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John Roughan: What's The Oil Palm's Basic Problem?

What's SIPL's Basic Problem?

By John Roughan
3 March 2004

Last week a PNG delegation visited the Solomons' oil palm plantation past Henderson Airport. This group of investors correctly boasted of their solid expertise in the oil palm industry--over 37 years practice. They knew much about growing oil palms, its world market value, future long term trends, etc. In a word they had a firm handle on the ups and downs, the ins and outs, of the oil palm industry. Publicly they claimed that with their expertise--having been at it for almost four decades--they were in a strong position to judge whether the SIPL oil palm plantation could once more come on stream.

The PNG investors touched many of the right bases--first of all they spoke at length to the land owners' group and then with senior government representatives. Both groups firmly backed the idea of returning the industry to its past glory and showed few reservations. Unfortunately, at least as reported in the media, the one group not consulted was the labourers. A vibrant oil palm production demands a large labour force . . . clearing tough shrub, strict planting plans, constant pruning, on-time harvesting, etc. etc. No one doubts that oil palm grows well on that part of Guadalcanal. Since 1972, the first palm oil plant plantings, SIPL's production was up there with the best in the world.

In the mid-1970s, the Commonwealth Development Corporation (CDC) invested heavily in the industry--an 8,000-hectare planting, a first class crushing factory capable of processing 16,000 hectares, heavy fertilizing, etc. CDC's original plan called for an initial 8,000 hectares planted by the company itself and over the following years an equal amount of hectares planted and cared for by the local land owners. However, the latter plan never panned out. Local landowners by 1992, had planted only 50 or so hectares of oil palms. The Guale plains people, the very owners of the land, had made a social decision not to be involved with planting, caring for and harvesting of oil palms. They had decided that they were only interested in the rental of their lands.

This decision--not to be involved in a plantation crop--has been echoed by other Pacific islanders as well. Both in Hawaii and Fiji, the original landowners ultimately refused to work sugar cane. In both cases, the sugar cane plantation owners were forced to import an outside labour force. In Hawaii, initially it came from Japan and in the Fiji case, Indians from Southeast Asia.

At present SIPL faces few land cases but there is a major problem where the labour force will come from to work the back-breaking, dirty and difficult work of tending, caring for and harvesting of the valuable oil palm kernel. At the height of SIPL's production in mid-1998, there were almost 2,000 labourers and probably twice that number of family members, two thirds from Malaita, on the plantation. And that's the major issue which lies at the heart of whether there will be a return of the oil palm industry to Guadalcanal.

Until and unless that 'fly in the ointment' is clearly understood and dealt with, then few investors will care to risk their money no matter how fertile the ground and how insistent government and land owners are. Of course the plains people, the true owners of the land, must get a just and fair share of the profit generated by the oil palm industry. But so too must the investor and the labourer both of whom make it possible to bring unproductive land to production. All parties--landowners, government, labourers and investors--connected to the proper and profitable running of the palm oil industry have to have a say to make it work for all concerned.

Guadalcanal's oil palm industry faces some hard choices. Importing an outside labour force, tried by two other Pacific island nations, created more problems than it solved. Ask Fijians whether the 19th century decision to import strangers to work the sugar cane fields has been a wise one! Many, I feel, would say no.

The Guale people could reverse their decision not to work on the oil palm plantation. If they did, then, not only would they reap rich rewards but considerably reduce the social friction that has been part of the scene. However, there is a third option. Perhaps a majority of Guale workers and a small number of other island workers could hammer out the necessary compromises needed to bring the industry back to health once again.

Unfortunately, our last five years of social unrest makes it difficult to win back sufficient Solomon Island worker presence to do the backbreaking work needed on the plantation. Whatever the Guale's people decision is about a future labour force, they must know well that all the investment money in the world and all the official government backing vitally depends upon their labour decision . . . hard as it is.


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