Sie sind auf Seite 1von 81

Program: Master Degree

Course: Business Administration


Topic: Advantage & Disadvantage of Oil Palm in WNBP
Student Name: Seal Becket Kaogo
Student ID: UM 36207BBU44781
Tutor Name: Lourdes Puente

Page | 1
Content
Abstract 2
Acknowledgement 3
Chapter 1, Introduction -Advantage of Oil Palm 4
Chapter 1 Introduction 5
Chapter 1 Continuation 6
Background 7
Languages
Economic factor
Social factor
Environmental factor 8
Land tenure Agreement
Dispute over land ownership 9
Document land
Transaction & causes of land disputes 10
Global demand for oil palm 11 12, 13
Economic outlook on WNBP 13 - 14
WNB Land its people 15 16
Benefits of oil palm 16, 17, 18, 19
Improving governance & financial literacy of ILG 19 20, 22
Infrastructure through oil palm 22, 23, 24, 25, 26

Chapter 2- Oil Palm Tax 27, 28, 29, 30, 31


Chapter 3- Responsibility of oil palm and company 32, 33, 34, 35
Involvement of Government in Oil Palm 35, 36
Policy development 37, 38
WNBOPWU 39
Land use Agreement 40, 41, 42
What will happen if NBOPL cease operation 43 - 44

Chapter 4- Disadvantage of oil palm 45 75


Chapter 5 - Conclusion of Thesis
Plantation development 76 79
Bibliography 80
Glossary 81

Page | 2
THESIS TOPIC: Advantage & Disadvantage of Oil Palm in West New Britain Province

ABSTRACT

This report provides a review of available scientific information and published literature on
impacts of using tropical peat for oil palm cultivation in West New Britain Province, Papua
New Guinea. It describes advantage of oil palm through human needs and disadvantage of oil
palm on how it affects people lives and living. Emissions from native and degraded forest and
oil palm plantations on peat, as well as other environmental impacts and social and economic
aspects of the cultivation of oil palm on peat. Based on the available literature, the report
presents conclusions on the gaps in knowledge, uncertainties and confusion in existing
datasets.

The palm oil sector has created in the past few decades thousands of jobs. Over the next
decade, the New Britain Oil Palm Limited plans to double the annual production of palm oil,
creating new jobs for an estimated 2 million households. Although the cultivation of oil palm
on peat lands creates new income opportunities for many farmers in the short term, longer
term economic implications remain uncertain. Transformation of tropical peat forest into
plantations will lead to the loss of ecosystem services and biodiversity and will affect the
social and cultural basis of forest dependent communities. Human health is affected
negatively by haze resulting from forest and peat fires related to land preparation and
drainage of the peat. There may be other negative ecological consequences linked to soil
subsidence, which can lead to flooding and salt water intrusion when water tables reach
levels and the land becomes undrinkable.

When peat is developed for agriculture, carbon is lost as CO2 because: 1) oxidation of the
peat; 2) fire; and 3) loss from biomass due to land use change. The simplest way to limit CO2
and other GHG emissions is to avoid the development of oil palm plantations on peat.
Development of plantations on mineral, low carbon, soils has fewer impacts in terms of GHG
emissions. For existing plantations on peat, effective water management (keeping water
tables as high as practical) reduces GHG emissions, soil subsidence and fire risk.
Nonetheless, even these measures will not turn the system into a carbon or GHG sink.

Keywords: tropical peat, oil palm cultivation, forests, carbon, greenhouse gases, biodiversity,
socio-economic impacts, West New Britain Province PNG

Page | 3
Acknowledgement

It takes me eight (8) months to complete this Thesis. Firstly Id like to thank my GOD for
giving me this opportunity with HIS blessings, protection, guidance, wisdom, understanding
and knowledge HE bestowed upon me. I also extend my sincere thank you to my tutor Ms
Lourdes Puente for her guidance over my Thesis completion and also not forgetting Ms
Amelia Aldret for your graceful support during my study with Atlantic International
University. Hence, I also extended my gratitude to the AIU administration for your
scholarship that enables me to complete this study, thank you. I cant complete this Thesis
without you.

I find it difficult to begin studying online at first but through the grace of GOD I successfully
go through it easily. On the other hand, I also not forgetting the International Training
Institute students of Morokea Campus, WNBP for your support with your research notes that
really helps me during my study, these research notes of yours drives me to complete this
Business Administration Thesis, Title: Advantage & Disadvantage of Oil Palm in WNBP.

Day and night doing research on this thesis, I feel like quitting by requesting the University
registrar to withdraw from study but thank you my son Ricardo Kaogo for your smiling face
that provoke me to push forward with my study because I am listening to your heart that
begging me for your future.

In sustaining my living and study at the same time, I also thank the International Training
Institute administration for supporting me, as your employee so therefore what wages comes
out from you, this monies really helps me to pay my school fees every month. Without you I
will not make it far today.

To summaries, there is a saying, To be powerful in the mind, we must eager to learn because
the land is a secret weapon that kills. (Seal Becket)

Thank you

Page | 4
ADVANTAGE OF OIL PALM

Chapter 1

Introduction

History of Oil Palm in West New Britain Province

Palm oil has been the standout performer in the PNG agriculture sector in terms of its
international competitiveness and export sales growth. The expansion in cultivation and
processing facilities has had important development benefits in locations that attracted the
investment. It has helped to alleviate poverty in those rural communities through the creation
of jobs and associated income earning opportunities and through the provision of social
infrastructure and services.
The success of the industry will naturally raise questions about the prospects for future
growth and wider economic development benefits. This report examines recent industry
performance from a number of perspectives and considers the prospects for further growth. It
focuses on some of the key issues that will shape future industry development and gains for
economy. They include:
Projections for global palm oil demand.
Nutritional and food security needs of PNG.
The economic contribution of agriculture and constraints on future development.
The benefits of palm oil production for the economy and rural communities.
Returns from palm oil production.
The industrys contribution is examined in the wider context of PNG economic development.
There are often challenges for developing economies with a dependence on a small number
of export products affected by a commodity price boom. PNG is currently in this situation
because of its heavy reliance on mineral and oil export earnings. Diversifying the base of the
economy may be a consideration for policy makers and palm oil appears to be a viable
option.
The assessment would not be complete without a review of the environmental case against
palm oil that is currently being advanced by green activist groups.
Environmental objection are primarily based on greenhouse gas 1emissions from peat soil
disturbance and the loss of natural habitats for charismatic megafauna such as pig,
cassowary, birds and cuscus. As discussed in the report neither peat soils nor megafauna are
under threat from the palm oil industry in PNG.
This report has been prepared as an objective, independent assessment of the industry
benefits to inform policy makers, officials and the general public.
Oil palm is one of the demanded cash crops that generate more income or revenue and
benefits to the people of West New Britain, Government and the people of Papua New
Guinea. The oil palm was first discovered and brought into WNBP by Peter Sumugon of
Dagua, East Sepik Province when he made a personal trip to Malaysia and while he was at

Page | 5
Malaysia he sighted the oil palm as major cash crop for Malaysia. When on his return to PNG
he brought with him some of the oil palm seedlings for planting as trial in Wewak, East Sepik
Province.
He planted some seedlings at Dagua (Wewak) but they all died due to climate and poor soil
fertility that does not enables the plant to grow. In search of suitable soil and climate that may
enable the oil palm to grow well; he flew off to West New Britain Province. Peter Sumugon
met Maniken a man from Silanga Village (Sinaka LLG) and other indigenous people of
Hoskins agreed to plant the oil palm at Kapore station. This land is leased by the government
of WNBP to settlers coming in from other parts of PNG resettling, purposely as labour in
coconut plantations at the colonial time. At last the oil palm tested to be growing better by
producing quality kernels. At Kerevat in East New Britain Province, the NARI officer,
brought in oil palm samples of seedlings to Kapore for planting also.
Early 1969, when sighting the oil palm plant grow well and bear quality fruits, Peter
Sumugon and the local leaders negotiated with the France Company called Harrison Cross
Field for consideration of planting oil palm that must be similar to the one in Malaysia. When
the company executive first landed at Kapore they hardly believed that this nut can be grown
in a tropical island of Papua New Guinea, WNBP. From the MOU sign by the provincial
government, national government, landowners and the company, oil palm is cultivate and
grown at Kapore before reaching the whole province. Therefore, with the help of Peter and
other community leaders and government, the company believe to be engaged with land
owners from (Kapore) villages on agreement that date are:
Mai
Buluma
Hoskins
Bolabolo
Ruango & Morokea
Mosa (Laheri)
Gaongo village to lease their land, for the company purposely for planting oil palm as
on trial basis.

In 1969 to 1970, Harrison Cross Field employed the first labourers for the operation to begin.
The figure shows that, the company employed much of the employees form the highlands
region, Momase region. These labourers are used by the company for brushing, fruit cutter,
sprayers, fruit picker, (lus frut pika) and many more, etc...
The first oil palm plantation project was at Kapore; from there they moved to Sarakolok than
to Tamba. The landowners and growers realized that the oil palm is so demanding in cash so
they turn to oil palm and forgot about copra and cocoa. Things like village oil palm being
divert to the people by creating a middle man OPIC Oil Palm Industry Corporation as the
main supplier to the people and the company.
In fact, there is another company department called Small Holders they do the same job as
the OPIC. There functions are equally, the aim is to look after growers depending on the
deeds of the company production through oil palm.
These oil palm holdings are known in the industry as customary rights purchase (CRP)
blocks and they make up approximately 15% of the total area of smallholder oil palm in West

Page | 6
New Britain. The Clan Land Usage Agreement (CLUA) was designed to deal with the
increasing number of land disputes on CRP blocks. To develop the CLUA, lengthy in-depth
interviews and meetings were held with smallholders and landowners to document: the types
of land transactions on CRP blocks; how tenure and access rights were acquired by migrants;
and the underlying causes of the land disputes on CRP blocks. This information formed the
basis of a CLUA template that was acceptable to landowners, migrant smallholders and the
broader industry. The completed CLUA template provides more secure land tenure for CRP
growers and ensures that all members of the landowning group with customary rights to the
land where these CRP blocks are located consent to the land transactions with migrants. By
designing the CLUA in partnership with landowners, migrant farmers and other industry
stakeholders, the likelihood of the CLUA being accepted was significantly improved.

Background
The province has a population density of 6.1 people per square kilometer with the highest
population densities being in the Kimbe, Hoskins and Bialla areas. The updated information
indicated that the province has 500 rural villages, 300 rural non-villages and communities, 30
resettlements schemes and 70 plantations.

Languages
Of over 800 distinct languages spoken in Papua New Guinea, Pidgin and Hiri Motu are the
two most widely used, but English is the official language of Education, Business and
Government.
West New Britain has approximately 29 distinct languages of which 21 are spoken by the
Kandrian District and 8 languages spoken by Talasea District.

DISTRICTS COMMON LANGUAGE SUB DISTRICT

Munduapa, Uniapa, Bali Vitu

TALASEA Nakanai Hoskins

Bola, Bulu Talasea


Pidgin, English, Bebeli Kimbe
Nakanai, Mansang, Auka, Bialla
Pele -Ata Meramera
Lusi, Anem, Mouk/Aria, Gloucester
Kove, Bariai,
Amara, Lamogai,
Maleu/Kilenge
KANDRIAN Aigon, Lesing/Gelime, Awau, Gasmata
Akolet,Karore,
Epalik, Asengeseng, Aiglep, Kandrian
Kaulong,Miu,
Gimi, Solong, Noudo.

Page | 7
The Oil Palm Industry began its heyday in the 1960s with the establishment of a milling
company with its nucleus estates and small holder out growers who were sourced from other
provinces and settled in W.N.B.P, purposely to grow oil palm and sell to the milling company.

1. ECONOMIC FACTOR
Since its inception the industry has grown in leaps and bounds bringing in new
developments in terms of new estates for milling company and the concept of village
oil palm growers (VOP) which involves ethnic land owners growing oil palm on
customary land and also outsiders who were attracted by the economic benefit of oil
palm industry, whereby they purchase land from traditional landowners to grow oil
palm commonly called Customary Right Purchase (CRP)
These new development has brought rapid development in terms of building new
roads into new areas , there by opening access to services such as health and
education and other spin offs associated with development . The oil palm industry has
now surpassed other agriculture commodities in terms of annual earnings, grossing
more than a billion kina (K) yearly.
Benefits
The resulting growth in oil palm industry has seen an increase in employment by the
milling company as well as other business taking advantages of this growth. The
smallholder growers who produce more than 400,000 tones of fresh fruit bunch (FFB)
yearly have earned an average of K80million yearly, money which goes directly into
their pockets and also have access to better business services.

2. SOCIAL FACTORS
Whilst the resulting growth in the industry has brought many economic benefits, there
are also social issues associated with rapid development, which are being experienced
here as in other places. One of the factors is the over population in small holder oil
palm blocks in state lb and called Land Settlement Scheme (LSS). When original
settler settled on these state leases during 1960s and 1970s there was only one settler
and his family. The resulting economic boom has also brought population boom
creating pressure on these state leases now having to sustain several generations of
offspring. This has also been compounded by the declining prices for fresh fruit
bunches (FFB) due to low world market prices for crude palm oil (CPO). These
factors contribute to social ills like prostitution, drug trade and other criminal
activities. These are also been an increase in migration by people from other
provinces which has put a lot of strain on existing services, squatter settlement.

3. ENVIRONMENTAL FACTORS
The oil palm development much land has been cleared to develop milling company
estate as well as small holder growers blocks which has resulted in considerable
damage to the environment which is unavailable but recent improvement care. The
milling company in Hoskins Project (NBPOL) and all its out growers have since been
100% Roundtable On Sustainable Palm (RSPO) certificated since 2012 ensuring that
all aspects of oil palm cultivation, production and refining are third party audited

Page | 8
annually against a stringent set of social and environmental criteria. This
environmental guide lines have since brought a range of best management practices in
environment care.

Land tenure arrangements


Approximately 31% of the PNGs oil palm production is from smallholder blocks, with the
balance produced on the plantations of PNGs two oil palm companies, New Britain Palm Oil
Ltd and Hargy Oil Palms Ltd. There are three categories of smallholder oil palm producers
distinguished by land tenure.

smallholders residing on agricultural state leasehold land on Land Settlement


Schemes (LSSs)

village oil palm (VOP) growers cultivating oil palm on their own customary land
non-clan members who have purchased customary land belonging to others
customary rights purchase (CRP).
The differences in property rights among these primary types of land-tenure arrangements
sometimes influence smallholder productivity, attitudes to replanting, investment levels in
farm inputs and tenure security (Koczberski et al. 2001; Curry and Koczberski 2009).
Over the past 1015 years, customary landowners, largely in the Hoskins area of West New
Britain province and to a lesser extent at Bialla (West New Britain), have been selling land
to non-clan members for oil palm development. These oil palm blocks are known in the
industry as customary rights purchase (CRP) blocks and they make up approximately 15% of
the total area of smallholder oil palm in West New Britain.
Also, for LSS settlers, especially from highly populated blocks, the acquisition of a CRP
block offers a way to reduce population pressure on their existing LSS blocks. The high cost
of LSS blocks puts them beyond the reach of most LSS growers (prices for a 6-hectare LSS
block at Bialla and Hoskins range from PNG kina (K) 40,000 to K80, 000 compared with K3,
0004,000/hectare for a CRP block). The acquisition of a CRP block is even more critical for
second-generation LSS settlers who have lost access to land in their home villages. Similarly,
company and government employees who have spent much of their working lives in West
New Britain and raised their children there, see the purchase of a CRP block as a way to
secure a livelihood in retirement and/or provide a future for their children.
It is expected that CRP blocks will continue to grow in number, especially in West New
Britain. At Hoskins and Bialla, there is enormous demand for land by migrants from
mainland PNG attempting to secure a future for themselves and their families in the relatively
prosperous oil palm belt bordering Bakada passing through Ulamona village bordering West
New Britain Province and East New Britain Province.

Disputes over land ownership


Increasingly, the Oil Palm Industry Corporation (OPIC), the government agricultural
extension service, was noting a growing number of disputes and evictions on CRP blocks.
The disputes indicated that the current procedures of OPIC for dealing with new oil palm
plantings on CRP blocks needed revision. While many of the early CRP land transactions
were undocumented, with only oral agreements between the clan leaders and outsiders
acquiring blocks, many of the more recent transactions have been recorded on a Clan Land
Usage Agreement (CLUA) form, which was initially designed by OPIC for village oil palm
(VOP) producers planting oil palm on their own customary land.

Page | 9
Land is an essential resources used to grow the palm trees. West New Britain economic
depended much on oil palm. Much of their land is taken up by company like NBPOL and
Hargy Oil Palm Ltd. These two companies are now operating in West New Britain Province
sourcing land from the landowners. The aim, vision for New Britain Palm Oil Limited is to
drives the oil palm industry to all parts of the province.
However, there were problems with the existing CLUAs on CRP blocks:
1 The size and boundaries of land parcels were not specified.
2 Written agreements typically did not specify the agreed sale price of the land, nor the
amount and timing of payment installments.
3 No details were provided on the specific land-use rights of the purchaser.
4 There was no written evidence that the clan had agreed to the land sale and for the
land to be released to a non-clan member for the cultivation of oil palm.

This lack of written documentation has led to much misunderstanding and disputes between
the purchaser and the customary landowners. Furthermore, because most of these land
transactions were not in accordance with customary law, they were technically illegal. This
meant that the transactions did not comply with the Roundtable on Sustainable Palm Oil
(RSPO) principles and therefore risked undermining PNGs RSPO accreditation. RSPO
accreditation aims to ensure fair and transparent agreements between oil palm growers,
milling companies and other stakeholders in the industry, as well as limiting detrimental
environmental impacts. Its principles and criteria stipulate a commitment to transparency and
a participatory approach to establishment of land-use agreements with landowners.
Document land transactions and understand the underlying causes of the land disputes
on CRP blocks
This first step in the research entailed interviewing individual members of landowning groups
involved in selling land and migrant smallholders who had purchased customary land to
cultivate oil palm. Several focus-group meetings were also held with landowning groups. The
purpose of the interviews and meetings was to gather information on the types of agreements
and land transactions that permitted outsiders access to customary land to cultivate oil palm.
The research team interviewed dozens of smallholders and landowners in several villages in
the Hoskins, Bialla and areas.
The interviews and meetings were conducted in a way that encouraged landowners and
migrant smallholders to tell their stories; that is, to tell the research team about their own
experiences, anxieties and perspectives on land transactions. It was not unusual for these
interviews and meetings to run for 24 hours. The lengthy open discussions helped the
research team to develop a sound understanding of the land transactions with outsiders on
customary land and were important in shedding light on the following:
the broad range of land transactions and agreements occurring between migrants and
landownersmost were informal, with ambiguous oral or written agreements
(typically not including the agreed sale price of the land and the amount and timing
of payment installments)
how tenure and access rights were acquired by migrants and how they were
maintained through time
the near absence of land surveys undertaken on CRP blocks to record their boundaries
clan members knowledge of and consent to land transactions. There was little
evidence the majority of the clan members had consented to the land transactions or
had received a share of the cash from the land sale (youth, in particular, felt they had
lost out and had been denied their birthright) factors underlying the land-tenure

Page | 10
disputes between migrants and customary landowners that sometimes led to the
eviction of migrants.

Therefore, for example, many of those acquiring land believed that:


they owned the block outright and their children could inherit the land. This is not the
case in law, as the land remains customary land with the potential for the block to be
reclaimed by the customary landowners on the death of the purchaser
they had permanent ownership of the block, and therefore had the right to poison and
replant their senile palms without the consent of the customary landowners. Many
customary landowners argued that the initial grant of land for oil palm was for a
single planting round and the land could be resumed by the customary landowners at
the end of a cultivation cycle.
Another point the company suppose to aware of is, the land ownership rights, because the
lands are customary. It is own by the people themselves, not the government. PNG is a mans
culture therefore they are superior over the land, and also decision maker. Womans have no
right over lands only one province in PNG shows womans have right over land, the
Bougainville people. Even this superiority of men culture is taken into parliament house and
also practices in all government sectors of each provinces of the nation.

Projected global demand for palm oil


Palm oil industry growth is expected to continue over the medium term.
Favorable returns due to strong demand for vegetable oils are expected to support further
investment in the industry. Cost competitiveness and the shift to healthier food additives in
developed economies will favor palm oil demand at the expense of some of its competitors.
Global consumption of palm oil is expected to rise by more than 30% over the next ten years.
One of the factors favoring palm oil demand in food uses are its health and nutritional
properties. Palm oil is high in monounsaturated fats which are considered to be
advantageous for a lower risk of heart disease. A further advantage is that it does not require
hydrogenation to achieve a solid state for manufacturing margarine. This avoids the creation
of the transfatty acids which are considered harmful to human health.
These properties have contributed to an increased use of palm oil in processed food
production in some developed economies. It has become a strong competitor with vegetable
oils made from soybeans and rapeseed that require hydrogenation to achieve a solid state.
Several other factors have contributed to the dramatic growth of the palm oil industry:
The price competitiveness of palm oil has enhanced its substitutability with crop based
vegetable oils. There are cost of production advantages in oil palm cultivation from lower
land prices in the main producing countries and lower energy inputs. Palm oil is now being
used in a range of products that traditionally used other oils.8
Oil palms are a highly productive tree crop in comparison to cropbased oil seeds
oil yields are 5 to 9 times higher than the yields achieved by soybean, rapeseed and
sunflower.
Per capita consumption of vegetable oils has been increasing in some major
developing economies due to strong income growth. Palm oil has benefited from this
development and further per person consumption growth is expected to occur. In
200910 China and India accounted for over 40% of the net imports in world trade.
Future economic growth in these countries will increase the demand for imported
vegetable oils.

Page | 11
Land tenure Project site
type
Bialla Hoskins Popondetta Milne Bay New Ireland
(West (West (Northern Province Province
New New Province)
Britain Britain
Province Province)
)

Land
Settlement
Scheme
(LSS) NIL (not Not included Not included
No. of 1,593 2,368
included)
blocks
Area (ha) 7,755 12,928
Area as
a % of
total 64 51

Village oil
palm
(VOP)
(customary
)
No. of 4,114
blocks 1,782
Area (ha) 9,140
Area as 4,068
a % of 36
total 34

Customary
rights
purchase
(CRP)
No. of
blocks 959
Area (ha) 70 3,114
Area as a % 200
of total
smallholder 13
area 2

.First, both groups wanted a more transparent process in land dealings and, especially from
the customary landowners perspective; they wanted the land transaction to accord with
customary law. Second, given that customary landowners and migrants interpreted land
transactions differently, there was a need in the negotiations to design a new CLUA.

Page | 12
This table above shows the Numbers of smallholder blocks and areas of cultivation by project
site in West New Britain Province

Reconcile their disparate perspectives, with the objective of giving greater tenure security to
outsiders meaning the people from all over Papua New Guinea coming into West New
Britain Province to resettle for a better living. They see oil palm as easy cash crop for income
for a better living. In fact, so called, outsider didnt realize that they are contributing much
towards influx of Asians also into WNBP. For one purpose only MONEY due to while
recognizing the underlying customary tenure rights of the landowning group, they havent
look at it as important.
Once sufficient information had been obtained from customary landowners, migrants and
OPIC, work began on developing a new CLUA template. This was an iterative process over
several years wherein regular consultation took place with landowners, migrants and OPIC.
During this process, the team conducted many workshops and meetings with OPIC at Bialla
and Hoskins mainly.
PNG is a commoditybased economy with mineral and oil exports providing the primary
source of wealth creation. Agriculture remains a vital part of the economy. The small holder
sector is an important source of subsistence food production, employment and rural incomes.
The plantation sector generates jobs in rural communities and in downstream processing
activities.
Economic development and improved living standards in PNG will require investment in
growth industries. The population is growing rapidly and a diversified economic base is
important to limit exposure to fluctuations in specific global commodity markets. In
agriculture, palm oil is one of the few growth industries. The industry is providing new
development opportunities in contrast to mature industries such as coffee, cocoa and copra
where growth has slowed or ceased altogether.
PNG is a small player in the global palm oil market and the industry is limited to particular
lowland areas with adequate rainfall. But the world market is expanding and future growth
prospects are promising. Further development of the industry in PNG will provide greater
opportunity to raise living standards and alleviate poverty in selected rural areas.

Economic Outlook on West New Britain Province


Currently the company, the people of West New Britain and the people Papua New Guineans
who were residing at West New Britain Province still continue to cultivate the preserved land
into oil palm fields because oil palm is their source of income.
West New Britain Province is located on the north-central coast of New Britain Island, Papua
New Guinea. It is the place that house almost Papua New Guinea for different purposes,
interest or job opportunities residing there. In the general view of West New Britain Province
`after interviewing my own parents who have spent almost forty years in the province I
recognise in brief that the province is developing at a higher rate in terms of its economic
development. In the following paragraphs you will read about growth, standard and living
condition of West New Britain Province.
Oil palm tree is a crop grown in large plantations for economic benefit. It produces oil that
export to overseas for foreign market as well as domestic market. Oil palm needs several
requirements to grow in West New Britain Province. It needs land, seedlings, tools, fertilizer,
up keeping like slashing, pruning and spraying.

Page | 13
Land is an essential resources used to grow the palm trees. West New Britain land is used
mainly to grow oil palm trees. Much of their land is taken up by plantations of foreign
companies. Oil palm trees are also grown in blocks which are not own by West New Britain
people but from people of other provinces in Papua New Guinea .All block holders have
three hectares of oil palm trees growing in their block.

Seedlings are kept in the nursery for few weeks and later transplant in the plantation. In
nursery the labourers placed young oil palm plants into Polly tine bags full of soil. The
workers remove weeds so that the young plants can grow fast and strong and not growing
malnourish. They also spray seedlings to avoid insects which destroy the plants. The
seedlings need sunlight, water, and fertilizer to grow healthy and strong.

Various tools are used for different purpose in the work place. In nursery they use tools like
spades and knife for weeding. In the plantation they use knife for slashing and they also use
knapsack for spraying weeds and insects. When the palm produces fruits and ready for
harvest they use chisel for harvesting short palm and hook knife for harvesting long palm.
The fruits are transported to the mill for processing it into oil.

Fertilizers are used to kill insects from spoiling the seedlings in the nursery. This will help the
plant to grow strong and not dying. The fertilizers also enrich the soil by giving more
nutrients to the soil so when the plants to absorb, it nourish them. Fertilizers are useful for
suppressing weeds growing in the plantation, rather than slashing.

Up keeping of the oil palm plant is at the plantation field after the seedlings have been
transplanted. Plantation workers slash unwanted grasses growing with the palm trees. They
get rid of weeds that compete with the palm trees for nutrients. They use chemical spray to
kill insects that cut the leaves of the young plant. Workers looking after palm trees in the
plantation keep on pruning the young ones until they have fruits.

Growing oil palm is not that easy. A lot is spending on machine, transport, labours, fuels,
electricity, etc. Oil palm takes four years to grow and produce fruit. During its harvest it
needs workers to harvest and dump truck to transport it to the mill factory.

Page | 14
West New Britain Land and its People

Firstly, WNBP has grown in its development at a higher rate compared to the past. During
80s and 90s the capital of WNBP was still surrounded by bush, only the government owned
services were operated with other small private owned enterprises like KBSA, and the
developer NBPOL operating in small quantity. By late 20s the WNBP has grown from its
capital Kimbe outwards. Many developers have come in because of the province resources
such as sea, forest, vegetation. WNBP has developed greatly in its infrastructure like
buildings, roads, agricultural sectors, developing human resources through education etc.
Local and overseas developers have come into the province for business purposes that result
in erecting of buildings, construction of roads to remote places, establishing schools health
centres by both the government and NGOs. As a result of these economic developments,
people all over the province and country PNG have flooded in to seek for job and starting
their small businesses.
WNBP in terms of its standard of living, like other provinces only the township or urban
areas are standardised in their living than rather than the rural areas still to developed due to
economical statues of the government of West New Britain support through people tax
scheme given by New Britain Palm Oil Limited towards improving peoples living conditions.
Apart from that, urban areas have good drinking water, excess to transport, get much benefit
from the government services than rural communities. Todays national and provincial
government is trying to provide much needed services to the rural part of the province to
bring up the rural communities to the standard that brings changes/development to their
society.
Some people have all the opportunity and resources to have built their livesto the standard
that is wealthy because of the Oil Palm blocks they owned, but because of misusing to
customs, drinking too much etc. leads to slow increasing rate in living standards. Almost

Page | 15
estimated 5 percent of Oil Palm Block owners have set up their living to the standard that is
most likely to the urbanised standards.
Thirdly, the living condition of the province is slowly improving. Village people were still
struggling to support their lives with the basic needs in terms of the government services.
Most of the remote parts of WNBP havent seen what is going on in the provincial capital
Kimbe due to no excess to road and money. Almost 80 percent of the population of WNBP
has a means of income to support their livelihood but lacking knowledge in expanding their
sources of income. Thus it result in non-indigenous of WNBP came in and making businesses
to at least bring the living condition of the people a step further. During 80s and 90s in terms
of crimes and security was good but, when it comes to 20s crime and security was a concern
to the people involved in business activities as well as local people of WNBP because of the
developments and revenue inflows.
WNBP is fine in its overall outlook because economically it is developing at a higher rate
unlike other provinces.
This is the most likely changes that will bring the condition of the province at a higher
customary rights and landowner engagement 97% of land in Papua New Guinea and is
customary rights land. The majority of our land bank is therefore secured via a lease-
leaseback system. Typically agreements are 40 years and never lower than 20 years, in which
customary land owners receive royalties based on fruit production, company shares and rent
for our use of their land.level beginning from the urban centres to the rural. This is what we
should expect in our province in the near future according to WNB Integrated Provincial
Development Plan (PIDP) 2011-2015.

How Oil Palm benefits the people of WNBP.

According to my understanding and observation on the development of New Britain


Palm Oil and its production, the company has focus in serving the people and also has
brought a massive impact on the development of the palm itself, the company consistently
plays a vital role in bringing opportunities and responsibilities to the landowners and the
settlers who derived from all parts of Papua New Guinea to sustain the increasing number of
plantation.
Palm oil has played a significant role in bringing job opportunities in to the province,
from labourers to the executive level, as the number of palm trees is multiplying, it has
occupy the land mass of the province for the popular demand of palm oil, while the demand
is high, the job opportunities is also erecting in a similar trend, people has been lured into the
province due to different types job opportunities, because the company has raised the
economy boom in the province, and also the company has been a contributing factor for the
development of the town itself.
The company has built roads to places where there is no service deliveries has ever
reached, people had to walk miles in order to acquire service, but with the Governments tax
credit scheme, the company has maintain many roads and bridges as part of the scheme, now
people from the remote parts of WNB, can bring their cash crops to sell to sustain their
living.

Page | 16
The company has been fair to the people who owns little palm blocks known as the
small holders, they sell their fresh fruit bunch to the company under the smallholder scheme,
the company has also helped the small holders with their customary land and it is developed
using the lease back provision of the PNG Lands act, the company even put in the OPIC
(Oil palm Industry Corporation) which specialised in assisting smallholders with advice,
training and technical supports.
The company has been giving out sub-contract to small businesses to do transporting
and construction, in the construction they use the materials provided by the company to
renovate NBPOL houses that needed maintenances, and this has created many job
opportunities for carpenters, plumbers and bricklayers to work in the vicinity of NBPOL,
furthermore in the transport department they have given a big responsibility to the transport
contractor to deliver fertilizer to all the NBPOL plantations in WNB.
The company has given a huge responsibility to the shipping industry in WNB too,
the shipping industries specials in the shipment of spoilt oil in containers to send to India to
be recycle and used again, the company also produce Palm kernel expeller a by-product of
kernel crushing that is used for valuable animal feed to be imported overseas, furthermore,
the ports facility has also been used to pump oil into the oil tankers from the NBPOL tanks
that contain palm oil to be shipped to Europe and Mediterranean ports to be processed, this
has made our provincial economy to boom.
The Numondo herd is the only sizeable beef herd in the WNB, the cattle is been
grazing with chopped grass daily and has been taken care of by committed employee that are
specialised in breeding cattle, meanwhile back in the abattoir, shops owner get their stocks of
meat from the abattoir because it has produce a premium meat quality beef that has benefited
the meat lovers of WNB, some are packed and exported to Australia and New Zealand.
The company has created a network of little company linkage that engaged in the day
to day service that brought a huge impact on the image of the company, this has given the
opportunity to the people of WNB to benefit, and giving employment opportunity to many
people to work, the company has been contributing effectively in strengthening its
commitment in allegiance to its palm oil growers and people working in the vicinity of
NBPOL.
The company also has employed more than a thousand employees in the mills and
plantations which is developing independently, the company also has a huge variety of
accommodation to cater for different category of employees, in the vicinity of the compound
the company has put in place trade stores, aid post, sports oval and community hall for
different purpose, even the houses are well maintained due to the regulation of the company,
even though some of the palm workers have no better qualification, but the company has
given a huge privilege to them without educational credential.
The block holders have been given some decades to live in the palm oil blocks, thats
equivalent to generation to exploit the land and fully reap the benefits, whilst doing such the
company also supply them with utensils and chemicals to keep the palm producing, the
company has been so compassionate in helping the palm growers because this is where the
process of the palm begins.

Page | 17
The New Britain Palm Oil Foundation has been funding infrastructure for education,
health and policing, the foundation has donated half a million kina to both the secondary and
primary schools in the form of additional classroom, and even a hundred thousand to Kimbe
General Hospital as the counterpart on the new wing.

Avoiding dispute and conflict


We understand that disputes and conflicts with communities can do severe damage to our
license to operate, our reputation and the long-term viability of our business. With the
takeover of the three new sites, we engaged with each of the local communities to understand
whether there were any existing issues which needed to be addressed in terms of land rights
or community needs. We discovered that there were some minor issues around land
boundaries, but we were able to resolve these quickly.
Therefore, WNB province develops economically at a higher rate unlike other provinces in
the Papua New Guinea. On the other hand, New Britain Palm Oil Limited (NBPOL) apart
from other developers like the Provincial government, non- government organisations is the
developer that changed the facelift of the province. WNBP has provided friendly environment
for the people outside the province as well as the overseas people to carry out business
mainly for bringing goods and services to people.
PNGs major agricultural exports are palm oil, coffee and cocoa. They account for nearly
80% of agricultural export earnings. Over the past 30 years the production of most export
cash crops has increased. The exception is copra which has experienced a substantial decline
in production and export sales in recent years. Palm oil has been the largest export earner
since the year 2000.
Between 1998 and 2008 PNG export earnings have grown at an annualized rate of 7.6%.
Agriculture has contributed to this growth but its relative position has declined:
In 2008 minerals and accounted for 77% of the total value of exports.

Page | 18
Agricultural accounted for 19% of total export earnings.
The relative decline of the agricultural sector is due to a number of factors.
Firstly, there has been a trend away from plantations towards smallholder producers in the
coffee, cocoa and copra industries. Plantation production generally involves centralized
farming of an estate by a single company who provide compensation and revenue to
employees, landowners and government.
Smallholder production, on the other hand, is a decentralized farming method whereby small
scale farmers produce crops individually. Often smallholders form a cooperative for down
stream processing, marketing, or sales.

Figure 1 showing NBPOL


Location map

Improving governance and financial literacy of ILGs

The role of the ILGs in managing and distributing funds to communities is crucial. In 2009,
we began work to support these ILGs in setting up stronger governance systems, ensuring
that communities benefit both in the short and the long term. We are currently partnering with
Australia-based consultancy Little Fish, to provide financial literacy training and set up a
transparent system for the management of funds. We believe this will significantly enhance
the impact of the governance and management in the ILG system, and enhance the benefits to
all landowners.
In fact a study recently told that every day almost a sum equal to K8 million is carried by
people to do their transactions daily. I can strongly suggest that 95 precents of people walking
around Kimbe town has money of different amounts in their pockets.

Page | 19
Since the WNBP is at the stage of developing, I would like to suggest that each and every one
of the business houses operating in WNBP, Government authorities, local West New Britains
and people coming in for employment opportunities must at least get involved in contributing
to the development of the province for our own benefit in terms of the three points mentioned
above to enjoy our stay here. We wont say that WNBP is not my home province, when you
benefit greatly for being in WNBP, what will you give to the province in return?
How much of the total revenue the provincial government have to tax to IRC PNG?
Tax is a payment compulsory collected from individuals or firms by a government. In Papua
New Guinea Internal Revenue Commission (IRC) is responsible for administering the income
tax system, as well as indirect taxes-goods and services tax (GST), customs and excise taxes.
Previously the Papua New Guinea Taxation office was responsible for income tax and the
Bureau of Customs and Excise was responsible for indirect tax. There are offices branches of
the IRC in all major towns in the country. But, with the exception of Lae they only deal with
GST and customs and excise tax.
The main purpose of taxation is to raise revenue to finance government expenditures. There
are also other economic and social objectives. For example, the government may use fiscal
policy, by lowering or raising taxes in order to encourage or to reduce economic activities.
The government may also create tax incentives to encourage certain activity. For example,
tax concessions (reduces tax or even no tax) may be offered to exporting firms, employment
creating firms or to foreign investors. Tax incentives may be offered to firms in remote rural
areas to help develop such areas and to reduce rural urban drift, as part of the social policy.
Taxes may also be levied on certain goods, such as drink and tobacco, with the declared aim
of reducing their consumption. That such taxes rarely achieve a reduction in the consumption
of such goods is seldom of great concerned to the government which confirms the fact that
the prime aim of levying taxes is to raise money.
As in this case, the provincial government is not a profitable organization so it is not liable to
pay tax to the IRC from its revenue but to use the revenue earned to provide infrastructures
services such as roads, hospitals, schools and to fund projects that will benefit, improve and
sustains the livelihoods of its people in the long term. And if the provincial government has
businesses, then the organization dimension of the business will determine the tax that is to
be paid to IRC.Suppose the provincial government is a shareholder with a company then it is
required under Income Tax and Dividend (Withholding) 1984 for it to pay 17% withholding
tax to IRC. Therefore if the provincial government owns a business then it is required under
Income Tax Regulations1959 as amended for the provincial government to pay 30-35%
income tax to IRC.
Profit motive business and individuals are required to pay tax to the IRC from their income.
If IRC finds out that a business has been avoiding the tax laws of this country or fails to pay
its taxes, then it will definitely contact the Investment Promotion Authority (IPA) to
deregister that particular company and terminate its business certificate from doing business
in PNG as the IPA and IRC work hand in hand.
In PNG, when the National Government is doing up its budget for a new financial year it then
collects all the tax contributed by citizens and businesses to every IRC offices in the country
and then they budget again for the citizens of this country without the people knowing that
its their money the government is using to provide infrastructure services, while the

Page | 20
government only contributes a little from its pocket to the budget and to each province in the
country. For instance in the past 10 years and currently, West New Britain province is one of
the province that contributes the biggest revenue to the government who then uses the money
to develop other provinces and centres around the country with little or nothing to show the
people and business houses of WNBP their appreciation, which is really unfair because other
provinces are free riding on other provinces money.
There are also other organizations that are exempted from paying tax to the IRC. They are;
NGOs
Churches
Charitable organizations
Schools
Hospitals etc...

They dont pay tax but they still benefit from the tax payers money in terms of government
grants and subsidies.
From my perspective, I think that the National government should give the authority to
respective provincial governments to use the revenues collected by the respective IRC offices
in each province to budget for their people rather than the national government receiving all
the revenues. In this way it will help the provincial governments implement projects and help
provide infrastructure services rather than to wait for funding from the national government
which sometimes dont work out as the national government bureaucrats in Port Moresby
usually take advantages of this long process by misusing the funds for their own benefits. It
will also help the national government to monitor the use of public funds in each province
and to ensure transparency and accountability prevails.

What is the use of oil palm tax?


In Papua New Guinea, Internal Revenue Commission (IRC) is the tax authority and is
responsible to collect tax on behalf of the government. They have a scale that shows how
much the operating organisation or the tax payer should pay which depends on their gross
profit or income. The main purpose of taxation in Papua New Guinea is to raise revenue to
finance government expenditure or infra-structure.
Papua New Guinea has many natural resources, apart from that, Oil palm is one of the
resource that Papua New Guinea has benefitted from for the past 30 years which contributed
much to the development of the country Papua New Guinea through the tax paid to the
government.
Oil palm was planted in several parts of Papua New Guinea like; Kimbe, Popondetta,
Madang and currently in Sepik, because of the increasing plantation of oil palm then the
government will expect to get more tax from oil palm. Apart from other centres, Kimbe is the
largest oil palm producer in Papua New Guinea.
The oil palm tax is paid to the government of Papua New Guinea through the assessment of
tax returns lodge by the operating oil palm company to the tax office who then determines the
tax payable to the government (national government). The oil palm tax rate is currently 25%

Page | 21
of the gross profit. The tax is payable to the national government and later a certain
percentage is remitted to the province, provincial government where the oil palm company is
operated.
The use or the benefit of the oil palm tax is the tax credit scheme which is an initiative of the
national government which was implemented for the benefit of the people. This is
implemented by way of projects such as road construction, sealing, bridges maintenance,
classrooms, and air strip maintenance, teachers houses, schools, hospitals, public roads etc...
these are some of the government expenditure or infra-structure.
The oil palm tax contributed to the country Papua New Guinea by benefiting the people
through these government infra-structures and through these infra-structures it brings
development to the country. The oil palm company is still increasing in the number of
plantation which will be resulting in the increasing of the gross profit and also the tax paid
will be increases in the coming years.
There are lots of ongoing infrastructures driven through the oil palm economy in Papua New
Guinea by various Oil Palm companies currently operating in the country. There are allot to
stress on, but here are some of the popular infrastructures have being driven through the oil
palm economy of NBPOL in West New Britain Province. Namely; Power supply, Health
care service and Education and Road upgrading. These are some basic projects and services
funded through donations by NBPOL economy that are currently in progress of operations.

Infrastructure through oil palm


1. POWER SUPLLY
In 2014, 1st of October New Britain Palm Oil has been proposes public-private
partnership with Business Advantage PNG organization to provide power for West New
Britain. New Britain Palm Oil Limited and the West New Britain Provincial Government
have held preliminary talks which could see electricity generated from the Companys
waste products provided across the entire province.

According to Harry Brocks statement, the General Manager of NBPOL stated during
the preliminary talks says There is a great opportunity for west New Britain to be
solely powered by green energy in future years of operation in the province.

NBPOL is in negotiation to greatly increase the supply of electricity from its own power
generation facilities for both the town of Kimbe and rural areas in West New Britain.
The concept would be base around a public private partnership involving NBPOL (as a
power supplier), the provincial government and PNG Power; Brock told Business
Advantage PNG.
The idea is that a newly formed partnership would take full responsibility and ownership
for the power needs of the province. It could also provide an opportunity for a private
company to be form involving local stakeholders.

BIOGAS:
There would be two energy sources: Methane and Palm kernel, both by-products from
NBPOL Palm Oil plant. In 2010, we commenced the project to build biogas power plants
at two of our five processing mills in West New Britain; Brock says. The investment was

Page | 22
approximately US$ 8 million (k19.85 million). The combined output for both site is 4.2
megawatts of power, from methane gas; says Brock

2. HEALTH AND EDUCATION NBPOL Foundation (registered charity) Through


sustainability program:

New Britain palm oil Ltd assist the local community surrounding its operation through
the NBPOL foundation was established in 1997 as a registered charity in PNG and set up
for the improvement of health and education to relief the poverty for the people of West
New Britain province.

Since its inception, the NBPOL foundation has supported local communities through
donation and contribution to community base projects, as well as enhancements to
education and health establishment in the single province of West New Britain.

According to my interview result from several students; NBPOL was so concern about
education in West New Britain. One of the community base projects is building of
classrooms in various primary and community schools, as well as Secondary Schools in
the province. For example building classrooms in Kintakiu primary school in Bulu
(Talasea). More over in Hoskins Secondary and Kimbe Secondary, there was also
delivery of Text Books and building of classrooms.
The major Foreign Direct Investment (FDI) partners such as NBPOL, Hargy Oil
Palms and other private sector organization established in the province should be encouraged
to play an active role in the provision of Technical and Vocational
Education as part of their Corporate Social Responsibility, as Tax Credit Scheme or
sponsorship and helping to develop facilities in the current Technical and Vocational
Education (TVET) establishments to support teaching and learning and bring about quality
and relevant education.
As we all seriously and consistently improve our Technical and Vocational Education sector,
we are basically creating better opportunities for our children in all fields of our economy.
Our Government should also look at providing extra training for TVET teachers and creating
employment and income generating opportunities for our young people along side informal
activities and establishment of Small and Medium Enterprise (SME) and niche markets.
This will absorb all our young people who have completed their education from whatever
type of technical and vocational institution to easily find employment. This also calls for the
local level administration in education and other sectors of the provincial administration to be
proactive in developing appropriate policy towards integrated community development or
wide sector approach in WNB Province to support employment creation for our people.

Page | 23
In line with government policy on economic recovery and development the education
sector through the Provincial Education Plan should target its activities especially to TVET
for appropriate skill production for economic development and self-reliance in families and
communities. Not only that primary and secondary schools should inculcate appropriate skills
for survival through their skills based subjects such as Agriculture, Basic Technology,
Computing and Community Living.
This they must do it with dedication and commitment in order to achieve the desired outcome
for appropriate skill development for lifelong living.
WNB Provincial Education Plan 2007 2016 is affordable and must have the political will to
drive it forward. I call on the involvement of our 11 Local level Governments
(LLGs) in the province to implement this plan where necessary because schools in the
LLG areas are theirs.
There will be challenges in our plan in particular where the state will meet the expenses of
teachers, curriculum, and school materials and support the establishment of new Technical
College and maintenance of existing infrastructure in our schools.
Other stakeholders have an essential contribution to make our education system work. The
plan recognizes that parents will always make some cash or kind contribution and more
particularly a commitment to their children education through their own efforts. To be most
effective this contribution should be reasonable, predictable and sustainable. Parents must
also contribute to their childrens education by assisting teachers to instill in their children
self discipline through molding and shaping them in order to have a peaceful, caring and
loving province.
Partnership and sharing responsibilities by all stakeholders in education should be seen as a
conscious act for the development of the younger generation in order that they become a
vibrant force in our provinces development.
Let us be positive and bold in saying that this plan is achievable and affordable for West New
Britain Province. It is achievable and affordable if we give more responsibility to our
communities and they will take up this challenge. Communities must see that their elected
government and their leaders are playing their part to support the development of education
in the province.
The affordability and success of this plan anchors on our Constitution, which grants every
Local level Government K20 per head of population. This Constitution Law provide for the
basic necessities of life including infrastructure for health, education, etc., in rural areas. This
money should be allocated directly to the community on the principle that if you give people
responsibility they will respond and this will result in valuable multiplier effect. Local level
governments must be allowed to be account for themselves. In doing our work let us all be
mindful of good governance because it is essential for development and guides the wise use
of the little financial resources we have to achieve cost effectiveness in delivering education
in WNBP.
I have been privileged to support the development of this plan with members of my Steering
Committee. This plan has been developed after provincial wide consultations with many
individuals and representatives from all walks of life and their contributions have informed
this plan.
We will only be able to implement this plan successfully if all stakeholders play their part.
The responsibility starts with the elected representatives and involves our public servants, the
churches, all local communities and the students themselves.
Finally, I commend this plan as the road map for developing a better, affordable and
sustainable education for West New Britain Province.

Page | 24
News
According to the news new health and education partnership between VSO and NBPOL
in PNG.
VSO and the New Britain Palm Oil Ltd foundation have entered into an agreement to
conduct a baseline assessment of the education and health needs of the communities in
areas bordering NBPOLs site offices in PNG.

3. Road Construction

From my observation; Road construction is a major infrastructure that normally driven by


oil palm economy in West New Britain. NBPOL upgrade roads that links village oil palm
blocks giving village people access to transport their raw oil palm fresh fruits to the
factory by fruit trucks for milling process. NBPOL also upgrade roads within settlers
blocks as well contributing on national high way upgrading especially within Kimbe
town areas.

Encouraging and supporting women


Inclusion and support of women in the workforce is an important aspect in our strategy to
foster local talent and resources. Over the past year, our operations have established gender
committees, which are mandated to address issues of particular concern to our female
employees as well as women in the wider community.
NBPOL have made this conscious decision not to focus solely on workplace issue, as some of
these problems are often underlying in enabling women to enter and succeed in formal
employment.
The committees therefore address a wide variety of problems, from workplace issues such as
sexual harassment, to wider community issues such as domestic violence and educational
opportunities for young women.
They also have a longstanding programme to increase income opportunities for female
dependents of workers and smallholders through the collection of loose fruit the Lus Frut
Meri and the Mama Card programmes.
The gender distribution in our workforce is largely reflective of our industry and of the
countries in which they operate. In Papua New Guinea, few women are active in the formal
labour market, unlike in Solomon Islands where more women are in active employment, and
39.7% of their employees are female.

Supporting PNG students


To support academic and professional development broadly, the company also has recently
embarked on two long-term partnerships in PNG, sponsoring students studying agriculture at
the PNG University of Technology (UNITECH) and the PNG University of Natural
Resources and Environment (UNRE). The initial sponsorships cover a total of 12 students
studying agriculture, but they are looking to expand these sponsorships to other areas such as
engineering. Actually this program benefits only the children of NBPOL employees not the
growers. This programme is effective within the company not outside where the growers are?
I dont think it is a better policy for the company to entertain. I suggest that, the companies
should involved both parties; the growers and employees children on a long term study
partnership in PNG and abroad through sponsorship.

Employment

Page | 25
The WNBP oil palm sector has created around two million jobs, the numbers of which are
still increasing. Over the next 10 years the NBPOL plans to double the annual production of
palm oil, creating new jobs for an estimated 1.3 million households and reducing poverty for
around 2 million people. This has been achieved largely through Nucleus Estate and
Smallholders schemes (NES). In these schemes farmers transfer a proportion of their land to
an oil palm company for establishment of an estate plantation; the remaining land also being
planted by the company but retained as individual smallholdings by the farmers. In some
cases smallholders sell their land directly or after 30 or 40 years to the company and are paid
compensation for loss of land use opportunities. Deals differ significantly in detail, such as in
the amount of land given up to the company in relation to that received back as an oil palm
smallholding, the amount of debt that the farmer must pay back for the planting of oil palm
on the area of land retained, and in the time period over which this must be done.
In 2010 smallholders had a land area of 3.08 Mha, with a share of 35% of the total crude
palm oil produced and of 41% of the productive area. Because of the required machinery and
the need for palm oil mills, most smallholder plantations are part of larger, company owned
plantations termed nucleus estates argued that the majority of the economic benefits of oil
palm plantations accrue nationally or regionally to a few large palm oil plantation owners and
the West New Britain Province.

10% benefit to the government of WNBP

Since the establishment of the Oil Palm industry in West New Britain in 1968, the Province
(WNB) gained very little monitory benefit through or in the form of Derivation grant.

In 1995 to 1996 the National Government granted Ten Percent (10%) share holding with New
Britain Palm Oil Limited when Kulim bought off Harrison and Crossfield. At that a Trust
Deed was drawn up to govern the Income and the Expenditure of the monitory aspect of the
Ten Percent (10%).

As a matter of fact Kulim disposed shares to New Britain Palm Oil Limited (NBPOL) Senior
Management workers and Integrated Land groups when it took over ownership of the
Company.

Yes as the Government (WNBPG) received its monthly payment, the Integrated Land Groups
(ILGs) and others received theirs as well. The proceeds to the Provincial Government were
paid to the Trust Account as guided or directed by the Trust Deed because the Trust Money
must be spent on social services such as Education, Health and Community Development
which were captured in the Provincial Budget.

Since Sam Darby (another Malaysian Company) bought off Kulim last year, it elected to pay
off all shares. It bought the West New Britain Provincial Government (WNBP) shares for
more than Three Hundred Million Kina
(K300 + million). From very reliable sources, the Provincial Government (WNBP) invested
this money through the Treasury Bill. Yes should this be true it is plus for Provincial
Government and its people for a credible investment.

Chapter 2

Page | 26
Oil Palm Tax benefit

The Oil Palm Tax in West New Britain Province is paid by the New Britain Palm Oil
Development limited to the Government of Papua New Guinea, through the Internal Revenue
Commission (IRC). It is being calculated through assessment of tax returns lodge by the
NBPOL to the tax office who then determines the tax payable to the government (National
Government). Company tax rate is only currently 25% of net profit, payable to National
Government and later certain percentages are remitted to the west New Britain Provincial
Government. Another benefit paid to the people of West New Britain is the Tax Credit
Scheme initiative of the National Government. This is implemented by way of projects such
as road, construction, sealings, bridges maintenance and classrooms, airstrips maintenance,
teachers houses and various institutions in the Province such as schools, hospitals, public
roads, and the reports of which is then submitted to the IRC who calculated the total cost of
these services and this amount is deducted from the tax due for payment as an incentives.
This is called the Tax Credit Scheme and is usually there to encourage NBPOL, Hargy and
other palm oil producing companies in PNG. For these matter to assist in the development of
the province and country as a whole. According to the question stated above, the benefits of
oil palm tax is for the Government and the people as well, people benefits from oil palm tax
in the form of development or infrastructure through tax credit scheme. When palm oil is sold
at the world market, the company tax is remitted to the Internal Revenue Commission (IRC),
which includes oil palm tax. This tax goes to the National Government budget. In general we
know that the purpose of the tax is to raise Government revenue and to finance its
expenditure.

This oil palm tax cannot be for the West New Britain Provincial budget itself. Only this oil
palm tax is kept in the National Government Planning budget and becomes the benefits for
Papua New Guinean as a whole. Fiscal Policy is the policy that the government used to
stimulate or deflate the economy through taxes. E.g. If there is inflation in the economy the
government may increase taxes so that our economy reached equilibrium or if there is
inflation, the government would reduce its tax and increased its spending in order to stimulate
the economy. Only the tax credit scheme is the benefits of oil palm tax in West New Britain
to the public in the form of infrastructure by N.B.P.O.L / Hargy. For example, if NBPOL
build road from Nahavio to kimbe town then they will inform the WNB Provincial
government office how much it cost them to build the road, which include labours cost and

Page | 27
other expenses. Therefore the government will reduce NBPOL oil palm tax according to how
much it cost them to build the road from Nahavio to kimbe town.

Who benefit from the Oil Palm?


Oil Palm is a perennial crop, very substantial to the citizen of West New Britain. Oil Palm
covers about 65% of land mass of the province and it has become a very big part of the West
New Britain culture. It is the most common cash crop, and citizen in the province mainly
depends on it, for lively existence.
Oil palm sector in the province is a major tax contributor to the national government but in
return the province doesnt get enough recognition. In the last 40 years West New Britain
have contributed roughly K30 billion to the Papua New Guinean economy much of the
money have been used to the development of the country.
The people of West New Britain have benefited heavily out from oil palm. Fresh fruit bunch
is always weighed by the major oil palm buyers in the province. From, generation to
generation New Britain Palm Oil Limited has helped out 100% the people of West New
Britain in ways such as medical bills, school fees, funeral expenses and food.
Some of the West New Britain bureaucrats in the country comes out of an Oil Palm
community for examples Dr Alphonse Gelu registrar of political party, Sir Brown Bai
Chairman of the Government own petroleum company ( Petromin ).
The only out spoken person Elias Batari a former Premier of WNB provincial government in
was also heavily involved in helping growers how to incorporate growers with OPIC and the
company NBPOL. Many of West New Britain working class citizen working within and
outside the province still value oil palm as the forever green gold for them. Actually another
perspective view, oil palm effectively helps the coastal Nakanai people, Talasea and covering
the settlers of WNB, meaning people from all over Papua New Guinea who are settling
Mainly the whole population of West New Britain are benefiting from oil palm except the
south coast people, rapid business changes have been escalating in Kimbe town because of
the demand of the cash flow in the province. Mostly of the people coming in seeking business
opportunities are Aliens (Chinese).
Locals are getting payment (royalty) to their lease. Land which is being used by NBPOL as
plantation came from that many of the local have become vary lazy in depending only on
royalty.
Projected global demand for palm oil
Palm oil industry growth is expected to continue over the medium term.
Favorable returns due to strong demand for vegetable oils are expected to support further
investment in the industry. Cost competitiveness and the shift to healthier food additives in
developed economies will favor palm oil demand at the expense of some of its competitors.
Global consumption of palm oil is expected to rise by more than 30% over the next ten years.
One of the factors favoring palm oil demand in food uses are its health and nutritional
properties. Palm oil is high in monounsaturated fats which are considered to be
advantageous for a lower risk of heart disease. A further advantage is that it does not require
hydrogenation to achieve a solid state for manufacturing margarine. This avoids the creation
of the transfatty acids which are considered harmful to human health.

Page | 28
The contribution of agriculture to PNGs economy
PNG relies heavily on the agricultural sectors economic contribution. The industry accounts
for approximately onethird of GDP. However there exists in PNG both the necessity and
opportunity to expand agricultural activities.
Agriculture in Papua New Guinea is performing below its potential.
Although the sector constituted 34% of GDP in 2008, there is an imperative for the
agricultural sector to expand in order to accommodate PNGs rapid population growth rate of
2.7%.
High population growth is a significant issue for PNGs long term economic
development and compounds already existing problems such as food security and
nutritional dietary deficits. The growth of the agricultural sector would act negate
these effects by securing a needed supply of food produce.
The agriculture sector is one of the major sources of infrastructure development in
PNGs rural economy. Rural communities rely on infrastructure such as roads, ports,
healthcare, law enforcement and construction projects funded by agricultural and
resource industry investment.
PNG is heavily reliant on its resource sector. In 2008 minerals accounted for 77% of
total value of exports. PNG faces the very serious risk of Dutch Disease. Growth in
the agricultural sector would serve to diversify the economy and reduce resource
reliance and symptoms of Dutch Disease.

Viability of palm oil in PNG


Palm oil is PNGs most viable option for growth in the agricultural sector. Global palm oil
consumption and demand is rising. Meanwhile traditional palm oil producing countries are
slowing down production due to land use restrictions and productivity concerns. PNG is in a
prime position to fill future supply shortages.
Over the next ten years, global demand for palm oil is expected to increase by 30%.
This reflects growing consumption for palm oil as both a food product and as a
feedstock for biofuel. The worlds current dominant producers face obstacles meeting
this demand. Malaysia and Indonesia together make up over 80% of global?mn
``1palm oil production and both producers face land use restrictions and
productivity concerns.
PNG stands in a good position to take advantage of a potential supply shortage. PNG
is endowed with suitable soils and climate, adequate rainfall and available land to take
advantage of growing global palm oil demand.
PNG palm oil industry is already internationally competitive oil yields reached 4
tons per hectare in 2007, outperforming top international producers such as Malaysia.
Responsibility of NBPOL projects to the province
New Britain Palm Oil Limited (NBPOL) is the biggest multibillion kina agricultural
development and produce exporting company in PNG and the Solomon Islands. The
companys core business is in Oil Palm plantations and production , but has further
diversified its business activities include sugar and cattle. NBPOL also has Oil Palm
plantations in the Solomon Island. Due to its business expansion, the company makes
million of kina annually. As a result, millions of kina in profits / dividends being
declared every year and paid to the shareholders of the company. While some of
these million of kina is re-invested for the companys continuing growth.

Page | 29
The company NBPOL is a very large and diversified business entity or organization,
only being responsible to its shareholders and board. At the same time it caters for
welfare of its management and employees. NBPOL further pays compulsory taxes to the
Government. However one question that is often debated is the obligation of this
company for the implementation of the community projects since it is making billion
of kina. Are community projects the responsibility of NBPOL? This short essay type
argument tries to explain NBPOLs responsibility with regards to the implementation
of projects at the community levels. Firstly, one must bear in mind that NBPOL is a
business entity and not a community oriented body, a Government implementing
agency or an NGO group. Therefore the responsibility of implementing community
projects is not NBPOLs immediate responsibility as it is a business entity where the
priority is profit for its shareholders.
Furthermore, the companys other priority obligations to attempt to minimize
operational costs thus maximize the projected profit margin annually. The welfare
including wages and housing, plus other benefit for its employees are also priority
obligation for the company.
We can therefore argue that NBPOL is not really obligated for the implementation of
community projects. This is because it pays direct and indirect taxes to the
Government under existing income and corporate Tax Legislation. Other areas where
the company is being taxed is from the imports of machinery and equipment parts
( import tax ) while its exports of Palm Oil products, sugar and beef are also being
taxed (export tax ).
Therefore, as mentioned above, because the company pays millions of kina in taxes to
the Government, it is not compulsory for it to implement projects at the community
level. It is the Government responsibility and obligation, especially the Provincial and
LLGs, whose main area of responsibility is implementing projects for the peoples
benefit. Any projects planned at the community level must be initiated and
implemented by the Provincial and / or Local Level Governments. This is because each
level of Government has its own yearly budget where the money collected from taxes
as the Government revenue is then allocated in the budget for specific project in the
communities. The Governments main source of revenue is to fund projects through
taxes from individuals and companies, and this money is then used to implement
community projects thus leaving such companies as NBPOL to concentrate on their
business. They have already paid their taxes as required by law.
However, NBPOL as a corporate citizen being registered and operating in PNG,
especially in West New Britain where its origins are, for more than 40 years is
obliged to implement certain projects at the communities, where its operations are
located. This is because there may be certain provisions or conditions to the Business
Agreement as endorsed by the Government and further, from the landowners to
surrender their customary land for the companys operations and expansion. Should
there be conditions laid down by the Government, then NBPOL must comply by
funding and implementing certain projects at specific communities.
One other way for projects implementation by NBPOL is to apply to the Government
by way of interim Tax Exemption under what is called Tax Credit Scheme. If approval

Page | 30
is given by the National Government, then NBPOL may undertake certain projects
such as road infrastructure at their own cost and then be exempted from paying tax
equal the total project costs, to the Government for that particular year. The Tax Credit
Scheme is an initiative by the Government to engage big companies like NBPOL to
assist by way of project implementation and then later any taxes due can be
deducted. Further, NBPOL can be exempted from such taxes as import duty and GST
should it undertake a particular community project under the Tax Credit Scheme.
We therefore can conclude that its not compulsory for NBPOL to implement
community projects but these can be done under special arrangement with
Government. At the same time NBPOL may honor its obligation towards the
landowning communities through the implementation of certain projects per agreement
signed or as a corporate citizen of this country and WNB in particular.
The role of palm oil in PNGs economic development
PNG has a record of economic instability. This has an adverse effect on attempts to alleviate
growing rates of poverty. But detailed analysis demonstrates that palm oil crops act as an
effective mechanism to achieve economic development.
80% of PNGs population is located in rural areas known to suffer from high levels of
poverty. Within the rural population, 40% live below the poverty line.
The palm oil industry has the potential to provide necessary economic benefits to PNG.
PNGs palm oil industry already contributes significantly to the countrys economic
development.
Incomes associated with palm oil cultivation and processing have risen steadily,
while levels of return from smallscale investments in palm oil plantations are high.
Over the last 15 years palm oil has recorded the greatest increase in real income out of
major crops such as cocoa, copra and coffee.
Palm oil smallholders on 2 hectare plots receive an annual income of K5, 586
almost double PNGs minimum wage.
Smallholder returns from palm oil are almost 10 times those from cocoa.
In PNG the Net Present Value (NPV) of palm oil crops is significantly larger than that
of competing agricultural crops. Large scale palm oil plantations record returns of
$US9275/ha compared with $US$745/ha returned from subsistence farming.

Chapter 3

Responsibility of Company

Page | 31
Papua New Guinea (PNG) is one of the most culturally and geographically diverse countries,
and also one of the most rural. More than 80% of its 7 million people live outside urban
centres and depend on subsistence agriculture for their livelihoods. In West New Britain, a
Malaysian Company under New Britain Palm Oil limited leads the area of oil palm business.
Along with food crops, cash crops are a crucial part of the economy, generating virtually all
of the countrys non-mining income and supporting rural communities throughout the
country. Of all the crops grown in PNG, oil palm is the most important in terms of export
income; palm oil exports earned more than 1,000 million kina in 2008, considerably more
than coffee, cocoa and all other agricultural exports.
The PNG oil palm industry is small by international standards (about 130,000 hectares and
1% of global production), but is very important for the country, behind the economies of the
provinces where it is mostly grown: West New Britain, Oro, Milne Bay and New Ireland.
More than 18,000 smallholder growers and two companies cultivate oil palm, which grows
well in the coastal lowlands of PNG.
Smallholder growers cultivate 45% of the area under oil palm and produce 32% of the fruit.
The two plantation companies mill all the fruit, extracting palm oil and selling it, mostly to
Europe. An estimated 200,000 people live in households that depend on oil palm as their
principal source of income. It is vital for the future livelihoods of these people, and for others
living in surrounding areas, that the crop is grown in a way that maintains the ecological
integrity of the land and surrounding ecosystems.

Smallholders have a close relationship with the plantation and milling company in their
region; they sell all their fruit to the company, which then sells the oil. Smallholders also
obtain credit and various
Agricultural supplies from the company. Importantly, their environmental accreditation is
also driven by the companies.
The focuses on smallholders, company operations are also considered because they are
integral to environmental sustainability on smallholder farms as well as on their own
plantations.

Page | 32
In addition to oil palm smallholdings under the land settlement scheme, village communities
have been encouraged and assisted in setting up their own oil palm plantings. These village
oil palm plantings usually comprise blocks of about 2 ha, and their establishment is based on
a Clan Land Use Agreement Currently in PNG, the ratio of plantings under the land
settlement scheme to plantings under the village oil palm scheme is approximately 1:1.

Changes of cash flow from Oil Palm?


In West New Britain Province almost 75% of settlers owned a hector of oil palm block.
They considered oil palm as their primary source of income for their living.
The Oil Palm project carries Papua New Guinea through in bed times and good times
since it was first introduced in the country. The Oil Palm project is the renewable project
unlike others projects like gas, mining, timbers, etc are all non-renewable projects and
will ease one day. For example, if we kill the oil palm today we can replant it again
tomorrow but gas, goal, copper and oil we cannot replaced it when it finished. From the
peoples opinion, in every fortnight there is cash flow of two million that are cashed in the
province. The cash flow of oil palm attracts many investors, companies, and foreigners
especially Asians to come and do business in the province. Therefore, most of the shops
and companies in WNBP were owned and controlled by the Asians.
However, growers are yet to see the changes of cash flow right in front of their door steps
from oil palm. Many people are coming into the province to experienced or flow with the
cash flow but on the other hand growers are decided to leave the province because they
want to earn what they deceive. In closer view we can see that growers are money makers
people. They involved directly in the productions of oil palm. For example, they looks
after the Oil Palm, they harvest the Oil Palm, and wheeling it to where it will be
transported to factory. If these jobs done are very coasty and used up much time and
energies; on the other hand can the government and the company take into consideration
and increase the rate /tone of Oil Palm?
The question is, if it says that cash flow in West New Britain Province is demanding for
business and why dont the growers owned a business like estate, wholesale, retail
supermarket, motors in the province. These are some of the critical questions to ask the
company NBPOL and the national government of PNG and the provincial government of
WNB. Are we going to blame the growers on how they spend money?

Page | 33
On other hand, the current pay for Oil Palm /tone in this financial year was k157.63. It was
stated that there were no changers in prices compare to the past records. Growers were the
engine room and why dont the company increase the rate/tone of oil palm because
through them the province and other departmental head or employees of the company earn
their money. Now a days k100 is not enough to carry us on to another fortnight. All the
store goods are sky rocketing and that k100 is for only two things but after all we left with
nothing. It seems that we are working for those relaxing Asians.
Business Law on Company Act 1997 there is a law based on property rights sub: charter.
It stated that if any one falsely abuse or misappropriate your properties you have all the
right to bring him/her to court. And also on business law section 134 confers that if
directors or any management staff take business as his/her own property is liable for that
or must explain to court. If there is a law governing the people rights and properties why
did the company under the growers. Is there any one to speak on behalf of the growers?
Than to answer this question, a grower seems to be working and serving other interest
parties for their economic benefit from oil palm itself. People are being used only not for
the benefit but for the company and government profit. Slaves working in their own
country.
The resent survey being done by Seal Becket base on the influx of Asians into WNBP 5
years ago was 5% every month within one year only. How will PNG Customs and foreign
affairs department control the movement of these foreigners? The government of WNB
should plan, organised and do better selection of business people entering WNBP for
business purposes only.
Today business operation in WNBP are only Asians doing business mainly in supermarket,
retail, wholesale, beer outlet etc... Apart from that no other business own by an indigenous
person. Why? Why is that happening? Who knows? The government of WNBP continues
to be having a blind eye on these business activities. The national government of PNG
should properly audit the WNB provincial government on what deals are being done by
them and the Asian business people. The future of the WNBP is so important than selling
a piece of land to a Chinese fellow to do a business than taking one life away from
customary land owner. The question when will that starts? There is no one to come and
help us solve our problems instead we our self must take the first steps before it is too late.
If we dont solved that issues today tomorrow our future generation will blind leading the
blind and will be eating on what is thrown for the dogs by the foreigners.
Our overall strategy is one of sustainable growth, through acquisitions, productivity increases
and increased vertical integration of our supply chain. Since 2005, NBPOL have been on a
growth trajectory, combining a strong focus on productivity increases with acquisitions and
improvements of plantations in the pacific. NBPOL have also grown our business vertically,
getting closer to our markets and end-users.

Supply chain, and will continue to expand this model. NBPOLconstantly engage with
customers in Europe to understand future needs and requirements. Our new bakery fats plant
in Liverpool and the Ferrero Rocher fractionation plant in WNB were prime examples of
partnerships which benefit our customers, our business and help promote traceable
sustainable palm oil. We believe that our adaptability and reponsiveness to market needs will
continue to grow our business into ever more vertical integration.

Page | 34
At the heart of NBPOL strategy for organic growth is Vision 2050. The objective is to
increase fruit yields to 30 tonnes per hectare and achieve 30% combined crude palm oil and
palm kernel oil extraction rates per tonne of fruit. In 2011, our group average yield was 25.4
tonnes per hectare and our extraction rate per tonne of fruit was 28.2%
Increases in fruit yields can be achieved through continuous improvement in management
practices and rigorous replanting programmes. This ensures optimal age of palms and
continuous breeding efforts to improve seed quality. Our extraction rates are also influenced
by these factors, but in addition we work on smoother and quicker means of transport of fruit
from the fields and upgrading milling processes.
\
From my point of view, they (NBPOL) are targeting Asians market. Its like a Boomerang
AID by Australians to Papua New Guinea.
They give it to people than follow this gift and take it back. This what happening in WNBP
on oil palm prices to growers. (When you throw a boomerang it doesnt go away, it
returns). Form my observation; oil palm is same as boomerang aid.

On the hand, oil palm is helpful but I dont see it as a cash crop where it can last long because
prices not steady and dont bring better services to growers.

What happened when oil price drops?


Oil palm is one of the cash crops that people of Papua new guinea uses it to generate income,
also it put allot of input to the country ,some provinces in the country now a days are going
more developed because of the oil palm taxes to the country. Only some provinces in the
country grown oil palm, mainly West New Britain but its taxes developed the other provinces
too, in terms of roads etc...
Oil palm now a days is very useful because allot of people depends mainly on cooking oil in
order to prepare their family meal even some people dont even uses local oil for preparing
meal why because they are use to manufactured oil and its a bid hard for them to change.
Also the country is growing with the population and youths are use on oil to keep their beauty
remains mainly the females, so oil is one of the resources that the people depend on it very
much.
While Papua New Guinea related business are divided on the impact some effect on their
business according to the advantage PNG poll. The poll has been conducted since the bank of
Papua New Guinea move to increase the value of the national currency against the us dollar.
According to the poll results 36% of the respondents said a stronger kina would be positive
for their business while 28% said it would have a negative impact.
A further third said that the effect would effectively balances out for their business with both
positive and negative effects. Significantly, however nearly all respondents indicated there
would be at least some impact on their business, with no one saying the business would be
affected. While the bank of Papua New Guinea unusual move to restricted trading the kina
within a 75 basis points either side of us$0.4130 improves the buying power of the country
importers, the impact on rural exporters is causing concern.
Oil palm is the main cash crops here in West New Britain where allot of people earn income
from it. And in times where oil palm price drops it causes some problem to the company,
small block holders, employees of the main oil palm company and student aspiring to become

Page | 35
professional in their field of studies and many more. When oil palm prices drops, NBPOL
loses allot of money that means the organisation spend allot of money but earn small income.
So as result, the management suspended or put on hold of some of the benefits where they
can do to the citizens of West New Britain, benefits such as royalty the landlord or education
facilities and sports groups etc..
Then it came into arguments between the citizen and the NBPOL management especially the
land lords to argue with the NBPOL management of why they didnt give their royalties
payment in time also the youths if they got angry of why the management didnt afford to
assist them in their request they can do something bad to management e.g. Shooting company
vehicle with stones etc...
Also allot of employees would lose their job because of company management wise or
company policy. As a result it causes conflicts of interest between the employees put out of
work and the employees still in the work area and also including the management of the
organisation. This employee loses their job it then affects their family lifelike for example
they find it difficult to them to afford their kids school fees or house hold goods to maintain
their living.
Continue on the small block holders are also affected in the way that their oil palm bunch are
not purchase in a reasonable price so it cause some difficulties to their living, because allot of
their land are covered with oil palm and they have no enough more land to make gardens or
whatsoever, too their gardens crop wont bear any good food because oil palm trees have
taken all the nutrients from the ground, and also oil palm project in west new Britain is is the
biggest project where people earn more of their income from rather than any other cash crops,
namely cocoa coconut etc..
Further on allot of students are thinking of making their practical work to get experience in
that oil palm company but wont be able to do so, because the company will reject their
application ,telling them that there are no space for practical people.
As a result when they went back to their places and have nothing to do they joined up with
the other youths in the village and causes trouble in the community that is mainly when they
consume alcohol then they start doing all this sorts of problems because they have nothing to
do they are not occupied to any work and even sometimes they can make robberies in the
shops or hold up of company and take out money or other property from them.
.And this can lead them to even dead when police are catches up with them or live disable for
the rest of their life or locked up in the jail for some year or months depending on their case.
Ian O/Hanlon president of West New Britain Chamber of Commerce and Industry has called
for a re-evaluation of the move suggesting the income from the province major export; palm
oil could drop by as k50per tonne of fruit. The palm oil industry is hugely important
economic driver in west New Britain .There are over 150,000 people that are dependent on
the business within the province .West New Britain rises and falls on the back of this one
commodity. When oil palm price are high everyone enjoys the flow on effects. When prices
are low, everyone in West New Britain suffers; he said

Page | 36
Government involvement in oil palm.
The Government of PNG involved in oil palm because oil palm is another cash crops which
generate the revenue of the country. In other cases it is the government regulation which any
company or business organization operating in the country must be register to the Investment
Promotion Authority (IPA). Also to safeguard the employee and the shareholder when the
company is not following the company act 1997.
The PNG government is partner with the oil palm company by getting tax from it. The
government gets tax from the company, employee, and the shareholder of the oil palm. That
tax is to generate the revenue of the government. The government revenue is being used to
fund for the public properties, (schools, hospitals, churches, road and other infrastructure)
salaries for the public servant and etc.
In order for the company or other business entities to operate in the country they must seek
illegal advice from the government first before they operate. This is through the process of
registering the company name to the investment promotion authority (IPA). After registering
they are allowed to operate. Then the internal revenue commission comes in to collect the tax
from the company and the individual employee.
The government of PNG also concerns about its people mainly the land owner. Thats why it
must create some formal agreement with the company from where to plant their oil palm
following the land boundaries (customary $ state land). The government must make sure that
the company must not use the state land to plant oil palm. Also to see that the company must
followed the company act 1997.
To elaborate more, the PNG government is responsible for any company that operates in the
country, to monitor their operation. It is just are two ways benefiting which the government
rely on the oil palm company through the tax collection. While the oil palms company also
rely on the government. Both are corporate to raise the revenue of the country. It is more wise
possible for the company to register to IPA. This is the government regulation which every
company must follow.
Policy development
As a company which has grown significantly through acquisitions over the past seven years,
and now comprises seven operational units, we have spent significant resources aligning
operational policies across the sites.
In 2011, we started work at two levels: All operational policies and standard operating
procedures are benchmarked to ensure consistency. As a result we have changed practices
across a range of areas, including wages, maternity policies and OHS reporting systems.
We also took the first step in developing high-level principles which set out our commitments
to international standards. The initial outcomes of this were the Human Rights Policy and the
Business Ethics Policy, which apply to all parts of the NBPOL Group globally. To ensure that
any gaps in compliance are identified, that future challenges are understood and that the
implications of the new policies are understood and accepted, senior management from
across the Group is consulted. For example, in 2011, all General Managers attended a two
day workshop on business ethics, where Transparency International PNG provided an
overview of current bribery issues in the local context.
Over the coming year, we will set out a full policy hierarchy, which ensures that all
operational and local policies are aligned to Group commitments. These will be informed by

Page | 37
leading international frameworks and benchmarked against the ISO26000 guidance, which is
currently the most complete social responsibility standard.

West New Britain occupies more than 2,000,000 hectares of the western portion of New
Britain Island and shares a common land boundary with East New Britain province towards
the eastern end of the island and Morobe Province at the fare west of the New Britain Island.
The province also shares maritime boundaries with Autonomous Region of Bougainville,
Morobe, Madang, Manus and East New Britain.
WNB is located at the intersection of latitude 150 degree east of the Green which line and
longitude 6 degree south of the equator. Kimbe, the provincial capital is approximately 550
km north east of Port Moresby. The western portion of the island and further broken down
into two districts of Talasea and Kandrian Gloucester.
In the province, Agriculture still continues to be the back bone of the economy. Since
independence this sector provides employment, income earning opportunities and food
security for the rural majority whereby on the other side, significantly generates revenue for
the country through its commodity exports. Strategies will be based on crops and livestock
production with the extension of providing appropriate incentives to assist in implementing
the National Land Development Plan (NLDP). So that the rural population will satisfactorily
benefits from their land and the Agriculture activities the employ on it.
In addressing agricultural development, the Provincial Division of Agriculture & Livestock
(PDAL) will employ seven (7) major projects and that is; Trees and Industrial Crops, Spices
and Minor Crops, Food Horticulture, Women in Agriculture, Livestock Development,
Integrated Agriculture Training Program (IATP) and Pest & Disease Management.
The way forward Provincial Division of Agriculture & Livestock has formulated and
submitted three projects to the Department of National Planning and Monitoring to source
fund.
They are; (a) Managing Integrated Program Targeting the indigenous Managing Tribe in
the South Coast Economic Corridor, inclusive of those living along the East and West New
Britain border.
(b) Bio- Health Security Resource Centre- To source funding for a central storage and
dissemination centre for reliable and up- to- date information to effectively battle pests and
disease threatening crops and livestock production. Latest technology will be employed in
gathering information where by relevant trainings and surveillance matters will be
coordinated from the fully equipped centre.
Redevelopment of Kapore Livestock stationPurposely to source funding to redevelop
the station, gradually bringing it to a stage where it will become the central livestock
coordinating, demonstrating and training centre in the province. Once fully develop and
equipped, should also serve as one- stop shop location for disseminating sound agriculture
knowledge, information and skills to all agriculture base societies, stakeholders and farmers
who are interested in participating in livestock production.
Apart from these, Mining activities have been rate very slow in the province. However, in
2011 exploration activities at EL 1043 Mt Nakru EL 1077 Simuku and Adewa in Kalia Kove

Page | 38
have revealed possible Gold and Copper deposits. And finally I believe, these prospects
seem promising for a booming mining industry in the province that could contribute
significantly to the economy of the province and development of the road network in
upcoming 5 years in the province.
West New Britain Oil Palm Workers Union (WNBOPWU)
The company has acknowledged the freedom of choice of workers to join a union.
To date, the company through its HR department has dealt effectively with individual
employee concerns that have been brought to the attention of the union for support.
The company has been slow in responding to a major a log of claims submitted by the
union.
The log of claims was taken to the Industrial Tribunal for arbitration in February this year
and the outcome is still pending.

NBPOL stated the log of claims was unrealistic and Negotiated agreement on these issues
could not be reached.
The audit team noted the union and company are following the process for independent
arbitration.
Smallholders
Smallholders appreciate the training provided through OPIC, credit supply of tools and
agrichemicals as well as treatment of pest infected palms.
LSS block holders are anxious about the future tenure of their leases when they pass away,
and the fate of their dependents.

To address this inheritance issue, OPIC has compiled a Will Preparation Manual and
conducted awareness on its importance to current block holders to ensure the smooth
passage of the block to their offspring. The company has been closely involved in this crucial
education and awareness exercise.
A long-term strategy needs to be formulated to address the increasing pressing issue of
population management from the LSS blocks in consultation with block holders, OPIC,
Hoskins Oil Palm Growers Association and the WNB Provincial government.
OPIC is fully aware of the social issues linked to increased population on LSS Smallholder
blocks. As a member of the Local Planning Committee, the company together with OPIC and
all the other parties will have to devise strategies to handle these challenges. The full and
active participation of the WNB Provincial Government is crucial.
The audit team considered these to be important issues that need to be addressed. Progress
will be checked at the Surveillance Audit.
ILG Customary Landowners
Members of all but one ILG committee (Moroa ILG) claimed that they did not fully
understand the terms and conditions of the lease agreement before signing it. This was
particularly in relation to the low rates for FFB royalty and land rental, long interval before
revision of agreement, and the exclusion of a social services component which they claimed
had been covered by a verbal agreement with the company. The ILG committees insisted that
if they had the opportunity to re-negotiate, the provision of socials services would be a key
pre-condition. In most cases, the people were not furnished adequate information on potential

Page | 39
negative environmental impacts and alternative revenue generating activities before
consenting to long-term land leases for oil palm cultivation.

NBPOL stated that agreements were explained to the elected ILG representatives, more than
once before signing. NBPOL also stated that it did not make verbal commitments to the ILG
representatives on a social services component. All of the terms and conditions were detailed
in the agreements and these were explained to the ILG representatives.

Developing land-use agreements in commodity cash crop production that meet the
needs of landowners and smallholders
Disputes involving land use and land ownership are commonplace in PNG, especially
between customary landholders and migrant smallholders who acquire blocks of land from
them for cash crop production, including oil palm. One of three objectives of Australian
Centre for International Agricultural Research (ACIAR) Project ASEM/2006/127
(Commercial sector/smallholder partnerships for improving incomes in the oil palm and
cocoa industries in Papua New Guinea) was to develop effective land-use agreements
between the commercial sector and customary landowners. This paper outlines the research
approach and methods the project adopted to design a new Clan Land Usage Agreement for
use by oil palm smallholders in West New Britain province and Northern Province, PNG.
Village oil palm (VOP) growers cultivating oil palm on their own customary land
non-clan members who have purchased customary land belonging to otherscustomary
rights purchase (CRP).
The differences in property rights among these primary types of land-tenure arrangements
sometimes influence smallholder productivity, attitudes to replanting, investment levels in
farm inputs and tenure security (Koczberski et al. 2001; Curry and Koczberski 2009).
Over the past 1015 years, customary landowners, largely in the Hoskins area of West New
Britain province and to a lesser extent at Bialla (West New Britain) and Popondetta (Northern
Province), have been selling land to non-clan members for oil palm development. These oil
palm blocks are known in the industry as customary rights purchase (CRP) blocks and they
make up approximately 15% of the total area of smallholder oil palm in West New Britain.
It is expected that CRP blocks will continue to grow in number, especially in West New
Britain. At Hoskins and Bialla, there is enormous demand for land by migrants from
mainland PNG attempting to secure a future for themselves and their families in the relatively
prosperous oil palm belt bordering Kimbe Bay. Also, for LSS settlers, especially from highly
populated blocks, the acquisition of a CRP block offers a way to reduce population pressure
on their existing LSS blocks. The high cost of LSS blocks puts them beyond the reach of
most LSS growers (prices for a 6-hectare LSS block at Bialla and Hoskins range from PNG
kina (K) 40,000 to K80, 000 compared with K3, 0004,000/hectare for a CRP block). The
acquisition of a CRP block is even more critical for second-generation LSS settlers who have
lost access to land in their home villages. Similarly, company and government employees
who have spent much of their working lives in West New Britain and raised their children
there, see the purchase of a CRP block as a way to secure a livelihood in retirement and/or
provide a future for their children.
Disputes over land ownership
Increasingly, the Oil Palm Industry Corporation (OPIC), the government agricultural
extension service, was noting a growing number of disputes and evictions on CRP blocks.

Page | 40
The disputes indicated that the current procedures of OPIC for dealing with new oil palm
plantings on CRP blocks needed revision. While many of the early CRP land transactions
were undocumented, with only oral agreements between the clan leaders and outsiders
acquiring blocks, many of the more recent transactions have been recorded on a Clan Land
Usage Agreement (CLUA) form, which was initially designed by OPIC for village oil palm
(VOP) producers planting oil palm on their own customary land.
However, there were problems with the existing CLUAs on CRP blocks:
1 The size and boundaries of land parcels were not specified.
2 Written agreements typically did not specify the agreed sale price of the land, nor the
amount and timing of payment installments.
3 No details were provided on the specific land-use rights of the purchaser.
4 There was no written evidence that the clan had agreed to the land sale and for the
land to be released to a non-clan member for the cultivation of oil palm.

This lack of written documentation has led to much misunderstanding and disputes between
the purchaser and the customary landowners. Furthermore, because most of these land
transactions were not in accordance with customary law, they were technically illegal. This
meant that the transactions did not comply with the Roundtable on Sustainable Palm Oil
(RSPO) principles and therefore risked undermining PNGs RSPO accreditation. RSPO
accreditation aims to ensure fair and transparent agreements between oil palm growers,
milling companies and other stakeholders in the industry, as well as limiting detrimental
environmental impacts. Its principles and criteria stipulate a commitment to transparency and
a participatory approach to establishment of land-use agreements with landowners.
It is understood that New Britain Palm Oil Limited is the main economic driver in West New
Britain and contribute to relatively high level of personal income through direct employment,
contracting opportunities, smallholders income and payments to ILG group. In addition,
NBPOL has provided development support through the NBPOL foundation since 1997: it has
participated in the tax credit scheme since 2002: and provide other support or contribution on
an ADHOC raise.
In the past TCS expenditure has focuses primarily on roads and bridges. The West New
Britain Provincial Administration and National Department of works both play a role in the
identification of projects to be funded through the TCS.
TCS expenditure while maintaining a focuses on roads upgrading and maintenance, while
including assistance for Health and Education facilities and water supplies in future years,
which reflect Province Development priorities.
NBPOL is breading the geographic coverage of the foundation to include areas impacted by
NBPOL operation in New Ireland, Northern, Milne Bay and Madang / Morobe (in addition to
West New Britain).
Foundation expenditure has been suspended until the legal and administrative requirement
relating to the broader geographic coverage have been reviewed and finalized. One
recommencing foundation expenditure will focuses on the Health and Education.
Although delay have been experienced with the methane capture project which are now
almost complete , they have the potential to provide a cheap sources of reliable and clean
power to the company .Company employees and communities surrounding each the
Kumbango, Mosa, Kapiura, Warastone and Numondo mills. The provision of an inexpensive

Page | 41
source of power could provide the stimulus for increased saving and investment in improved
housing and household items. This could have wide ranging and positive impact on the local
population: improving Education level (having good light to read by at night, and power for
computers) and health level (reducing the amount of cooking on smoking fire, and having
better light to detect mosquitoes, etc
Economies of scale and productivity improvements
Small holders are a large and growing proportion of oil palm cultivation in the major
producing countries. This suggests the benefits of economies of scale from large scale
cultivation may not be a critical factor at this stage of the industrys development. In fact the
evidence indicates there is scope for higher net returns by small holders from farm
performance improvements.
In WNBP both small holders and estate plantations have been expanding but small holders
are the major contributors to industry output. In 2008 government settlement schemes for
small holders accounted for 28% of WNBP palm oil areas and privatelyowned small holders
accounted for another 12%. In Indonesia some 43% of palm oil areas were owned by small
holders in 2006.
Oil palm yields vary with the introduction of new varieties, variations in seasonal conditions
and alternative fertilizer application rates. A recent study by World
Growth (2009) indicated there was considerable potential for small holders in
Indonesia to expand output on existing acreages through the use of fertilizer and new genetic
stock. Higher yielding varieties illustrate the potential for output and income growth without
the need for an expansion in acreages.
The scale of farming units and their output performance are questions that relate to
productivity. In simple terms productivity refers to the efficiency of input use in a production
process. Productivity levels measure the ratio of output to inputs.
For example, an increase in per hectare palm oil yield would signify a productivity
improvement for land inputs. A per tree yield increase would signify a productivity
improvement for biotechnology inputs.
These are partial measures of productivity performance. They are often used to show the
change in output relative to the use of a key input in the production process (for example
labour productivity, land productivity, etc). Total factor productivity is a more comprehensive
measure of performance. It takes account of changes in the contribution of a group of key
inputs.
Productivity growth occurs when output growth exceeds the amount of input growth over a
specified time. In other words more output is created from a given level of inputs or the same
output is obtained from fewer inputs. The key point of difference between small holders and
plantations is labour. The low cost of labour in PNG dilutes the pressures to move to larger
scale production units to achieve gains in productivity and net returns:

What will happen if NBPOL ceased operation?


NBPOL is the greatest oil palm producer in the country and if it had left, the national
economy would have plummeted especially from this renewable sector. And as such, there
will be great increase in retail goods prices where many citizens heavily rely on for day to
day consumption and survival.

Page | 42
Many people who work for NBPOL will lose their jobs and the children and dependants of
this workers will lose many privileges provided under their employment conditions, the
provincial government definitely will lose out on its shares with NBPOL and thus, decrease
in the internal revenue generation which in turn will affect other sectors too.
The roads and other infrastructures under NBPOL arrangements will not be in their
conditions and glamour like they are now. These infrastructures will truly deteriorate the
unusable conditions. For those; especially the oil palm growers who rely heavily on the sale
of this commodity will deeply suffer and struggling to find new markets, thus many will lose
interest in the welfare of this commodity and turn to illegal activities and causing much more
pain for themselves and law enforcing agencies. Likewise more money will spent on this
sector while others will miss out.
The Dami Research, which the world depends very much on for quality seedlings, will also
pack up and leave our shores and we will miss out on this great opportunity. The whole chain
reaction will be activated whereby the country will lose a lot on all the benefits associated
with this industry. People may turn to other cash crops such as cattle, rice planting, cocoa,
copra, logging and fishing. The province has much resource and a diverse forest that can
enable the people to cater for them. The government of WNBP and national government of
Papua New Guinea may support the citizens through better distribution of goods and services
to better their living.

Why WNBP was not in G8 nations


The late scheduling of a G20 summit in Toronto affected the G8 weekend in together the
heads of the richest industrialized countries, France, Germany, Italy, the summit included an
Africa outreach session. Explaining the world, dearly a counterweight to the G8 and G20,
which are dominated by rich-world economies? BRIC countries were the constituent
members of abut denying the reality of how the world is changing is not going to stop things
from change.
Papua New Guinea supposes to be included in the G8 or G20 nations around the world. The
question is why? What is the problem? Are members of parliament (the government of PNG
or WNB) not part taking in the operation of oil palm in West New Britain? These are some of
the critical questions to ask when I see that the operation of oil palm is similar to Malaysia.
By looking at Malaysia as a practical example to West New Britain Province.

Chapter 4
The DISADVANTAGES of Oil Palm
The oil palm tree originates from the West Africa where it grows in the wild and later was
developed into an agricultural crop. It was then introduced to Malaysia, then Malaya and to
other places where oil palm is found today. The oil palm industries have grown and big areas

Page | 43
of land has turned into oil palm plantations, and today, the palm oil is one of the worlds
leading agricultural commodities.

Despite the fact that palm oil production is growing at a faster rate, there are also number of
disadvantages that comes along with it. The industry is linked to major issues such as
deforestation, climate change, animal cruelty and indigenous rights abuses in the country
where it is produced, as the land and forest must be cleared for the development for the oil
palm plantations. Another major issue is the concern of harmful effects of palm oil on human
health.
Impacts on Environment

A large proportion of palm oil expansion occurs at the expense of biodiversity and
ecosystems in the countries it is produced. Sprawling oil palm farms replace the rich
rainforest ecosystem with biological desert, thus cause deforestation that also contributes
significantly to climate change. The removal of the native forest often involves the burning of
invaluable timbers and remaining forest undergrowth, emitting immense quantities of smoke
into the atmosphere.
Forest fragmentation has effects on wildlife populations that are far greater than simply the
area of forest lost or the number of trees destroyed by the infrastructure.
In Papua New Guinea, numerous oil palm projects are being encouraged or endorsed by the
government. In the countrys West New Britain Province, as in Indonesia, high conservation-
value forest is being permanently lost because oil palm plantations are replacing much of the
lowland forest after it has been logged commercially. In West New Britain, companies
majority-owned by Malaysians dominate both the logging industry and the oil palm industry
New Britain Palm Oil Limited (which is majority-held by the Kulim Group) is Papua New
Guineas largest oil palm operation. New Britain is a small island, and its lowland forest is
rapidly disappearing.
Impacts on Animal

Page | 44
In the Jungles of Bornea and Sumatra, there are found over 300,000 different animals, many
of which are injured, killed and displaced during deforestation. In addition, palm oil
development increases accessibility of animals to poachers and wildlife smugglers who
capture and sell wildlife as pets, use them for medical purposes or kill them for their body
parts.
Animals are burned alive in the flames or are killed as they try to flee. Borneos orang-utan
population was reduced by one-third in just one year. Animal populations shrink because the
remaining rainforest cannot support all the refugee animals in addition to the normal
populations already there. The displaced animals become stressed and may starve, be killed,
or grounds. Areas of oil palm disrupt animal social systems by hindering migration patterns
and blocking travel corridors.

Impacts on People

The establishment of oil palm plantation is often promoted as a way of bringing development
to poor rural regions. In reality, the industry often has devastating impacts on the people in
these areas. All too often, the governments main interest in the countrys economy leads
them to allow corporations to take the land owned by indigenous peoples for their own
financial benefits. Sometimes, the indigenous people, especially the land owners are being lie
to with false information on the money that will be shared like the royalties. Procedures taken
by the industry is not appropriate, as they turned to give better services to expatriates and
fewer services to the indigenous people.
The industry is also linked to major human rights violations, including child labour in some
remote areas of Indonesia and Malaysia. Children are made to carry large loads of heavy
fruit, weed fields and spend hours every day bent over collecting fruits from the plantation
floor. More than often, children receive little or no pay for their efforts. With the plantations
replacing the rainforest land which the local people depend on, communities are continuously

Page | 45
finding themselves with no choice but to become plantation workers. Instead of being able to
sustain themselves, indigenous communities become reliant on the success of the palm oil
industry for their income and survival.
Palm oil, widely used in processed foods and cooking oils in Asia, Europe, Pacific andto a
lesser extentthe United States, also harms human health. Yet those effects are not broadly
recognized in the countries that finance, import, and trade in palm oil. Oil from palm oil trees
which is used around the world in such foods as margarine, shortening, cooking oil, soups,
sauces, crackers and other baked and processed goods could very be harmful to your health .
Generally, plant oils are more beneficial for health than animal fats, but palm oil is an
exception. At room temperature, palm oil is the consistency of butter or shortening and is
often used in place of them in baked goods and processed foods. The large amount of
saturated fat and high number of calories it contains make palm oil a risky choice for human
health. Fat diets that are high in fats such as palm oil can lead to weight gain, heart problems
and other chronic diseases. Consumption of palm oil that has been heated may elevate blood
pressure.
Palm oil is not a health food. If current trends in palm oil consumption continue, that oils
global impact on public health will increase greatly. According to medical experts who
carried out a major multi-country study sponsored by Columbia Universitys development-
oriented Earth Institute, the burdens of heart diseasein terms of both health and economics
will fall heavily on people in developing countries.
Nevertheless, the provinces rely heavily on agriculture as a staple cash crop for the provincial
revenue that may continue to grow in support of the nations economy. Since independence
and this sector especially provides employment, income earning opportunities and food
security for the rural majority whereby on the other side, significantly generates revenue for
the country through its commodity exports. Strategies will be based on crops and livestock
production with the extension of providing appropriate incentives to assist in implementing
the National Land Development Plan (NLDP). So that the rural population will satisfactorily
benefits from their land and the Agriculture activities the employ on it.
In addressing agricultural development, the provincial Division of Agriculture & Livestock
(PDAL) will employ seven (7) major projects and that is; Trees and Industrial Crops, Spices
and Minor Crops, Food Horticulture, Women in Agriculture, Livestock Development,
Integrated Agriculture Training Program (IATP) and Pest & Disease Management.
The way forward Provincial Division of Agriculture & Livestock has formulated and
submitted three projects to the Department of National Planning and Monitoring to source
fund.
They are; (a) Managing Integrated Program Targeting the indigenous Mangseng Tribe in
the South Coast Economic Corridor, inclusive of those living along the East and West New
Britain border.
(b) Bio- Health Security Resource Center- To source funding for a central storage and
dissemination center for reliable and up- to- date information to effectively battle pests and
disease threatening crops and livestock production. Latest technology will be employed in
gathering information where by relevant trainings and surveillance matters will be
coordinated from the fully equipped center.

Page | 46
Redevelopment of Kapore Livestock stationPurposely to source funding to redevelop
the station, gradually bringing it to a stage where it will become the central livestock
coordinating, demonstrating and training center in the province. Once fully develop and
equipped, should also serve as one- stop shop location for disseminating sound agriculture
knowledge, information and skills to all agriculture base societies, stakeholders and farmers
who are interested in participating in livestock production.
Apart from these, Mining activities have been rated very slow in the province. However, in
2011 exploration activities at EL 1043 Mt Nukru EL 1077 Simuku and Adewa in Kalia Kove
have revealed possible Gold and Copper deposits. And finally I believe, these prospects
seem promising for a booming mining industry in the province that could contribute
significantly to the economy of the province and development of the road network in
upcoming 5 years in the province.
Implications of Land Use Change

Carbon and greenhouse gas implications


Tropical peat swamp forest ecosystems are one of the most important terrestrial carbon stores
on earth. West New Britain Province peat lands changeable to the conversion of forest for
agricultural development are a one-point emission in time, while emissions resulting from
peat drainage are continuous processes. Emissions due to peat drainage are not caused just by
land use change, which generally involves a loss of biomass, but rather to its long-term
effects on the carbon store in the soil. This is different in the case of deforestation on mineral
soils, where the largest proportion of emissions results from the loss of biomass at the time of
land use change. Several studies have been performed based on past trends, land availability
and projected demand for palm oil.
Other ecological implications
The rapid and massive expansion of oil palm has also led to concerns about its impact on
natural habitats and biodiversity. Locally, the development of oil palm plantations in forested
areas will have several consequences, such as increased erosion, loss of biodiversity,
pollution by chemical runoff, and increased fire risk. Other impacts include soil subsidence
due to drainage and fires, which can lead to an increased risk of flooding, salt water intrusion,
and, in some cases, eventual loss of the entire peat formation. Oil palm monocultures require
use of insecticides, herbicides and fertilizers, which may enter water bodies as runoff or
groundwater seepage and can seriously impact aquatic biodiversity. Another problem is haze
following peat and forest fires. Exposure to high levels of air pollution increases risk of
asthma, bronchitis and other respiratory illnesses Haze can also result in the reduction, by as
much as 92%, in photosynthetically active radiation (PAR) which can affect rates of carbon
fixation.

Social, economic and livelihood implications


The broader economic, social and livelihood implications of oil palm cultivation on peat
remain poorly understood. Although many households profit from the palm oil business, the
expansion of large-scale oil palm plantations will lead to loss of ecosystem services. Some
studies warn of instability in food prices because smallholders may become over dependent
on the price of palm oil. In WNBP, one point of concern is from transnational corporations

Page | 47
and other large landowners who establish extensive landholdings at the expense of small
farmers. I am referring to companies operating in the province such as: New Britain Palm Oil
Limited and Hargy Oil Palm Ltd. However, many findings are contradictory and differ among
regions and may be affected by the time frame of the studies, while short term economic
consequences are often positive, the longer term implications can be the reverse. Figure 1
below shows the linkages that exist between the loss of peat swamp forests and global market
forces, as mediated by national export policies and international investments. The increasing
demand for a product in one part of the world may negatively impact wetland ecosystems
elsewhere. In the process, the conservation and sustainable management of tropical peats in
Southeast Asia is threatened. Nonetheless, oil palm appears to be an attractive new income
opportunity for Indonesian farmers, as attested by its widespread uptake by many smallholder
communities.
It is good to see people when it time for fortnight. How they spend their money to business
houses in Kimbe town. There is a saying Somare arrives & Peter Lus gone, the saying; it
meant about the fortnight. People spend unwisely. Fortnight of oil palm shared or distributed
to the all members of the family at the same day. No budgeting or managing of money within
themselves, when money is withdrawn from Bank South Pacific BSP, Australia New Zealand
Bank ANZ, West Pac Bank and other financial institution directly misused through
unnecessary goods.
On the other hand it helps much in education, health, transport, clothing, building houses,
rent government, sports, churches activities etc... Oil palm provides better services to people
through socialism, physically and spiritually. People grow mentally in order with oil palm
cash flow but they dont realize how they spend it, even wisely or unwisely. Oil palm
provides yet people are very poor. Why? What is good reason to answer this simple question?
Misuse or mismanagement of the people themselves and most contributing factor to this
question is the government and also the company itself. The answer depends highly on the
company policies on their price at the world market. The favorable outlook for palm oil
demand will encourage industry investment in other countries. PNG is in a good position to
attract some of this new investment. Palm oil has become the countrys most successful
agricultural industry in terms of international competitiveness and export earnings. In
specific areas the climatic conditions and availability of land offer a good base for industry
growth and further development of the rural economy. But PNG is not the only option for
industry expansion and much will depend on government efforts to facilitate new investment.
Consequently PNG has a heavy reliance on local produce for its food needs. In
2006 an estimated 83% of food energy and 76% of protein was locally sourced.
This has been a factor in the persistent nutritional deficiencies. The available food products
do not meet all the necessary requirements for a balanced diet.
The remainders of PNGs food needs are imported and this includes 56,000 tonnes of
vegetable oils. Expansion of the palm oil industry will generate more export income. But it
could also lead to greater domestic use of palm oil in cooking and as a food additive. This
would have important nutritional benefits and reduce the dependence on imported vegetable
oils.

Page | 48
CARBON BALANCES AND GREENHOUSE GAS EMISSIONS IN TROPICAL
PEATLANDS

Intact peat swamp forests store large amounts of carbon in the peat and in the vegetation.
Since the 1980s large areas of tropical peat swamp forest in West New Britain Province have
been converted for urban development, forestry and agriculture, including for palm oil
production. Conversion of tropical peat forest areas into agricultural land has various
consequences for the carbon and GHG balance in the years following disturbance. These
consequences are mainly dependent on the extent of deforestation, drainage depth and water
management. The companies are not looking at these problems on how to tackle it. It cannot
be solved unless companies change its own policy.
Carbon Dioxide and Carbon
Direct loss of carbon
Agricultural development of tropical peat involves a change in vegetation cover and, in
almost all cases, permanent drainage. The land use change from forest to oil palm plantation
(clearing and/or burning of AGB), causes a direct loss of carbon

Page | 49
OTHER ENVIRONMENTAL IMPACTS OF DEVELOPING OIL PALM
PLANTATIONS ON TROPICAL PEAT SWAMPS
With oil palm being the most rapidly expanding crop in Papua New Guinea mainly WNBP,
there is a need to identify sites where the development of oil palm plantations has the least
impact, as well as ensure that oil palm that has already been planted enjoys improved
management. The negative impacts in terms of sustainability of transforming peat swamp
forests into oil palm plantations include:
1. Soil subsidence leading to increased flooding risk and salt water intrusion.
2. Loss of biodiversity and ecosystem services.
3. Carbon emissions into the hydrosphere through runoff and erosion.
4. Methane emissions from POME ponds.
5. Discharge of other effluents from palm oil mills into waterways with adverse consequences
for water quality.
6. Increased fire risk through peat drainage, leading to adverse implications for human health.

Subsidence, Salt Water Intrusion and Flooding


Tropical peat swamps affect the hydrology of surrounding ecosystems due to their large water
storage capacity which slows the passage of flood waters in wet seasons and maintains stream
base flows during dry seasons. Disruption of this hydrological system, for example by clear
cutting and drainage will have consequences for hydrological regulation. For example,
because of the low capillary rise in peat soils, oil palm on drained peat is very sensitive to
drought and dry periods often result in significant yield reductions Drainage of peat leads to
soil subsidence. Soil subsidence is caused by several processes: consolidation, compaction,
and oxidation, fires, and water and wind erosion. Consolidation refers to surface height loss
caused by tighter packing of the peat soil below the water table. Consolidation of tropical
peat drained for plantation development may result in considerable height losses, but usually
ends within one year The initial or primary subsidence depends on the type and depth of peat
and the drainage level; subsidence rates can be more than 50 cm yr-1 in drained tropical peat
After a few years of drainage, the balance between the processes contributing to subsidence
will change and oxidation becomes the main factor responsible for subsidence. Indicating
that consolidation contributes only about 7% to the total subsidence after the first year after
drainage; in fabric peat with low mineral content the role of compaction is reduced rather
quickly and becomes negligible after 5 years. Over 18 years of drainage, 92% of the
cumulative subsidence was found to be caused by peat oxidation, which is close to the 85-
90% reported for subtropical peat by based on more than 40 - 90 years of measurements in
operation in each estates own by the company. Those studies also report that peat surface
subsidence continues at a constant rate for many decades, which can explained by the
dominance of oxidation and the limited role of compaction report average subsidence rates
of 4.6 cm yr-1 for oil palm plantations in Kapiura (Bilomi)at 14 to 28 years after drainage.
The most recent, extended research of shows that constant long-term subsidence rates are 4.5
- 5 cm y-1, on the basis of both literature reviews and subsidence monitoring for water tables
between 60 and 80 cm at 218 locations in Kumbango and Mosa and oil palm plantations in
WNBP. No studies have been published on the relationship between soil subsidence and CH4
or N2O emissions. Several authors have proposed strategies that both reduce emissions and
enhance biodiversity within oil palm landscapes, such as production of oil palm beneath
shade trees, establishment of diverse agro-forestry on plantation boundaries, and maintenance
of forest patches within plantations. A regulation to restrict oil palm expansion to only

Page | 50
degraded lands and existing agricultural lands would partly solve the problem. But if logged
forests are classified as degraded lands, then biodiversity will continue to decline. Many of
the largest palm oil producers have expressed a desire to implement environmentally friendly
management. Maintenance of forest patches within oil palm plantations has been suggested
as a means to increase biodiversity. However, it shown that forest patches, if not inter-
connected, did not increase bird abundances in adjacent oil palm, had lower species richness
than contiguous forest, and had an avifaunal composition that was more similar to oil palm
than to contiguous forest. Therefore, species richness and diversity of butterflies and ants
declined significantly with declining forest area and endemic species were not recorded
within small forest remnants. Many studies highlight the importance of retaining areas of
contiguous forest for biodiversity protection and they suggest that from a conservation
perspective any investment in the retention of forest patches would be better directed toward
the protection of contiguous forest.
Increased Fire Risk
Fires are dependent on four conditions: the presence of fuel (organic material), oxygen,
dryness and an ignition factor, and are usually caused by human intervention and linked to
activities such as forest clearance, road development, and poor land use management.
Undisturbed rainforests usually do not burn, due to high moisture levels in the atmosphere,
vegetation and soil. However, drainage, excessive logging and forest it make both forests and
peat highly susceptible to fires, especially in times of periodically occurring droughts
typically coinciding with El Nio events now happening all throughout Papua New Guinea
shows that fire has increasingly affected forests in West New Britain Province destroying
over 50 blocks of oil palms and 10 hectors of oil palm belonging to NBPOL at Mosa, Bebere
plantation, Dami Research Centre and Kumbango plantation over the last few months of year
2015 , leading to severe consequences for biodiversity and air quality. So climate change,
coupled with land use changes, could lead to more frequent fires, which in turn could result in
positive feedbacks with climate change. The fire risk in oil palm plantations on peat is
generally reduced compared to that for abandoned, degraded peat land, because of intensive
monitoring and control of fires by state agencies and estates. The consequences of forest and
peat fires are numerous and include destruction of the hydrological functioning of peat
swamps (e.g. their ability to reduce flood peaks and maintain base flow in periods of
drought), a loss of biodiversity and wildlife habitat, the death of seeds and seedlings so
preventing re-establishment of vegetation. Peat and forest fires are the second largest GHG
sources after emissions due to drainage of peat. Undisturbed peat swamp forests do not
usually burn, but can do so if drained and subject to seasonal droughts. Such fires can cause,
1) destruction of the hydrological functioning of the peat swamps, 2) loss of biodiversity and
wild life habitats, 3) elimination of seeds and seedlings, 4) release of large amounts of CO2
and CH4 to the atmosphere, 5) smoke, resulting in lower ecosystem production, 6) air
pollution and adverse effects on humans health, and 7) reduced photosynthesis due in
reductions in photosynthetically active radiation. Peat fires affect ecosystems worldwide by
contributing significantly to climate change through increased GHG emissions. However,
information on air pollution associated with the increased fire frequency after peat and forest
burning is scarce and more research on these aspects is needed.
Figure 2 below shows the oil palm being destroyed by fire at Bebere plantation Mosa
NBPOL

Page | 51
Page | 52
Drought
The picture below shows some parts of PNG and WNBP that have experience El Nino this
year 2015. For the last six months the company NBPOL loss a millions of kina due to heavy
down pour of bush fire, sun heat that consume the whole nation to stand still. Economy also

Page | 53
drops due to the production of oil palm and other cash crops like cocoa, copra, vanilla,
logging, fisheries etc because of the effect of El Nino.

Shortage of food

The government of WNB may help the affected are only. Places like Bali /Vitu LLG Local
level government, Bialla LLG, Kandrian /Gloucester, and Talasea LLG. Shortage of food in
this mention areas due to their garden foods have been dried and burned by fire. Even the
company is reaping people in their own land; I dont think the company will help in
providing rations to people.

Much of what we know about poverty in Papua New Guinea is based on a limited number of
national level surveys and data sets. The most significant of these have included census data
(1980, 1990, 2000), Demographic Health Surveys (1981, 1991, 1996 and 2006), a National
Nutrition Survey (1982-83) and a National Household Survey (1996). The PNG Resource
Information System (completed 1986), which collected geographical data on the environment
and resources, has also been used in several studies to supplement survey-based data.
The most recent analysis on poverty in PNG is based on the National Household Survey of
1996. This estimated that overall 37.5 per cent of Papua New Guineans lived in poverty.
Rural poverty was estimated to be almost double that of urban areas.
Based on this research and the similarities between districts identified as poor over several
decades, we can make some judgements about the characteristics of poor areas. These areas
are isolated, have low levels of cash incomes and poor access to services. Factors such as
isolation and limited cash earning opportunities appear intractable. Environmental factors,
which affect the productivity and reliability of subsistence farming, mean that populations
living in these areas are vulnerable to the effects of food shortages and malnutrition in
particular. Underlying each of these factors is the sometimes harsh geography of Papua New
Guinea.
In West New Britain Province this year 2015 on my research at Valoka Village Hoskins LLG,
base my findings on individual families out of the total population of the village.

Strictly base on the findings for this year 2015 El Nino, the country is facing downfall of
economics statues due to the commodity prices drop because of the drought.
The government of PNG plans to cut public expenditure by K1.4 billion, and increase
revenue by K 1.1 billion in a bid to offset the sharp fall in tax revenues. The big drop in the
government revenue was caused by the reduction in export commodity price.
Why? The country experiencing drought, commodity prices drop due to the fall of cash crops
such as: cocoa, copra, oil palm, rubber, timber (logging), fisheries etc How can the
governments help? The government increases the deficit to 4.5 per cent of GDP so the debt to
GDP will remain 35 per cent a target that IMF team felt was unlikely to be achieved even by
2020. These are the hallmarks of a good government particularly in fiscal management.

The table below shows the individual families lives on poverty line compare to urban
families.

Page | 54
No. of House Cash No. of Garde
Familie ( they Crops Childre n
s own) ( oil n
palm)
Family 1 1 12 1
A
Family 1 1 15 1
B
Family 1 1 11 1
C
Family 1 1 10 1
D
Family 1 1 9 1
E
Family 1 1 9 1
F
Family 1 1 7 1
G
Family 1 1 10 1
H
Family 1 1 12 1
I
Family 1 1 11 1
J

This table above shows how the family depended on each other on number of each asset they
have to make their living.
This photo show how they depend to help each other. Picture taken at Valoka Village Hoskins
LLG.

Page | 55
The picture above shows the drought in WNBP due to the clearing of forest, the province
experiencing dryness and burning of bushes chasing of animals far away from the people to
hunt. In PNG today, the country is experiencing El Nino. Water dried, bush fire across the
nation, people find it very hard in sustaining their living due to climate changes affecting the
whole nation.

This article of above is taken out from the post courier 23/09/2015, it shows how the USAID
assist PNG in this EL NINO period.

The development of the oil palm sector in PNG has been less dramatic compared to Indonesia
and Malaysia. However, the mature area of the PNG oil palm plantations almost doubled
from 46,000 hectares to 73,000 hectares between 1990 and 2000. Since the mid-1990s there
has been a dramatic expansion of the oil palm area in PNG. Domestic interest has already
revived and, as in both Malaysia and Indonesia, increasing foreign investment can be
expected in the coming years. Senior Government officials announced plans for expansion of
oil palm plantations in nearly every province in PNG.
In October 2001 the government endorsed a proposal from Ramu Sugar in PNG to set up an
8,000 hectares oil palm plantation in Usino-Bundi in Madang province. About 6,500 hectares
would be operated by Ramu Sugar and the other 1,500 hectares by smallholders.
In April 2001, the PNG Agriculture and Livestock Minister, Muki Taranupi, announced plans
for tax incentives in the oil palm sector designed to encourage growth and boost production.
In August 2001 the governor of the East New Britain province, which currently has no oil
palm plantations, announced that the province would start to encourage the establishment of
oil palm plantations. The provincial government plans to convert a large area of land in the
Open Bay area of North Baining for this purpose.
In August 2001 the governor of Morobe province presented a pre-feasibility study on a
30,000- hectare oil palm project on the border of the Morobe and Gulf provinces. The project
would cost some 200 million kina (US$58 million) to develop. However, project viability
will depend heavily on the development of road infrastructure in the area, as it is very remote,
economic activity is almost nonexistent and basic services such as health and education are
very primitive. To improve accessibility, a route near the plantation area for the planned
Trans-Island Highway section connecting Lae with Kerema and Port Moresby may be
chosen.
In August 2001 the presently dissolved Oil Palm Industry Corporation (OPIC) in PNG
announced that the World Bank is planning a nation-wide oil palm project funding in 2004.
At that time the World Bank was conducting feasibility studies in oil palm growing provinces
to ascertain the viability of the project.

Page | 56
In June 2002 OPIC announced that a large number of new oil palm projects could be
developed in PNG within the next 5 to 10 years if current feasibility studies on proposed
projects are completed and approved by the government. The studies cover at least 10 new
projects under the PNG Agro-
Industry Development Program: in Sandaun, East Sepik, East New Britain, Madang, Gulf,
Central and Morobe provinces where oil palm is yet to be introduced. 31 The Asian
Development Bank (ADB) provided a US$5.9 million loan to the Smallholders Nucleus
Estate Agro Enterprises (NE) feasibility study. The Government of PNG (GOPNG) had
already made public announcements that the ADB feasibility study is to facilitate oil palm
projects and earmarked the following areas to be studied:
Bewani and Aitape integrated oil palm projects in the Sandaun Province
Vailala oil palm project in the Gulf Province
Ramu Valley oil palm project in the Ramu Plains in the Madang Province
Sepik Plains oil palm project in East Sepik
Open Bay oil palm project in East New Britain
Amazon Bay integrated oil palm project in the Abau District in Central Province
Morobe-Gulf border integrated oil palm project in the Morobe & Gulf provinces
Arowe oil palm project in the South Eastern part of West New Britain, and
Collingwood Bay oil palm project in Milne Bay & Oro provinces.
All these oil palm proposal project by the government has been approve since the bill have
been pass by the parliament and already many of this estates and plantations are ready for
harvesting their fruits.
What about the future generation? Where will they lived, hunt, do gardening, fished, their
secret places are clear by companies so therefore the future generation stands untold. All
secret places are dug out and where the people lived? Who will take responsibility of taking
care of the people? The company or government? Its good to plant palm for country benefits
but what about the living standard of the people? I believed oil palm cant help unless there
are policies drawn up for the benefit of the people of WNBP and the country as a whole.

How can we solve this problem?


A key competitive advantage of PNG, which explains the interest from foreign investors, is
the fact that the country is among the ACP countries, which have a preferential trade
agreement with the European
Union (EU). This means that CPO exports from PNG to the EU are exempt from 6% import
tax that the EU raises on CPO imports from other countries, including Indonesia and
Malaysia. The CPO export from PNG is thus 100% directed at the EU with the UK, Italy and
the Netherlands being the main markets. Furthermore, because PNG is a relative newcomer
in this industry, its oil palm plantations are planted mostly with highly productive seedlings
from Malaysian nurseries. On a country-level, PNG therefore records the highest CPO
production level per hectare (4.2 tons) of all production countries.

Deforestation
The role of oil palm expansion
The original habitat in most areas suitable for oil palm is lowland evergreen tropical
rainforest. These forests support the highest biodiversity of any terrestrial ecosystem, with
those of equatorial Southeast Asia among the richest. For example, while Indonesia only
covers 1.3% of the globe's land surface, its forests are home to around 10% of all species of
flowering plants, 17% of all species of birds, and 12% of all species of mammals, 16% of all
species of reptiles, and 16% of all species of amphibians. PNG covers only 0.3% of the
Earth's surface but holds 5% of the globe's biodiversity. The forest areas that are cleared for

Page | 57
oil palm development often provide habitat for well known keystone species, such as the
orang-utan, Sumatran tiger, elephant and rhinoceros, and the world's largest butterfly, the
Queen Alexandra Birdwing. In large part owing to their rainforests, Indonesia, PNG and
Malaysia are among the world's ten most mega diverse countries. As a result of this
biological richness, these forests provide a livelihood to indigenous communities including
the Asmat in PNG, the Dayak in Kalimantan and the Senoi in West Malaysia. With the
demise of the rainforest, their livelihoods are set to alter dramatically. So there in what ways
well protect these species and our secret forest of West New Britain Province. Its difficult to
protect it from companies like NBPOL and Hargy Oil Palm Plantation Ltd because
government of Papua New Guinea is very supportive to oil palm growing in country.
Much of the forestland cleared to make way for oil palm plantations has been previously
logged and may be viewed by outsiders as degraded and therefore valueless. This, however,
is to ignore the often critical ecological, socio-economic and cultural functions such
forestland has for local communities.
The global significance of the forest destruction in terms of biodiversity and climate change
should not be underestimated - but it is the local communities who most immediately feel the
impact of its destruction. They depend on these forests, often managed under the
community's traditional law, for their subsistence and cash income, as well as for cultural and
religious practices. Deforestation completely overhauls their entire way of life.
Those degraded forests converted for oil palm furthermore often still provide a habitat for
an array of species, which is destroyed when the forest is logged and replaced by oil palm.
Research has shown that an oil palm plantation can support only 0 - 20% of the species of
mammals, reptiles and birds found in primary rainforest.64 Those species that are able to
survive in the new environment of the plantation frequently come into conflict with humans
in and around the plantations. Workers and villagers encounter pigs, cassowary, cuscus, birds,
porcupine and wild boar for some time after forest clearing.
The results are often serious and sometimes fatal

Pollution
General concerns
Villagers interviewed in Koimumu village, Valoka village, (Hoskins Local Level
Government) often report that local fish stocks in rivers and lakes declined and that their
potable and bathing water sources turned brown and smelt foul after oil palm was introduced
to their areas. In Talasea Projects, female workers in plantation estates are disproportionately
unhealthy compared to other women. In, West New Britain village women especially have
also reported significant increases in birth defects, fertility and maternity problems associated
with oil palm pollution. NGOs are concerned that the country's relatively undamaged coral
reefs will be affected by pollution, thus contributing to the destruction of pristine reef systems
and hence valuable fish breeding and spawning grounds.
Palm oil production brings about various types of environmental pollution. The most
important are:
Air pollution caused by forest and peat fires;
Heavy sediment loads in rivers and streams;
Pollution caused by excessive or improper use of agro-chemicals; and
Palm Oil Mill Effluent (POME) dumping.
Today, NBPOL is using Dagi river without the consent of the landowners and the
government, the health agency department of PNG. The waste of the factory out from their
drainage being dump into Dagi River, killing fishes, coral, reefs out into Kimbe bay. Oil
chemical like waste of oil palm wash away by rain into the seas, river banks into the gardens.

Page | 58
These chemicals destroy and kill trees, plants, fish animals such as pigs, cuscus, cassowary,
bandicoot and reef, corals from the sea. Rubbishes from laborers compounds, factories, waste
oil from cars etc

Environment and Developmental NGOs


NGOs are concerned about the impacts of oil palm cultivation and processing including
sedimentation and contamination by agricultural chemical residues in water courses and the
marine ecosystem, inadequate buffer zones and wildlife corridors, expansion of oil palm
planting and loss of biodiversity. The company should improve its environmental monitoring
and publish the results at regular intervals. All buffer zone requirements should be met and
there should not be any further expansion of oil palm planting in pristine forest areas or those
with advanced secondary re - growth where high conservation values have been identified.
Improved erosion control and runoff management with sediment traps should be undertaken
to reduce the volume of sediments ending up in the watercourses and the shoreline waters.

NBPOL has implemented best practices to minimize water quality impacts. Riparian buffer
zones are being reinstated along streams and rivers before replanting is carried out. Buffer
zones are measured by GPS survey to ensure the correct size. NBPOL has implemented water
quality monitoring and is preparing a report on the environment, which will be publicly
available. NBPOL is committed to complying with the RSPO P&C and oil palm will not be
planted on land with HCVs present.
The local people have not been provided information on negative and positive aspects of oil
palm in order to make an informed decision on whether to participate in the industry. NGOs
should be invited to talk to landowners intending to take part in the oil palm industry while
negotiations are in progress so that they have the widest possible range of information
available on which to decide what land use is preferable.

NBPOL has revised its land acquisition procedure to ensure landowners are informed of the
environmental and social impacts.

The company should improve dissemination of information to the public about its operations
and community assistance programs so the public is well informed about its activities and
appreciate its limitations. This is to deal with the general perception in the community that
the company is making huge profits and not doing enough to improve social service and
infrastructure development in the province.

Soil erosion
Land clearing causes considerable increases in topsoil run-off disturbs stream-flow and
increases sediment loads in rivers and streams. Soil erosion, for example, is five to seven
times greater during clearance, while sediment loads in rivers increase by a factor of four.
Whereas some of these impacts are temporary; the pressure on riverine and coastal
ecosystems remains significant in many areas because land clearing and development is
continuously taking place in different areas in the same watershed. Soil erosion is especially
problematic when oil palms are planted on steep slopes and at high altitude. Terracing
reduces longer-term erosion risk but the land preparation causes very heavy erosion.

Page | 59
As suitable lowland areas become scarcer, it may well be that upland oil palm plantations will
be introduced to Arowe and Kove area in the Kandrian / Gloucester Electorate with all the
associated risks. This has already taken place in Hoskins, Bialla and Mosa Local Level
Government where oil palm has successfully been planted at 1,000 m above sea level.
One of the main constraints to such farming was found to be the limited area of land that
individual farmers own, which means that most of them plant just one crop, which has no
yield during the first 3 years after planting. This renders them vulnerable to exploitation by
buyers and other outsiders. Nonetheless, many choose oil palm because it provides a better
income than fruit and vegetables.

Illegal activities and corruption

Oil palm plantations in WNBP are developed on land leased from the landowners. Illegal
expansion of oil palm plantation prior to obtaining all licenses or in excess of the legally
permitted maximum, results in unacceptable environmental degradation, losses of public or
community owned natural resources and losses to state coffers.
If and when they are detected, illegal practices present the authorities with a choice of either
accepting the situation or entering lengthy and uncertain legal proceedings in a generally
corrupt legal arena. It is no secret in WNBP that the first option is commonly chosen and that
bribery is also common. As a result, forests are lost and affected local communities are left to
deal with the situation themselves, a recipe for persistent social conflicts.
After in-principle approval by the Department of Physical & Lands, an investor approaches
the provincial governor for his in-principle approval, which is followed by a land allocation.
Department of Forestry, a leasehold title (HGU) is granted for a period of 40years (99 years
lease in every estates own by NBPOL). Plantation licenses are now issued by investment
promotion authority IPA, but there has been no corresponding decentralization of licence-
issuing authority in the Ministry of Forestry. The country has four offices allocated in the
Highlands, Momase, Southern and New Guinea Island regions for registering and
deregistering of businesses in Papua New Guinea. Thus, getting new plantation licenses has
become more time-consuming. Some companies proceed with land clearing ahead of
obtaining formal approvals. There are instances where district governments issue new
investment licenses for land that has in fact been allocated to another company but is not
under active cultivation. Moreover, it has also been reported that local officials keen to
encourage oil palm development in the districts sometimes falsify the condition of the forest
for which a release permit is required from the Ministry of Forestry.
As of 2000, approximately 270,000 hectares in 7 provinces had been excised from protected
(Production) forests for oil palm projects without the approval of the Ministry of Forestry. A
plantation company can only fully engage in plantation development when it has
recommendations from the Governor, provincial Forestry authorities and at least four other
permits from the Ministry of Agriculture and the Ministry of Forestry.

In Papua New Guinea a very different situation exists. Almost all land in PNG is owned by
communities. While this is probably one reason why oil palm development so far has been
modest and why PNG is still heavily forested, conflicts between communities and, especially,
logging companies are widespread. The situation in PNG illustrates the importance of
community awareness raising and education. Without it many communities may be tempted
to lease out their forests to logging companies with a view to making a quick profit, without
taking into account the longer term costs and benefits.
Once village leaders agree to an oil palm development on their land, internal community
conflicts often arise if not everyone in the community is in agreement with the project.

Page | 60
Customary land boundaries are sometimes crossed when oil palm plots are established, or at
other times, the company leases out some of the land to people from other areas for oil palm
plots. This results in tension and misunderstandings within and between communities, as land
use decisions are no longer based on customary decision making processes. Conflicts arising
from land disputes are on the increase as these kinds of schemes are introduced.

In fact PNG, nucleus-smallholder schemes are the predominant model of oil palm
development, probably because companies must deal with the local landowners in order to
gain access to their land, rather than with the central or local government. But the PNG
government is assisting the industry to influence landowners and considerable pressure is put
on them to accept the "success story" and surrender their land to the miracle crop. The
Minister for National Planning and Monitoring Sinai Brown stated that "from a humble
beginning as a relatively minor crop, the (oil palm) sector has enjoyed average export growth
of nearly 11 per cent per annum in real terms since 1980. It is now our most important
agricultural export and it directly supports around 190,000 Papua New Guineans. Average
incomes and the quality of life in our oil palm regions are significantly above that in other
areas of rural PNG."
As in Indonesia and parts of Malaysia, the benefits of oil palm compared to alternatives that
better sustain local communities' traditional way of life, culture and environment are
disappointing to local communities who have become oil palm growers. In PNG,
communities are not well aware of the costs compared to the benefits of oil palm growing and
they are not presented with a balanced picture of the costs and benefits by industry or
government.
The other side of the story, according to the Centre for Environmental Law and Community
Rights
(CELCOR) in PNG, is that many landowners and smallholders in existing oil palm project
areas are unhappy with the low returns they get from oil palm. They complain that, whilst big
promises were made to coerce them into accepting oil palm as a good development project,
they find themselves trapped in a situation of total dependency on the Oil Palm Company and
exposure to commodity price fluctuations. Normally growers allocate the best farmland
available in their charge to oil palm. The opportunity costs of oil palm, according to
CELCOR, are too high.
In the Milne Bay province, Village Oil Palm scheme, producers average income from oil
palm reached K$1000 (USD$250) per annum per hectare. Compare this with the net profit
from one grown tree of K$1,050 (USD$260) where an average 3 cubic meters worth of rough
sawn timber can be obtained.
When the value of non-timber products is added to the worth of the 1-hectare forests, the
opportunity costs of the area are far beyond what oil palm can offer to landowners and many
of the alternatives are far more ecologically sustainable and socially viable. In the same
province landowners are offered rent in a lease-leaseback arrangement by oil palm companies
of a mere K$20 (USD$5) per annum per hectare.141
Not all communities in PNG believe that oil palm will bring them the development that they
seek. For example, eight landowner groups in Madang province fiercely opposed the Ramu
Sugar oil palm project through an advertisement in a PNG newspaper in June 2003.
This year 2015 average income per tonne is K160.00 in a fortnight but it the oil palm price
not steady, it change every month of every year.

Company treatment to employees

Page | 61
People cannot manage money. Money come and goes into the dogs mouth. People take but
still suffer due better service like, education, health, infrastructures & roads etc How can
you live in a small cubic house accommodating four families altogether. Sharing a toilet,
kitchen, shower and four rooms not a contain house. Families find it very hard to work very
hard for the company and at last sleep, eat, and dress using a same room that being used as a
family bed room. (I am referring to laborers)

Palm oil and Climate Change


Environmental organizations have leveled accusations that palm oil is a driver of
deforestation, unsustainable farming, and biodiversity loss. These are linked to the claim that
palm oil expansion contributes to GHG emissions, mostly through drainage of carbon rich
peat lands. Overall, close investigation shows palm oil has potential to provide net climate
benefit to PNG.
Many of these allegations are inaccurate and do not stand up to closer analysis. They
are levied at other economies where drivers of deforestation are myriad.
Contemporary research indicates urban growth, subsistence farming, housing and
firewood collection are the primary causes.
The most reliable scientific surveying shows that PNG peat lands, at 67% of total
land area, make up a smaller percentage then in Indonesia and
Malaysia. Analysis illustrates that current and proposed palm oil development is
predominantly located in areas outside of peat lands. As such, GHG emissions from forest
conversion in PNG will be considerably less than developments elsewhere in South East
Asia.
Furthermore, the campaign against palm oil fails to acknowledge any offsetting
factors such as the contribution of palm oil plantations as a carbon sink, the
development of plantations on degraded or already deforested land, or mention of
environmental controls applied to industry.
The climate changes occurs in Papua New Guinea due to El Nino effect this year 2015, the
picture below shows the half of the plantation at Dami Research being burn down by fire.

Page | 62
The environmental impact of PNG palm oil developments
Most of the PNG population lives in rural areas and most income generating activities are
linked to land access. Agricultural developments like oil palm plantations are important for
economic growth and poverty alleviation. The use of forest land for agriculture is one of the
reasons why rural to urban labour migration has not been a feature of PNGs economic
development:
Policy measures that unduly restrict the opportunities for alternative land uses in PNG could
lead to significant regional adjustment issues.
PNGs population is growing rapidly, with a large proportion relying on rural sector
developments for employment or income generating occupations. A reduction in forest land is
an inevitable outcome of economic growth in a developing economy. PNG has a limited
economic base and needs to utilize its natural resources to its best advantage.
Protecting all PNGs forest land to the exclusion of other land uses is not a sustainable or
rational policy position from an economic and social welfare perspective. A balanced
approach is necessary to accommodate environmental concerns and development objectives.
Climate change issues should be closely scrutinized and rejected if they are unsubstantiated
or irrelevant to the circumstances in PNG.
The previous discussion has highlighted the different elements of climate change concerns
that could affect future agricultural developments in PNG. They have implications for the
palm oil industry and its contribution to the economy. This is because the global campaign by
environmental NGOs is using climate change concerns to heighten public interest and build
support to curtail the industrys growth.
Until now PNG has not had a high profile in this antidevelopment campaign
Malaysia and Indonesia have been the centre of attention. But it is increasingly being drawn
into the claims and accusations made against the industry. This poses a risk for future access
to land for plantation and small holder developments.
Agriculture is a major export earner for the national economy. Plantation crops of palm oil,
coffee, cocoa, and copra account for most of these exports. Currently palm oil is the only
industry with strong growth prospects. Global demand continues to strengthen and PNG has
an opportunity to benefit from this growth:
There are signs of emerging limitations on the capacity for palm oil industry growth
in Malaysia and Indonesia.
The potential for increased used of palm oil in biodiesel production could be a strong
stimulus for long term industry growth if trade barriers and regulatory controls in the
developed economies are not discriminatory.

Page | 63
The importance of continued growth in the PNG agriculture sector is widely recognized by
foreign aid and international development agencies. It is going to involve the conversion of
some forest areas to arable land and oil palms are ideally suited to the climatic conditions in a
few locations. However, there appears to be a growing perception that palm oil is causing
excessive deforestation in PNG:
Concerns about the rate of deforestation in PNG and the apparent implications for
GHG emissions seem excessive and unbalanced.
The antidevelopment views on PNGs palm oil industry do not give adequate
consideration to the rights of people to seek improvements in their standard of living.
Concerns about deforestation and land use in PNG land are not supported by the facts. The
amount of agricultural land is just over 1 million ha about 2% of the total land area. Since
1990 agricultural land areas have increased by 163,000 ha.This is not an excessively large
expansion and its not suggestive of widespread deforestation:
The amount of land currently used for oil palm plantations in PNG is minimal there
were 96,000 ha in 2007 and current estimates suggest a total area of 128,000 ha.
There is no indication of future investments causing a dramatic increase in oil palm
areas.
The large areas of inaccessible land in PNG act as natural barriers on the rate of deforestation
for agricultural development. Developments of permanent tree crops such as oil palm and
coffee have only played a minor role in the deforestation that has occurred. Subsistence
agriculture is a much larger user of forested land and these areas are allowed to regenerate.
In some cases the land that has been used for oil palm developments has been previously used
for forestry or is fallowed land from subsistence agriculture. In other cases natural forest land
has been converted to plantations. Only land designated for development purposes can be
used for oil palm cultivation and environmental impact assessments are required for large
scale developments.
Less than 3% of PNGs land area is currently used for commercial agriculture.
This equates to 0.16 ha per person. In comparison Indonesia has 0.21 ha of agricultural land
per person while Thailand and Malaysia have 0.29 ha per person. In New Zealand and
Australia agricultural land use equates to has 2.9 and 20.0 ha per person respectively. 120
In the future some further deforestation will occur if only because of population growth. The
current deforestation rate is estimated to be around 140,000 ha per year. This is lower than
most developing economies in the region121. Even if this estimate is correct the contribution
of palm oil industry growth has been minimal:
Since 1990 agricultural land areas in PNG have increased by just 163,000 ha and oil
palm areas have increased by just over 80,000 ha.
Claims by environmental NGOs about the impact of oil palm developments on deforestation
and GHG emissions in PNG are misleading. It is simply not credible to suggest the industrys
growth is a serious concern for climate change outcomes. Future land use changes for
industry growth may have an impact on carbon emissions and sequestration rates. But there is
a much uncertainty about the size of the net impact and no indication of a dramatic escalation
in industry investments:
This assessment assumes peat land development will remain a nonissue for industry
growth peat lands in PNG are not in areas where the palm oil industry is currently
located.
If peat land developments were to occur, estimates of the carbon release and the
potential use of development regulations would be considerations in judgments about
the net impact on GHG emissions.

Page | 64
Political responses to climate change concerns will have implications for the contribution of
the palm oil industry to the PNG economy in another way. Public perceptions in the
developed economies about the GHG emissions effect of an industry expansion may affect
future demand growth. There is the added risk of trade barriers or regulatory controls on the
use of palm oil in biofuel.
Domestic landuse policies, environmental regulations and foreign investment conditions are
areas where the PNG government can shape and encourage the industrys development. But
consumer perceptions and policy developments in the developed economies are beyond the
direct control of industry players and the PNG government.
Despite this limitation the PNG government needs to be actively involved in shaping the way
foreign policy measures are applied. Credible data and information on the GHG emissions
effect of industry developments needs to be distributed. There needs to be an effective
counterbalance to the campaign by the environmental NGOs. This will reduce the risk of
discriminatory policies being introduced that will limit the industrys growth prospects.

Human needs
In West New Britain Province, some 50,000 people are directly employed by the oil palm
sector (around 5% of the work force). The terms of plantation labour are subject to much
debate in Mosa, along with land rights issues, illegal workers, safety, pesticide use and forced
worker evictions.
Wages
The core message of the at the Oil Palm 2020 vision at Nahavio OPIC head office, August
2003 was that oil palm has been around in Malaysia for almost 100 years. The sector is the
backbone of rural development and political stability. Hence palm oil is sustainable.
However, an NGO representative puts this history in quite a different perspective when
saying: "Through the blatant exploitation of workers, the plantation companies have
successfully kept the workers poor enough to be recognized as a poverty group in every Five
Year Plan."
In 2001 a collective agreement was reached that stipulated that oil palm workers will receive
a guaranteed monthly wage of K160 per tonne. The wage agreement has been severely
criticized because it represents only 80% of the basic poverty-level wages in the country. The
hidden and unrecognized fact behind the wage-environment controversy is that in most
plantations children between 10 and 20 years of age work to help their parents, as each
worker in an oil-palm plantation has to collect 1.5-2 tons of palm fruit each day. Nearly 60
percent of the plantations are without schools for children. With K160as a wage to run a
family of five, poaching presents a viable way of bringing in more money. OX & Palm (Bully
Beef of PNG), for example, fetches a high price and sells for K60.00 a plate in some of the
country's hotels, motels and guest house spots.
Health hazard
The accident rate in the plantation sector is higher than in other sectors in West New Britain
Province. Including company plantations, estates, village oil palm and small holders
especially at Bialla, Hoskins and Talasea are experiencing higher rate of incident during
harvesting, brushing, of oil palm . In 1999 and 2000 the plantation sector alone contributed
14 percent (or 12,753 cases out of 92,704 cases in 1999) of industrial accidents. The reason
for this high accident rate is the nature of the fieldworkers' working environment. Accidents
often occur because of sharp thorns, branches and the fruit of the oil palm and/or by use of
the long-handled implements or by exposure to pesticide.
Housing issues

Page | 65
The quality of the housing and amenities available to fieldworkers is generally low. The
quality of living in a cube house is entirely requiring better house for employees to reside and
perform their duties. Reports that more than 80% of estate families live in houses which do
not meet the basic minimum requirement, regulated by the Workers Minimum Standards of
Housing and Amenities Act 1973, and most estates do not have an adequate, treated water
supply", laundry house, kitchen, toilets and proper shower rooms for them.

Poverty in rural areas of WNBP

Based on this research and the similarities between districts identified as poor over several
decades, we can make some judgements about the characteristics of poor areas. These areas
are isolated, have low levels of cash incomes and poor access to services. Factors such as
isolation and limited cash earning opportunities appear intractable. Environmental factors,
which affect the productivity and reliability of subsistence farming, mean that populations
living in these areas are vulnerable to the effects of food shortages and malnutrition in
particular. Underlying each of these factors is the sometimes harsh geography of Papua New
Guinea.
In terms of future research, the baseline data from Kalia/Kove LLG highlighted
several areas that deserve further investigation. These include the quality of
services that were accessible to the communities, in particular issues of
whether health services were adequately equipped with appropriate
medications, diagnostic tools and staff. Given the reported high level of food
insecurity, it would also be beneficial to investigate levels of malnutrition,
knowledge around dietary issues and access to supplementary foods.

The issue of the communitys vulnerability to various shocks, including climatic, agricultural
and social (e.g. crime) could also be further explored. Although many potential shocks were
identified in the Bialla & Hoskins LLG baseline, it is important to understand how shocks
impact on communities, how they cope and how quickly they recover. Knowing more about
this will give further insights into the factors that the rural poor must consider when making
decisions such as whether or not to diversify their crops, or whether they should send their
child to school. This kind of information could be a major benefit in determining the best
ways to address disadvantage in these communities.

Where are the most disadvantaged communities?


It seems that the most disadvantaged communities have changed little over time. They tend to
be located along the East - West border. They cover many parts of the Mamusi 1, Ulamona,
Silanga, Koimumu, and Kasia and continue to Kandrian/ Gloucester electorate and Talasea
LLG.
Table below compares the ranking of the most disadvantaged communities in the survey
taken this year. For comparison purposes the communities selected are based on those ranked
in the most disadvantaged. A cross indicates that the relevant study also found the community
to be among the most disadvantaged in WNBP alone. While it is difficult to compare studies
directly due to different methodology, and changes in district names, there appear to be six
districts that have consistently been found to be among the most disadvantaged. These
include; Bali / Vitu Island, Kaliai/Kove-Talasea LLG, Nakanai LLG, Bialla, Hoskins LLG,
Gasmata inland and coastal was considered by most of the studies as disadvantaged areas.
The Papua New Guinea (PNG) economy provides a unique opportunity to study the effect of
access to infrastructure on poverty.

Page | 66
Districts / Housing Transport Cash Electricity Health Education Because
LLG Crops of
(Economy PNG's
) status as
Hoskins such a
(Koimumu X X late
- Kasia)
Bialla LLG
(Ulamona X X X X X X
Bago)
Talasea
LLG X X
( Bulu -
Kandoka)
Kalia /
Kove LLG X X X X X
Gasmata
inland & X X X X X X
Coastal
Gloucester/
Kilenge X X X X X X
Kandrian
inland/ X X X X X X
Coastal
developing country (one in which vast parts of the country remained isolated from the rest of
world until after 1950) and because of its mountainous and rugged terrain, the country suffers
from a fragmented system of transportation. In cities and some better-off rural areas, residents
have access to multiple modes of transportation--paved roads, airports, and water travel. In
poorer areas, however, a high proportion of PNG's rural residents live many hours from the
nearest basic social services. And, while recent investment in rural infrastructure has made
PNG more comparable to other developing countries in terms of some metrics (e.g., meters of
roads per person or per square kilometer), access to many social services is still limited
mainly because the road system is poorly maintained, it is highly fragmented in some areas,
and frequently inaccessible during and after rains. In fact, in some areas the deterioration of
roads has reached such a serious level that it has pushed local rural residents to demonstrate
and even riot when national ministers visit.

Comparison of Local level Government (rural villagers that are rated as poorest areas that
badly need services to be provided).

Page | 67
Based on the research that has been concluded so far, and the large similarities between
districts identified as poor over several decades, it is possible to draw some conclusions about
the characteristics of poor areas. These areas are isolated, have low levels of cash incomes
and poor access to services. Underlying each of these factors is geography.
Although cash income was only directly estimated in the more recent studies, it was captured
through variables such as smallholder cash crop production by district and income from
agriculture I suggested that the lack of data on income was a shortcoming of their study,
although they did include a variable on employment which may, to an extent, have captured
some income effect given low levels of formal sector employment.
Poor service levels are reflected largely in education variables that are used in each of the
studies. They are also more directly measured by variables such as level of local services and
access to services. The influence of geography is captured in each of the
studies, directly (for example land potential in Hanson et al 2001) or geographic and
climatic features (Gibson et al 2004). It is also captured in many of the variables relating to
accessibility.

Maternal mortality and child health


In West New Britain Province, it was not possible to gain an accurate picture of maternal
mortality rates via the survey as responses on this issue were very low. This may be due to an
unwillingness of survey respondents to discuss the issue or the small sample size (the sample
size of households with children aged between 0 and 5 years was 152)
Data on where and how they gave birth was collected from parents of children aged between
0-5. This shows that three out of the four clusters had similar access rates to ante-natal care,
of between 60 and 70 per cent, but had a much lower rate at 43 per cent. It was not possible
to collect data on the quality of ante-natal care.

Page | 68
Most retained traditional birthing practices, with no trained mid-wife or village birth
attendant. On at least one occasion, 32 per cent of mothers had delivered in a health facility.
The company NBPOL health service focus only on the employees; example the executives
staffs not the company labourers. The rural villages are the priority of the government. There
are two different bodies work hand in hand in helping people of WNBP.
Comparing to PNG health strategies it says: The decentralization of government roles and
responsibilities and financing under the Organic Law has seriously compromised the quality
and functionality of health services, including maternal health. The integration of hospital,
health centers and community level services- required for safe motherhood programs was
not achieved in PNG as hospitals were made autonomous, further exacerbating the
conflict between provincial health and hospital CEOs.

Policy Setting for Maternal Health


The deterioration of the health services in PNG has contributed directly to the worsening of
the maternal health status in the last decade. Maternal mortality is an indicator of disparity
and inequity between men and women and its extent is a sign of womens place in society
and their access to social, health and nutrition services and to economic opportunities.
Womens participation in economic activities & control of their own income is more
important to improvement of maternal health than household socioeconomic status16. The
low status and empowerment of women negatively affects their access to, and use of, health
services. The lack of a PNG national gender policy creates a vacuum for implementation,
enforcement, monitoring and evaluation of gender development policies including gender
equality and the rights of men and women to equal opportunity and safety. Poor
implementation and monitoring/enforcement of the laws relating to gender based violence
create poor maternal health outcomes for many women and violence in pregnancy is
associated with many negative consequences for maternal and foetal health. The negative
effect of unsafe abortion on maternal health is well researched and documented including
complications such as hemorrhage, infection, pain, infertility and death. The present laws
regarding termination of pregnancy increase the risk for many women of unsafe and often
fatal abortions, poor access to safe abortion and post-abortion care, and often confused health
workers regarding the management of septic abortion resulting in womens deaths and
disability.
The government of WNBP and the NBPOL has to concentrate in improving the health system
of the province. Both parties must exercise their service in building aid post, health centers or
hospitals to care for people who lived far from the main town Kimbe.
Another problem NBPOL will focus on is: Maternal health in WNBP is affected by the
nutrition, education levels and equity of opportunity of girls and women in PNG; by the level
of expenditure on and accessibility of health services; by access to information, education and
services on reproductive health at all ages; and by laws and policies relating to gender based
violence, access to safe termination of pregnancy, family planning services; and broad
development policies regarding population policy, poverty alleviation and gender and
development. Maternal mortality is an indicator of disparity and inequity between men and
women and its extent is a sign of womens place in society and their access to social, health
and nutrition services and to economic opportunities. The social determinants of health must
be addressed in making pregnancy safer.
Why I want the company to address this issues because every day in WNBP is money. People
are using money out of harvesting oil palm for bribing school girls for sex. And so
prostitution is high in percentage at urban areas, rural areas and at blocks (settlers).

Page | 69
Changes in human resource policies are necessary to deliver the maternal health intervention
package to scale. These include providing mid-level health workers the necessary training to
perform procedures presently restricted to obstetricians and gynecologists, and changing the
salary, career structures and working conditions of health workers. The policies and standards
for basic and post-basic training for health workers, especially those directly linked to
maternal health services such as CHWs, nurses, midwives, HEOs and doctors need
review and strengthening to ensure every health worker is trained in, and remains
competent to provide, the essential health services required. Attention to accreditation and
continual professional development is poor in the present system. Better liaison and
cooperation between the Office of Higher Education, the National Department of Health and
Medical Board and Nursing Council is required to support these actions.
Mechanisms to strengthen the voice of the poor and marginalized to make claims must be
supported. This requires a dynamic relationship between people and their government in the
areas of entitlement and obligation, which becomes a building block for functioning health
systems, and can be enhanced by well designed and implemented decentralized health
services. As can be seen with the AIDS movement, this requires building and supporting of
the capacity of communities, civil society organizations, and government staff in planning,
setting priorities, reviewing how services are delivered and the provision of information.

NBPOL used the growers tax scheme or taxation revenues on export industries are an
important feature of PNGs budgetary position. The government currently applies a
withholding tax of 5% on timber and fish exports. This tax is also applied to mining and
petroleum exports. An additional flat rate duty is levied on all timber exports. There are no
specific tax imposts on exports of agricultural products. But companies exporting these
commodities contribute to government revenue through standard corporate taxation.
Therefore the company used growers tax in infrastructure building such as:
Roads
Education and
Health
The picture below is a health centre run by Catholic Health Agency that supports and help
patients who are affected by HIV/AIDS, and Voluntary Counselling Test VCT in West New
Britain Province. With the help of the Catholic Health Service the companies and the
government must jip in the operation of the health center in building of wards, staff housing
etc

Sea View (Back of the VCT Building) The Front View of the VCT

Page | 70
Picture (1) Male ward, a nurse and a
patient. Picture 2 showing the front
view of the health centre

Water
West New Britain Province is surrounded by Bismarck Sea, Solomon Sea and being name as
marine province behind Milne Bay Province. The province is rich with water. From my point
of view, with in the provincial capital, Kimbe town and along the Hoskins coastal and Kove
Local Level Government. People are using well water from digging. Apart from this places
Mosa where NBPOL is situated, there are no water. Water are being dug and powered to be
distributed to all houses belonging to companies; that will be same as the main city Kimbe.
Therefore, LLG like Talasea, Kandrian, Gloucester, Kaliai, Bialla, Gasmata and Nakanai are
privilege to have save, clean, fresh waters coming from mountains.
Besides, the company NBPOL limited should be very supportive to growers, landowners and
the government in providing better and quality water to them.
For ages people are walking in distance to fetch water for cooking, drinking, laundry and
having bath but it is understood that the company NBPOL and Hargy oil Palm Limited must
be responsible of bringing this water service to the door step. Both companies are reaping the
landowners so that kind of help makes people feel responsible in looking after companies
properties.
Sports activities
Once West New Britain have rugby team call, Kimbe Bulls that participating in the Digicel
Cup NRL, National Rugby Football of Papua New Guinea. Without the support of the
government, NBPOL, Hargy Oil Palm Limited and other business houses of West New
Britain and eventually the pride of the province being axed from the national rugby board of

Page | 71
PNG. Five years later the provincial government and NBPOL do partnership together again
in year 2013 involving a soccer team of the Province called, Tavur Soccer Team to
participating in the PNG National Soccer Association but the team vanish after some months
of playing. Why? Sponsorship is one factor and also it requires tangible management and
quality administration from the people who are responsible in managing the affair of the
team. The oil palm has been grown in the province yet the outcome of this cash crop is not
helping the indigenous people in sports activities.
Disasters / Pollution
In West New Britain Province air pollution is not a matter but mixer pollution from factories
from oil palm companies such as NBPOL and Hargy Oil Palm Limited. The waste from oil
palm through famine of kernels it being washed out the sea where it destroyed the biology of
the sea, using Dagi river are factories from Mosa and Kumbango Oil Mill, the Kapiura
Plantation is using Kapiura river for oil waste. Haella Oil Mill and Wara Stone Mill
(Numondo Plantation) are dumping their oil waste in the middle of oil palm field. The
company do open cut for the oil palm waste to be secure and turn oil into gas for electricity.
Air pollution also damages our environment. Ozone can damage vegetation, adversely
impacting the growth of plants and trees. These impacts can reduce the ability of plants to
uptake CO2 from the atmosphere and indirectly affect entire ecosystems. Visibility is reduced
by particles in the air that scatter and absorb light.
Typical visual range in the Mosa or Kumbango oil Mill is 10 to 30 miles, approximately one-
third of what it would be without man-made air pollution. In the West, the typical visual
range is about 30 to 80 miles, or about one-half of the visual range under natural conditions.

Newly Fabricated Muffler at Mosa Mill

Page | 72
Newly Installed Smoke Emission Monitor Mosa Mill

Prevention of Pollution
The company has implemented best practices for management of pesticides and the improved
controls associated with this program has reduced overall chemicals usage over the past 5
years. The company has completed a trial with Syngenta on the use of an alternative to
Paraquat. NBPOL concluded from the trial that at present there is no economic alternative.
Reports are available on the Dami server. NBPOL has volunteered its Estates for the EB
alternative weed strategy programme. OPRA are also looking at alternatives to paraquat.
The company has implemented a best practice system for the segregation of wastes at source
into composts, recyclables and non-recyclable for disposal at a landfill. This program has
reduced substantially the quantity of waste disposed in landfills.
The modern pollution control technology associated with construction of a new central power
station at Kumbango and a new boiler at Mosa Mill is expected to result in reduction of
particulate smoke emissions to air. In addition, a CDM Project to capture methane from the
mill effluent ponds will significantly reduce greenhouse gas emissions.
Within the plantations, riparian buffer strips are being reinstated at replant to reduce sediment
from discharge into streams. This is being augmented by a programme of planting Vetiver
grass on the embankments of road cuttings and stream banks to reduce erosion of soil and
discharge of sediment into streams.
An independent Scoping Assessment was carried out in August 2007 to identify a list of
social impacts on employees, Smallholders, ILGs and local communities. A Register has been
prepared and risk assessment carried out for the social aspects and impacts. A Social Impacts
Improvement Plan is in preparation.
NBPOL is engaging with The Nature Conservancy (TNC) for involvement in the stakeholder
awareness process associated with new oil palm developments and has held a workshop for
information sharing on their respective work programs. At a meeting on 14 June, NBPOL and

Page | 73
TNC discussed and prepared a Draft MOU for involvement in stakeholder consultation at the
planning stage of future new oil palm developments.
NBPOL plans to hold a series of workshops for enabling stakeholder participation for the
Incorporated Land Groups at existing oil palm developments on customary land. The
workshops would involve an NGO and are aimed at initiating, establishing and maintaining
dialogue between stakeholders and NBPOL. Initially a pilot workshop would be held for
trialing the techniques at a single ILG, followed by workshops at the other ILGs.
But eventually, this things are not happening, the message did not reach the people, growers
and other stake holders.

Roads / Bridge
The road condition in West New Britain Province is 75%. Even NBPOL is operating in the
province yet the road system is not in a better position where citizens may enjoy, in terms of
doing their business in town. People are struggling to walk 10km to 40 kms to excess better
road service. Many of the roads connected to the main highway from Bialla, Hoskins,
Talasea, Amio, Kandrian, Kove and town area also are not mended properly for pedestrian to
use. The question is:
How will the road improve?
Why the government and the company not work together for improving road
infrastructure of the province?

The picture below showing the road condition in West New Britain Province.

Page | 74
Chapter 5
Conclusion
Plantation Development
Oil palm (Elaeis guineensis) has become one of the most rapidly expanding food and biofuel
crops in the world. The two main palm oil producing countries are Malaysia and Indonesia,
with Malaysia currently responsible for up to 38% and Indonesia for up to 49 %, of the
worlds palm oil production. Figure below show s the production in year 2010.

A large part of the area needed for the expansion of the palm oil industry has involved the
conversion of forest. A study by Seal Becket (2015) shows that in West New Britain Province
the largest land use change was from forest to oil palm and other agricultural crops, while in
Kavieng, Alotau, Morobe and Popondetta oil palm development has been mainly at the
expense of other permanent crops, rather than directly from deforestation.
New Britain Palm Oil Limited NBPOL operates in a larger land mass that cover (), one
quarter of the province only in growing oil palm.

Page | 75
Many of the largest palm oil producers have expressed a desire to implement environmentally
friendly management. Maintenance of forest patches within oil palm plantations has been
suggested as a means to increase biodiversity. However, New Britain Palm Oil Limited have
shown that forest patches, if not inter-connected, did not increase bird abundances in adjacent
oil palm, had lower species richness than contiguous forest, and had an avifaunal composition
that was more similar to oil palm than to contiguous forest. Another study taken by me (2015)
shows that, plantation operated by NBPOL such as:
Kumbango
Bebere
Dami
Kapiura
Haella
Numondo
Garu
Talasea, Natoko Estate, Lolokoru
Navari
Silivuti
Kuludagi

Shows that species richness and diversity of butterflies and ants declined significantly with
declining forest area and endemic species were not recorded within small forest remnants
(<4000 ha). Many studies highlight the importance of retaining areas of contiguous forest for
biodiversity protection and they suggest that from a conservation perspective any investment
in the retention of forest patches would be better directed toward the protection of contiguous
forest. The conclusion of this biodiversity protection is that what we do (or do not do) within
the next few decades in terms of biodiversity protection will determine the long-term future
of a vital feature of the biosphere, namely the abundance and biodiversity of species. A
mixture of regulations, incentives and disincentives targeted at all sectors of the palm oil
industry is necessary to protect the regions rapidly disappearing forest.
Picture below show biodiversity protection by NBPOL at Kumbango plantation and Bebere
plantation. It is a joke to the government of WNBP and the customary landowners.

Page | 76
Picture 1, showing the buffer zone at Dami Research

Picture 2, the buffer zone at Dami Research Centre


The buffer zone supposed to be 2 4 hectors of land must be protected by the company for
animals, preservations of trees and plants. Yet the picture above show the buffer zone is only
2 meters away from the oil palm own by company. The company must rewrite its policies
again to meet the demand of the growers/landowners and the government. Because from what
I see, the poverty lines used in our study were based on baskets of locally consumed foods
that provide 2200 calories per day. A comparison of the food budgets of poor households in
each region showed that a single national basket of foods was inappropriate, so separate
baskets of foods were used for the NCD, the Highlands, and the lowland regions. To ensure
that these baskets provided diets of the same quality, they were formed from the food budgets
of households living below the same level of real expenditure per adult-equivalent, rather
than from the poorest x percent of households in each region. Thus, differences in real
consumption levels between regions did not translate into differences in the poverty line
diets. Furthermore, revealed preference tests were carried out by checking if the cost in
region j of buying the region i basket of foods was less than the cost of buying the region j
basket of foods, at region j prices. The tests provided no evidence that any region had a
poverty line diet that was inferior to that of the other regions. The annual cost of the poverty
line diets varied from K543 in the NCD to K218 in the North Coast region, with a national
average of K300.
Although oil palm is a valuable cash crops in West New Britain Province yet people cannot
managed them in comparing to modern living, money, education and health. The people
themselves are still way back in the 18th century. There are still some parts of the province
wearing grass-skirts, malo (Tapa Clothes), pigs tusks and dogs teeth.
On my point of view that is why the foreigners (white people) call us Kanaka.meaning the
bush people.
How the companies can improve the living standard of the people? The suggestion is:
When company operates on a customary land, companies should build houses
Increase oil palm prices
Build roads

Page | 77
Build hospitals
Build schools
Electricity
Scholarships for small scale business for woman
My suggestion is that, government must work together with the companies like New Britain
Palm Oil Limited and Hargy Oil Pam Limited for bringing quality services to the people of
West New Britain Province and the nation as a whole.
Therefore companies must work hand in hand with grower, landowners, settlers and the
provincial government of WNB in providing better and quality services to them.
Why NBPOL provides only service like fortnight only when land owners and growers
provides to the company, things like:
Land usage &
(VOP) village oil palm, estates,
Beside, People Trust Fund from NBPOL growers tax and why the government administered
it, that trust money is belong to people, they themselves have to have a say on it. Why WNBP
government and the company managed and operate over it?
This Trust Fund monies sometimes used by the government as supplementary budget and
give it back to NBPOL for infrastructure in the province yet it didnt work out well to benefit
the whole people of West New Britain Province.

Registered Land
For the past people are not registering their land, making land registration an obligation will
correct poverty in the country and empower customary land owners who have been
marginalised for too long.
PNG Land Law Foundation director Dr. Onne Rageau said that landowners needed to unite
and put an end to activities that continued to suppress people. In West New Britain Province
the landowners need to understand that message and stop selling customary land (birthright)
to settlers, foreigners including NBPOL and the provincial government. For example, land
must be leased to landowners. Land is peoples life Life without a land cannot
survive.

To keep PNG safe, registering land would allow landowners to be protected under the
customary law, eliminating chances of land grabbing and promoting viable sustainability. It
will be most advantageous for a country province like WNB with the resources available that
we should use non-sustainable resources to help our sustainable resource.

The non sustainable resources in terms of gas, oil, and minerals will be gone forever but at
the moment it help us to develop our sustainable resources, so there is no rush to dig out all
our oils, gas, copper, gold, nickels, and other minerals one or two mines is enough to
sustain WNB people and the nation as a whole.

Oil Palm is a sustainable resource that helps much in building the lives of people here in
WNBP and yet on another perspective view oil palm suppress people in their living. In terms
of using their land only to get what they (company) wants/ needs.

PNG is a commoditybased economy with mineral and oil exports providing the primary
source of wealth creation. Agriculture remains a vital part of the economy. The small holder

Page | 78
sector is an important source of subsistence food production, employment and rural incomes.
The plantation sector generates jobs in rural communities and in downstream processing
activities.
Economic development and improved living standards in PNG will require investment in
growth industries. The population is growing rapidly and a diversified economic base is
important to limit exposure to fluctuations in specific global commodity markets. In
agriculture, palm oil is one of the few growth industries. The industry is providing new
development opportunities in contrast to mature industries such as coffee, cocoa and copra
where growth has slowed or ceased altogether.

PNG is a small player in the global palm oil market and the industry is limited to particular
lowland areas with adequate rainfall. But the world market is expanding and future growth
prospects are promising. Further development of the industry in PNG will provide greater
opportunity to raise living standards and alleviate poverty in selected rural areas.

Bibliography:

Seal, Becket K. Advantage & Disadvantage of Oil Palm in WNB. Kimbe, Morokea ITI
Campus Keep Safe West New Britain Province, 2015.

Rose, B., & Vicky, L. (2015). NBPOL Magazines: Economic outlook WNBP, Provincial
Government Taxation, and Jackson T. ITI Morokea, Business Law Book 1 & 2.

Charles, David, ed. Cultures of the Nakanai: A New History. Hoskins: Kimbe, 2015.

Tainty, Michael. Who benefit from Oil Palm: Kimbe Urban, 2015.

ITI Accounting Students, ed. Modernisation of Oil Palm in PNG. Group 2: Semester 2 2015.

Christine, Ruth. The Oil Palm Effectiveness. Completed by Roselyn Boana. Kimbe:
Morokea, 2015.

Alwin, Joyce .Sani. Dispute over land Issues. Kimbe: Scholastic, 2015.

Erick, Robin .Clifford. What happened when Oil Palm Price Drops. Kimbe: Scholastic, 2015.

http://rspas.anu.edu.au/economics/publish/papers/wp2005/wp-econ-2005-11.pdf. Accessed
15 June 2009

Page | 79
Achard, F., Eva, HD., Stibig, HJ., Mayaux, P., Gallego, J., Richards., T, & Malingreau, JP.
(2002) Determination of deforestation rates of the worlds humid tropical forests. Science,
297(5583).

AlRiffai, P., Dimaranan, B., & Laborde, D. (2010).Global Trade and Environmental Impact
of the
EU Biofuels Mandate. International Food Policy Research Institute. Available at:

http://www.ifpri.org/publication/globaltradeandenvironmentalimpactstudyeu
biofuelsmandate

Bank of Papua and New Guinea (2010). March 2010 Quarterly Economic Bulletin
Baumert, KA. Herzog, T., & Pershing, J. (2005). Navigating the Numbers: Greenhouse Gas
Data and International Climate Policy. World Resources Institute, Washington DC

Bourke, M., & Allen B. (2009). Twenty myths about Papua New Guinea Agriculture, in Food
and
Agriculture in Papua New Guinea (Ed. Bourke, R. M. and Harwood, T). Edited report
published by ANU E press.

Bourke, R. M., & Harwood, T. (2009). Food and Agriculture in Papua New Guinea. Edited
report published by ANU E Press

Glossary
NBPOL New Britain Palm Oil
WNBP West New Britain Province
OPIC Oil Palm Industry Corporation
CELCOR Centre for Environmental Law and Community Rights
RSPO Roundtable on Sustainable Palm Oil
LLG Local Level Government
PNG Papua New Guinea
TNC The Nature Conservancy
ILG Incorporated Land Group
VOP Village Oil Palm
PDAL - Provincial Division of Agriculture & Livestock
GHG Green House Gas\
Biomass is fuel that is developed from organic materials renewable and sustainable
PLWG - Peat land Working Group
Deforestation is the permanent destruction of forests in order to make the land available for
other uses
Fluxes the action or process of flowing or flowing out
Heterotrophic respiration - decomposition of the peat by microbes
Autotrophic respiration - respiration from plant roots
Biogas - it refers to mixture of different gases produced by the breaking down of organic
matter in the absents of oxygen
Microbial activity relating to cause by microbes / infections
Ecosystem is a community of living organisms in conjunction with the components of their
environment (things like, water air and mineral soil)
Oxidation is the loss of electrons or an increase in oxidation state by molecule, atom, or
iron.

Page | 80
Ecosystem Services - are the economic benefits that ecosystems provide to humanity
Dependence the state of relying on or being controlled by someone or something else
Commodity is marketable item produced to satisfy wants and needs, comprising goods and
service.
Downstream the sector commonly refers to the refining of petroleum crude oil and the
processing and purifying of raw natural gas, as well as the marketing and distribution of
products derived from crude oil and natural gas
Global consumption refer to the total energy used by human civilization, measured each
year. It involves all energy source applied towards humanity.
Monounsaturated its fatty acids (MUFA or more plainly mono unsaturated fats) are fatty
acids that have one double bond in fatty acid chain
Prominence the state of being important, famous, or noticeable.
Stake holders a creditors, directors, employees, government (and its agencies) owners
(shareholders), suppliers, unions, and the community from which the business draws its
resources.
Emission green houses gases, which absorb and emit radiation in the thermal infrared
range.
Variability summary use to measure or describe the amount of or spread in a set of data
Kernel a softer, usually edible part of a nut, seed, or fruit stone contained with its shell
WNBOPWU West New Britain Oil Palm Workers Union
IRC Internal Revenue Commission

Page | 81