Papua New Guinea: Helping improve the livelihoods of small oil palm farmers in Oro and West New Britain

December 12, 2011

Palm oil offers an opportunity to increase incomes in rural communities when managed sustainably.

World Bank Group

  • The Smallholder Agriculture Development Project aims to help raise income for small oil palm farmers and their communities
  • The project focuses on environmental sustainability, and infill planting will only occur in existing oil palm areas
  • Roads will be upgraded to improve market access and connectivity for all residents

December 12, 2011 — The Smallholder Agriculture Development Project (SADP) is designed to improve the livelihoods of small oil palm farmers in two rural provinces in Papua New Guinea, Oro and West New Britain while paying close attention to environmental sustainability. The project was approved in 2007.

The project aims to ensure that smallholder communities in project areas enjoy higher incomes and a better quality of life, through higher oil palm productivity, improved rural infrastructure, and greater community participation. Roughly 15,000 smallholder oil palm growers and their families are expected to benefit directly from the project.

As a mother of ten children, Patricia Loi, 45, from West New Britain, is looking forward to the benefits the project will bring. “I am happy that oil palm is helping me and my family pay for school fees, buy food, buy clothes for my children. I am happy about this oil palm project coming into my area because oil palm has helped in many ways, and is looking after our livelihood.”

The project has three main goals:

  • Increasing the productivity and efficiency of existing smallholder oil palm areas for farmers in the two provinces, and upgrading and maintaining local roads;
  • Improving local governance and community participation to support better local-level services and infrastructure; and
  • Supporting the Oil Palm Industry Corporation (OPIC), the implementing agency, and the smallholder sector through training, research and studies.

The project focuses on environmental sustainability, with infill planting occurring only in existing oil palm areas; no new oil palm areas will be developed. The project will avoid deforestation and risks to critical habitats.

Also, 550km of existing rural roads will be upgraded. Better roads improve access to markets and critical social services for all smallholders—not just those involved in oil palm—enabling community residents to engage in a wider range of income earning activities, diversify their incomes and reduce poverty.

Robert Tiboro, 36, of Morokea village, West New Britain points to the merits of having an access road. “We’re living in the bush, and if it wasn't for the oil palm, we would not have a road in here to bring in services to us. We planted oil palm and services are coming to us here in the bush like the road which we now use to go back and forth to town.”

Papua New Guinea’s palm oil industry contributes substantially to rural incomes. It benefits approximately 265,000 people, or 4.7 percent of the country’s rural population, and is second only to the public service in terms of formal employment.

When managed sustainably, oil palm offers an opportunity to support rural livelihoods: at current prices, it provides smallholders with significantly higher returns for their land and labor as compared to other cash crops, such as cocoa and coffee.

To address concerns raised during project preparation, the Bank commissioned an independent Effluent Study to assess the environmental implications of increased palm oil mill effluent production.

The Study concluded that “most of the mills in the SADP project area are legally compliant with Papua New Guinea national regulations” and that on the basis of the work completed and the current effluent management infrastructure, “there is no reason to believe that any health issues can be attributed to current operations.”

Information about the project has also been shared with the local community through radio programs, field days, newsletters, and other meetings. Since 2010, relevant project documents have been translated into the local language and made available to villagers. In 2011, 75 consultations were held, and OPIC, the implementing agency, has improved its communications and documentation of consultations with stakeholders.

About the Smallholder Agriculture Development Project (SADP)

Approval Date: 18 December 2007

Closing Date: 31 December 2012

Total Project Cost: US$68.8 million


  • World Bank (International Development Association)—US$27.5 million
  • Government of Papua New Guinea—US$7.4 million
  • Provincial Governments of Oro and West New Britain—US$10.7 million
  • PNG Sustainable Development Program—US$10.2 million
  • Smallholders—US$7.3 million
  • Palm Oil Milling Companies—US$5.7 million

Implementing Agency: Oil Palm Industry Corporation

Location: Oro and West New Britain provinces