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The Chain: Cameroon Seeking to Expand Palm Oil Business, Yet Land-Tenure Risks for Communities and Investors Remain

October 12, 2016

The Cameroon Development Corporation (CDC) is seeking to increase its palm oil production 67% by 2020, from 270,000 metric tons to 450,000 metric tons. Current Cameroonian annual consumption is 385,000 metric tons. The Government of Cameroon has set price controls on palm oil and palm kernel oil estimated at €0.69 a kilo for industry sales. In 2015, the government banned palm oil imported from Malaysia and Indonesia.

The CDC’s palm oil, rubber, and banana land bank currently is 15,240 ha, 22,262 ha, and 4,525 ha respectively. CDC’s rubber is sold to global buyers, including Michelin. Its bananas are sold to Del Monte and Fruitier. It is unclear how many of the zero-deforestation procurement policies established by 210 corporations worldwide would apply toward Cameroonian agriculture exports.

Corporate Investments in Palm Oil in Cameroon

Earlier this year, the Government of Cameroon nationalized CDC. It is now solely owned by the government and operates under technical supervision of the Ministry of Agriculture and Rural Development. It is currently the nation’s largest state-owned agribusiness. CDC is also the second largest employer in Cameroon, employing more than 22,000 people. The company is facing significant cash flow constraints given that rubber prices have dropped about 50% since 2012 and its palm oil production costs are reported to exceed palm oil revenue by 25%.

Palm oil development in Cameroon is not without its controversy. On September 27, 2016, two collective complaints involving 244 farmers were filed with the Government of Cameroon against SG Sustainable Oils Cameroon (SGSOC). SGSOC’s 20,000 ha palm oil plantation is alleged to occupy lands belonging to local farms. It also appears that SGSOC has failed to obtain free, prior, and informed consent from the villagers. Some of these lands are considered High Carbon Stock and/or High Conservation Value forest.

SGSOC’s 3-year provisional land lease on its 20,000 ha concession is currently set to expire in November, 2016. It is unknown if SGSOC will seek to renew. SGSOC’s palm oil plantation, formerly owned by Herakles Farms, has been supported by U.S. investor Blackstone Group (BX:US) through its subsidiary Sithe Global Power, but this relationship is not transparently described within security filings.

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