Minister for International Trade and Investment, Hon. Richard Maru, has presented the final report on the government’s investigation into the business practices in the Oil Palm Industry on the floor of Parliament.
Addressing Parliament on March 13, Minister Maru spoke of the historical significance of this investigation. “This is the first time in the history of our country that a government is investigating the price of palm oil after receiving complaints from over 15,000 small oil palm growers in East New Britain Province,” he said.
The probe was initiated following complaints that East New Britain Palm Oil Limited had been fixing the price of oil palm at 13,000 kina per metric ton for over a decade, while growers in West New Britain Province were receiving 6,800 kina per metric ton.
The investigation was sanctioned under NEC Decision No. 192 of 2024, with a budget of 2 million kina. An independent oil palm expert led the inquiry.
Maru revealed that East New Britain Palm Oil Limited, part of the East New Britain Resource Group, manages 7,996 hectares of land with oil palms and sources from 36 smallholders cultivating an additional 245 hectares. The company operates a palm oil mill with a 16-ton-per-hour processing capacity.
The investigation expanded to other companies within the East New Britain area. Maru clarified that these companies are not interconnected through their ultimate shareholders but have common directors.
The findings also exposed unethical land acquisition practices. Mentioned persons and companies were found responsible for securing land through verbal agreements and alleged intimidation tactics.
Maru said: “No documented evidence of free, prior, and informed consent negotiations had been located by the investigation team.”
The inquiry estimated that East New Britain farmers suffered financial losses of 38 million kina due to price underpayments between 2009 and 2024.
Maru stated: “What our people lost in the 10 years behind the price shift is over 38 million kina.”
Lack of Industry Regulation
The investigation highlighted the absence of a regulatory framework governing PNG’s oil palm industry. Unlike coffee and cocoa, which have regulatory bodies, the oil palm sector operates without oversight.
Maru said: “This country does not have a national price formula for oil palm. These companies are setting prices and abusing our people.”
The investigation team proposed several recommendations to address these issues, including:
- Development of a new oil palm policy and legislation to prevent logging companies from exploiting Special Agricultural Business Leases (SABLs) under the pretext of agricultural development.
- Immediate review of oil palm grower concerns nationwide following similar complaints from other provinces.
- Compensation for landowners through options such as direct payments, share ownership in the company, or legal action against the company.
- Legal and criminal proceedings against those responsible, including possible deportation of foreign investors found guilty of exploitation.
- Establishment of a regulatory authority like those in other agricultural sectors.
Maru stated: “The government must act firmly to ensure our people are no longer exploited. We must put an end to foreign investors cheating and robbing our farmers of the fruits of their labor.”
The Minister highlighted the economic significance of the sector, noting that oil palm generates over 2.1 billion kina in export revenue annually, making it the most valuable agricultural commodity in the country. He contrasted this with coffee, which brings in only 510 million kina per year.
Maru pointed to Indonesia’s success in the oil palm industry, as it has over 13 million hectares of oil palm, contributing 1.6% of its GDP and generating more than 18 billion US dollars annually.
PNG must tap into its vast savannah lands for expansion, the Minister said.
He assured Parliament that this investigation would not be ignored, unlike past inquiries.
“This report will not gather dust in Waigani. We must secure bipartisan support for a total overhaul of the palm oil industry,” he said.
PNG stands at a turning point in reforming its oil palm industry, ensuring fair pricing, and preventing future exploitation of its farmers, Minister Maru stated.
