Oil Palm Processing in Ghana: Hanging In, Stepping Up and Stepping Out

Oil palm production has been a lifelong activity for many farmers in south-western Ghana. Although oil palm could be harvested throughout the year, production peaks from January to May.  Like other crops of this nature, one would expect prices to fall or rise with production quantities. However, this is not always the case, as the big oil palm companies in the area (Norpalm Ghana Ltd. and Benso Oil Palm Plantation Ltd.) often succeed in fixing prices so they are not as upwardly flexible as one would expect. Many farmers are of the view that processing their own oil palm is more profitable than selling to the big companies or on the open market. But who is able to take advantage of the real or apparent higher profits offered by self-processing? This question provides an opportunity to explore livelihood outcomes and empowerment using the livelihood schema of ‘hanging in’, ‘stepping up’, and ‘stepping out’.[1]

Hanging In

For some oil palm farmers, low initial resource endowments including small land holdings seems to hinder them from expanding their farms or diversifying into other crops. They are also unable to process or to acquire processing machines. This category of farmers seem trapped in small-scale oil palm production, with little hope of taking off either through increased production or processing.

Stepping Up

Other oil palm farm households have initial endowments (including land) that allow them to expand their oil palm farms, process their own fruits, as well as diversify into rubber and cocoa production. Some of these farm households not only process fruits from their own farms but are also able to buy fruits from other farmers. A large share of farm households in this category also serve as agents who link smallholders to the large oil palm companies through oil palm fruit sales. There are a few farm households in the villages who also invest in artisanal palm fruit processing machines and process for others for a fee. They then invest some of their earnings into expanding both their farms and the processing activities. The ability to store the processed palm oil for sale during the lean season makes a big difference in profit margins obtained from processing. Households that are able to store oil palm for the lean season are those that are engaged in non-farm income generating activities.

A private processing mill at Butre
Photo credit: Prince Selorm Tetteh

Stepping Out

There is little evidence of farm households stepping out in the communities. However, there are households where woman specialise in trading while men focus on oil palm farming. Income from both activities complement each other and so could be described more as diversification and pluriactivity rather than stepping out. In terms of stepping out of oil palm production, there is an emerging trend of farm households of all types cutting their palm oil trees to plant rubber and or cocoa. The farmers are motivated by the fact that rubber and cocoa are more lucrative than oil palm. Additionally, for cocoa especially, the state supports farmers from production to marketing, and the Ghana Rubber Company Limited (GREL) incentivise farmers who transition into rubber production.  Besides, individual business people enter into profit agreements with farmers who give out their lands for rubber production. Farmers also compared the labour and input needs of oil palm with rubber or cocoa and concluded that the latter two offered less hassle. Furthermore, while the maturity period of an oil palm tree is 25 years, after which a farmer must start again, they maintained that the longevity of cocoa is 60 years and above and that rubber is forever. 

Replacement of oil palm with rubber trees
Photo credit: Gertrude Dzifa Torvikey/ Dorothy Takyiakwaa at Kwesikrom, Western Region of Ghana

Oil Palm Processing Dynamics

While oil palm processing is viewed as more lucrative than fruit production, the (in)ability to do so depends on a number of structural and individual/household level factors. The structural factors include a lack of processing machines, absence of water in communities, bad road networks – which affects marketing, the labour intensity of rudimentary processing, and low pricing of the oil. The wider socioeconomic linkages in specific areas is also a structural issue relevant for rural growth. Communities with many processing facilities, whether home-based or factory-types, also have a thriving non-farm employment sector. From the perspective of some community members, the presence of the large oil palm companies has ‘destroyed’ oil palm processing skills and innovation, and has made people ‘lazy’. Although the oil palm farmers desired to process their own oil, the gradual decline of artisanal oil palm processing due to the presence of big companies is a certainly a hindrance. In sum, social differentiation and resource endowment are significant determinants of the (in)ability to process palm fruit into oil palm.

[1]Dorward, Andrew, Simon Anderson, Yolanda Nava Bernal, Ernesto Sánchez Vera, Jonathan Rushton, James Pattison, and Rodrigo Paz. 2009. “Hanging in, stepping up and stepping out: livelihood aspirations and strategies of the poor.” Development in Practice no. 19 (2):240-247. doi: 10.1080/09614520802689535.

Written by Gertrude Dzifa Torvikey and Fred Mawunyo Dzanku

Cover photo credit: Prince Selorm Tetteh