Palm Oil Pricing Formula Review 2013/5 – FINAL REPORT

An Independent Review was undertaken by accounting/consulting firm KPMG of PNG’s Palm Oil Pricing Formula (which forms the basis for smallholder payments to outgrower oil palm producers), together with an audit of the application of the current formula (which has been in operation since the early 2000s). The review was commissioned by OPIC (the Oil Palm Industry Corporation) in 2013, and funded under the World Bank Stallholder Agricultural Development Project. The review was undertaken of outgrower schemes around the country, and entailed full access to the milling companies’ accounts and extensive consultations with the companies and outgrowers. The final report incorporates the feedback from the companies, outgrowers and responding government agencies, including from the consultations held around the country.The report and its recommendations were considered by the Government’s Commodities Working Group (chaired by the Dept of Treasury) in November 2014 and the Working Group’s recommendations should be considered by the National Executive Council before the end of 2014, to provide the basis for outgrower payments for all current and new projects, until the next review is undertaken (which should be in 2 years time or so). In the meantime an effective mechanism will be applied to ensure consistent compliance by all players to the agreed formula, and full awareness and understanding of the composition of the formula and its application will be required by companies, officials involved in its explanation, and the outgrowers and grower associations.

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Smallholder Agriculture Development Project Final Design of Road Maintenance Trust Fund for PNG (SMEC); plan of how to restore and provide reliable ongoing funding to maintain the roads in oil palm project areas to the standard necessary for the industry’s and outgrowers’ sound future prosperity and welfare.

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