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Does investment in palm oil trade alleviate smallholders from poverty in Africa? Investigating profitability from a biodiversity hotspot, Cameroon

dc.contributor.authorAyompe, L.M.
dc.contributor.authorNkongho, R.N.
dc.contributor.authorMasso, C.
dc.contributor.authorEgoh, B.N.
dc.date.accessioned2022-09-21T07:30:31Z
dc.date.available2022-09-21T07:30:31Z
dc.date.issued2021
dc.identifier.citationAyompe, L.M., Nkongho, R.N., Masso, C. & Egoh, B.N. (2021). Does investment in palm oil trade alleviate smallholders from poverty in Africa? Investigating profitability from a biodiversity hotspot, Cameroon. PloS one, 16(9): e0256498, 1-17.
dc.identifier.issn1932-6203
dc.identifier.urihttps://hdl.handle.net/20.500.12478/7783
dc.description.abstractIn this study we investigate whether the increasing investment in smallholder oil palm plantations that contributes to deforestation is motivated by financial gains or other factors. We evaluate the financial viability of smallholder farmers selling fresh fruit bunches (FFBs) to intermediaries or agro-industrial companies with mills, or processing the FFBs in artisanal mills to produce palm oil. We use data collected in four oil palm production basins in Cameroon and carried out a life cycle assessment of oil palm cultivation and CPO production to understand financial gains. We use payback period (PBP), internal rate of return (IRR), benefit cost ratio (BCR) and net present value (NPV) for 1 ha of oil palm plantation over 28 years at a base discount rate of 8% to asses viability. Our results show that smallholders make more money processing their FFBs in artisanal mills to produce CPO than selling FFBs to intermediaries or agro-industrial companies with mills. The sensitivity analysis show that land ownership is the single most important parameter in the profitability of investment in palm oil cultivation and trade. In addition to land cost, smallholders suffer from borrowing at high interest rates, high field management costs, while recording low on-farm FFB/processing yields. To improve the financial viability of smallholders investing in oil palm cultivation, measures are needed to encourage them to access land, get loans at reduced interest rates, reduce the cost of field management, adopt good agricultural practices to improve on-farm FFB/processing yields, as well as to generate additional revenue from the sale of other products.
dc.description.sponsorshipUK Research and Innovation’s Global Challenges Research Fund
dc.format.extent1-17
dc.language.isoen
dc.subjectSmallholders
dc.subjectAgrobiodiversity
dc.subjectOil Palms
dc.subjectProduction
dc.subjectCameroon
dc.titleDoes investment in palm oil trade alleviate smallholders from poverty in Africa? Investigating profitability from a biodiversity hotspot, Cameroon
dc.typeJournal Article
cg.contributor.affiliationUniversity of California
cg.contributor.affiliationInternational Institute of Tropical Agriculture
cg.contributor.affiliationUniversity of Buea
cg.coverage.regionAfrica
cg.coverage.regionCentral Africa
cg.coverage.countryCameroon
cg.coverage.hubCentral Africa Hub
cg.researchthemeNatural Resource Management
cg.identifier.bibtexciteidAYOMPE:2021
cg.isijournalISI Journal
cg.authorship.typesCGIAR and developing country institute
cg.iitasubjectAgronomy
cg.iitasubjectBiodiversity
cg.iitasubjectLivelihoods
cg.iitasubjectPlant Breeding
cg.iitasubjectPlant Production
cg.iitasubjectSmallholder Farmers
cg.iitasubjectSocioeconomy
cg.journalPLOS ONE
cg.notesPublished online: 01 Sep 2021
cg.accessibilitystatusOpen Access
cg.reviewstatusPeer Review
cg.usagerightslicenseCreative Commons Attribution 4.0 (CC BY 0.0)
cg.targetaudienceScientists
cg.identifier.doihttps://dx.doi.org/10.1371/journal.pone.0256498
cg.iitaauthor.identifierCargele Masso: 0000-0002-3980-6832
cg.futureupdate.requiredNo
cg.identifier.issue9
cg.identifier.volume16
cg.contributor.acknowledgementsWe acknowledge funding from the UK Research and Innovation’s Global Challenges Research Fund (UKRI GCRF) through the Trade, Development and the Environment Hub project (project number ES/S008160/1).


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