be sourced from Kampala with some effort. However
enough suppliers exist in the key palm centres that if consistent demand was there for certain
fertilisers, the market would be able to respond.

Merchinary and equipement: On-Farm machinery, Oil palm trees are not a broad acre crop, so
harrows, ploughs, seed drills are not required but small tractors and trailers are common on
commercial plantations, even smallholder plantations.

Processing fresh fruit bunch: In Uganda, Henan Glory Company is good at providing customers
with a full set of palm oil / palm kernel oil processing equipment solutions, which includes
design and manufacturing, installation and debugging, technical training, after-sales service and
so on. They also use a larger drum (300kg vs. 200kg) meaning more fruit can be processed at
once.

Kernel Cracking and Pressing: Kernel processing (CPKO) machines, are available for purchase
for Shs. 7,500,000. The machine owners have a near monopoly on the palm kernels as it is not
possible for farmers to process kernels in a low-cost manner such as farmers can do with fresh
fruit bunch. However, barriers to entry to setting up a cracking machine are low and therefore
any monopolistic powers over kernel prices paid to farmers are subject to competition between
machine owners.

Packaging: For the few local processors who sell Crude palm oil, packaging materials are
sourced from suppliers in Kampala. Similarly, soap producers source packaging materials from
Kampala. As volumes are small, packaging and bottling is done by hand. For Crude palm oil
Middlepersons and Retailers, packaging materials (re-used plastic containers) are readily
available in Kampala, Kalangala and Buvuma. The use of previously used and unsanitary water
bottles and oil containers presents inherent challenges with food safety issues.

3. Knowledge based services

Extension and advisory services: Extension services for palm oil producers are very limited in
Kalangala, with Seed change being the primary provider, in support of that provided by local and
regional Government extensionists. Government extensionists lack the agronomic knowledge on
palm oil plantation management and do not have the capacity (time) to address issues raised by
the many scattered smallholder palm oil producers.
The use of technology, such as mobile phones, to disseminate agronomic advice and provide a
hotline to answer questions is an innovative opportunity that could be explored to address this
issue. Further, knowledge on postharvest practices to improve palm oil quality and food safety
are of the utmost importance.

Laboratory Analysis: There is no soil or sophisticated laboratory analysis facilities in Kalangala

and Buvuma. Soil analysis can be obtained from commercial fertiliser suppliers such as Yara24
or from research institutes. Prices for these tests are currently prohibitive for farmers at Shs.
102,000 per sample. Yara does, however, provide a fertiliser recommendation and regime as part
of their service.

Research and development: There is no dedicated palm oil research body in Uganda. Seed
Change, in their farmer field school, run pilot irrigation schemes and test fertiliser regimes but,
by their own admission, this research is partial at best yielding few actionable outcomes for
smallholders. Henan Glory Company has developed a handful of machines for various stages of
palm oil processing in addition to the Crude palm kernel oil Machine, palm oil sterilizer, palm oil
digester, palm oil clarifier, palm oil kernel extractor. Of the four additional machines listed, none
are for sale

4. Physical Infrastructure

Transport: Palm Oil farmers in Kalangala district have decried poor transport to the outlying
islands saying that this has limited their ability to improve palm oil productivity. The outlying
islands that grow palm oil include Bunyama and Bubembe. But the islands have no safe means
of transport for equipment and inputs. People here use boats to transport seeds, fertilizers,
machines and other materials.

However, the instruments used in the transportation are risky, while some of the seeds and
fertilizers become spoiled before they reach their final destination. NPK fertilizers, for instance,
are reported to be stable under normal conditions of storage and transport but decompose when
heated.

The farmers say each of them loses close to 400 kilograms of Palm oil fruits when they do not
use fertilizers and better farming methods. A palm oil farmer, according to Jack Wycliffe
Mbaleeba, the Secretary of the Oil Palm Growers Association loses an approximate of 75,000
Shillings from each acre of palm oil if they do not use fertilizers.

Electricity: Among the 4 Kalangala Infrastructure Services projects, namely; Ferry, Road,
Power and Water; KIS was licensed to generate and sell Electricity on Bugala Island, Kalangala
District; In fulfilment of this mandate, KIS constructed a 1.6 MW Solar-Thermal hybrid power
generating station, a 2MVA substation with 120KM Medium Voltage/ distribution network to
supply over 40 villages on the Island.

Bugala Island has 49 villages with nucleated settlement, where 80% are connected to electricity
and the 20% awaits network extension and connection. Commercial Operation of this power
system was achieved in 2015 after successful completion of construction and commissioning
tests; and to date, over 4,208 customers are on supply 24/7.

Water: Commissioned in March 2019, the Shs270m Solar Water pump under the rural water
project that was established by Kalangala District Local Government has failed to serve the
intended purpose. The pump can only serve a distance of 1km yet the safe water coverage target
extends to a distance of 4km, covering a school and communities on Bufumira Island.

The 2014 National Housing and Population Census estimates Kalangala population at 54,293.
The households with access to piped water were estimated at 3,810 (19.3 per cent) of the total
population of Kalangala District.

5. Finance

Only a handful of palm oil value chain actors report accessing formal financial services. Bank
loans remain rare and hard to qualify for. In interviews both farmers and middlemen stressed the
issue of capital as a major hurdle to business. Farmers said there are no accessible sources for
loaning money internal or external to their value chain.

Middlepersons have no additional capital to lend or loan to farmers and vice versa. Neither group
appears to be able to secure loans from formal financial service industry. This thwarts famers
(and middlepersons) ability to expand operations within the value chain.
As is the case across Uganda, formal bank loans are hard to access and come with high interest
rates (18% or higher). Microfinance institutions are more willing to loan to farmers and
processors but their interest rates are too high, at 25% or higher.

6. Value chain governance

The palm oil value chain is characterized by many individual farmers, expellers, middlemen and
market-women and consumers that all do not exercise any domination over the market. In
addition, there is little to no cooperation between farmers nor with other value chain actors.

No sustainable supplier contacts have been established by expellers with primary producers or
further downstream in the value chain. While actors engage in purchase and trade of products
with the same counterparts regularly, all transactions are on a spot market basis.

Value chain actors employ workers through on an informal basis. Even employees of soap
producers – the most formalised of all actors – report that they are employed informally.
Therefore, the governance structure of the value chain can be considered as unarticulated and
unstructured.

7. Policies, regulations and laws

Farmers linked to the National Oil Palm Project diversify enterprises to add to the good income
from Oil Palm and food security for households with policy support from the Ministry of
Agriculture, Animal Industry and Fisheries.

For diversity, farmers like Mr. and Mrs. Muwereza have been encouraged through Household
Mentors to use their earnings from Oil Palm to purchase food and also grow Bananas,
Vegetables along with other enterprises including livestock.

Crops like Coffee which were not previously prominent in areas like Kalangala are now also
grown by the Oil Palm Growers. These farmers are also linked to both public and private
extension service providers.

The policy support is as stated here by Mr. Pius Wakabi Kasajja, the Permanent Secretary of the
Ministry of Agriculture, Animal Industry and Fisheries.

8. Institutional environment
There is no central authority or coordinating body for the palm oil industry in Uganda, but there
are a number of organizations involved. The wider edible oil sector in Uganda (sunflower,
sesame, among others) is a common focus of development interventions as edible oils are an
important part of the Ugandan diet. Actors involved in edible oils development in Uganda
recently include FAO, Care, ActionAid, amongst others.

9. Socio-cultural norms

Socio-cultural norms for labour in the palm oil industry mirror norms for smallholder crop
cultivation. Fresh fruit bunch production and processing is a family endeavour where all family
members, including children, are expected to provide free labour in harvesting and processing
fresh fruit bunch.

The subsequent steps in the palm oil value chain follow these same norms with families
supporting middlepersons in purchases and transport, retailers in market sales, and kernel oil
processing. Women do not take a lead decision-making role in the household or in production
activities.

There is a distinct gender division of labour in the Crude oil palm value chain. Men are largely
responsible for management of oil palm trees and palm oil sales. Women contribute labour in the
processing of Crude palm oil, but most do not take leadership or have decision making power
over the process.

Many of the time-consuming functions are completed by women whose time is deemed to be
less valuable than men’s. Women often take principal roles in the Crude Palm Kernel Oil
segment of the palm oil value chain because it is culturally viewed as a “women’s crop” by the
community due to its lower value.

Women often fill retailer roles, along with their children, as this is deemed by the community to
be a non-labour intense activity. Farmers use family labour to harvest Fresh fruit bunch, often
young boys and men, as the harvester has to be agile to climb the tall trees. Child labour is
sometimes employed in Crude palm oil processing and general farm maintenance.
No. 2

From the time oil palm harvests started in 2010, experiences showed that increased production of
oil palm benefited the national economy through import substitution and associated foreign
exchange savings, with many associated local economic benefits. However, another side of the
story also became apparent, of negative impacts, that must also be told. Basing on the knowledge
of the requirements of land and the nature of oil palm plantations, it is important to note that
social conflicts, issues of local land ownership and negative constraints on the local ecology have
occurred.

Poverty and food insecurity: The project set out to bring sustainable poverty reduction by
raising rural incomes, but is far from achieving its goal. The establishment of oil palm
plantations puts pressure on other land uses including food crop production. Two sectors
negatively impacted are agriculture and fisheries which were (in Kalangala) or still are (in
Buvuma) the backbone of rural livelihoods. This has had serious implications on local
communities and consequences for sensitive ecosystems, and resulting in food insecurity, for
example in Kalangala where food is now imported from the mainland.

Deforestation and land degradation: Rapid land use changes accelerate biodiversity loss and
negative impacts of associated ecosystem services, leave the very communities who are the
intended project beneficiaries vulnerable to the effects of environmental stresses. On Bugala
island in Kalangala, the area of fully stocked tropical high forests declined from 58% to 20%
since the year 2000, while oil palm increased from 0% to 28% over the same period. In Buvuma
the situation is different, with mainly subsistence farmland acquired for oil palm plantations.

Land rights and tenue inequalities: The process of implementation associated with such large
investments has a high risk of social injustice from the outset, such as from inadequate land
acquisition processes. At least 80% of landlords in Kalangala who sold their land did not do so
under conditions of free, prior and informed consent, while in Buvuma, the Uganda Land
Commission skipped some required processes in land acquisition, and compensated squatters on
public land without first taking the necessary steps.

Migration: While some movement of people is expected in development initiatives, large

agrarian projects are characterised by high levels of migration in a search of new employment
opportunities. In the case of the oil palm project in Kalangala, the mis-match between the
provision of social services such as health, water and sanitation and the increasing population
became obvious. Furthermore, migration of mainly men between the islands and the mainland
and increased income, and the parallel increase in prostitution, are increasing the levels of and
hampering efforts to manage HIV/AIDS, compounding its impacts.

Indigenous people and gender inequalities: The project design targeted local poor and
vulnerable communities and the participation of women and youth in all activities as key
beneficiaries. However, many in these groups were actually displaced by the project during land
acquisition, or were further marginalised during implementation. Currently, Oil Palm Uganda
Limited (OPUL) employs about 1300 staff (35% female) in Kalangala but only 7% are natives to
the district, and of the registered 1,810 oil palm outgrowers, only 37% are female and they have
smaller landholdings compared to men.

Selective financing priorities: Local communities complain about low prices for fresh fruit
bunches due to the lack of alternative players in the market needed for healthy competition. So
contrary to what the project promotes, oil palm is not always the best or only option to improve
household incomes for the majority of farmers. Gross margin analysis for crop enterprises
showed that cassava, beans, sweet potatoes, rice and coffee would also be viable alternatives in
Buvuma, while in Kalangala, oil palm competes with passion fruit, tomato and coffee as high
value alternatives.

Distortion of communication and education: Given the skewed positive impressions presented
regarding the benefits of oil palm as shared by project proponents, the adoption of oil palm by
smallholder farmers has happened swiftly, and the project promoters have not given enough time
for proper planning, learning and decision making at both community and household levels. The
risks of associated social and economic disparities caused during implementation are therefore
not communicated. However, despite the positive ‘news’, this research shows that only 30% of
the Buvuma population are optimistic about the project while 70% had mixed feelings about its
benefits.

Limited livelihood options: The National Oil Palm Project (NOPP) aims to ensure that benefits
of oil palm are shared by the communities in which investments take place, to be realized by
empowering community members to also seize emerging economic opportunities by developing
non-oil palm farming and non-farming livelihood activities as well as those presented by oil
palm development. However, the current outgrower model does not allow for alternative food
crops and intercropping, making it difficult to diversify farming options.

Future forecasting: Economic forecasts show that oil palm is profitable to both the single
company and the smallholder, but only in the short term. Projections in the medium and long-
term reveal declines in economic returns to smallholder farmers as ecosystem services are lost,
alongside growing demands to ensure food security as the area of land available for growing
food crops becomes limiting.
REFERENCES

Mwima P., Opige, M.O. and Ssemmanda, R. 2019. Analysis of oil palm projects in Uganda –
impacts and implications for future development. Policy brief. Tropenbos International,
Wageningen, the Netherlands and Ecological Trends Alliance, Kampala, Uganda

Bigirwa J., Anena, S. and Katunguka, G. 2019. Impacts of oil palm on employment, demography
and gender issues in Kalangala. Policy Brief. Tropenbos International, Wageningen, the
Netherlands and Ecological Trends Alliance, Kampala, Uganda

Ssemmanda R. and Opige M.O. (eds.). 2018. Oil palm plantations in forest landscapes: impacts,
aspirations and ways forward in Uganda. Wageningen, the Netherlands: Tropenbos International.
55pp

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