**West Africa:** The Palm Oil Barometer 2025 warns that without equitable procurement reforms prioritising smallholder farmers, the region’s palm oil sector faces persistent income disparities, underinvestment, and food security threats, urging collaboration to implement a ‘Procurement for Prosperity’ framework enhancing market access and sustainable yields.
A newly released report titled “Palm Oil Barometer 2025: Procurement for Prosperity” has highlighted the urgent need for a transformative approach to palm oil procurement, particularly aimed at enhancing the livelihoods of smallholder farmers in West Africa. Developed by Solidaridad and supported by various experts and smallholder representatives, the report underscores the significant imbalances present within the palm oil market that often disadvantage those who play a crucial role in production.
The report illustrates that oil palm cultivation is essential for food security in the region, providing a livelihood for millions. In West Africa, smallholder farmers contribute disproportionately to oil palm production yet frequently receive only a fraction of the profits. In Ghana, for instance, smallholders manage around 81% of the country’s oil palm area, but many of these farmers struggle with low yields and limited market access. Similarly, in Nigeria, smallholders are responsible for 80% of production but face hurdles such as outdated processing techniques and inadequate infrastructure. Côte d’Ivoire and Sierra Leone reflect similar patterns, where smallholders manage substantial portions of oil palm areas yet remain vulnerable due to systemic challenges.
The imbalance is compounded by West Africa’s reliance on palm oil imports, as domestic production fails to meet local demand. This dependency poses a threat to national food security and diminishes the potential for smallholder farmers to elevate their incomes.
Muthalir Ramasamy Chandran, Chairman at IRGA.AG and an Advisor to the Roundtable on Sustainable Palm Oil, emphasised the necessity for collaborative efforts among governments, industries, and sustainability certification platforms. He advocated for a new business model that prioritises the needs of independent smallholders by enhancing their access to markets and necessary resources.
The core finding of the Palm Oil Barometer underscores that value is inequitably distributed across the supply chain, often leaving smallholders with insufficient returns on their sustainable farming practices. Michael Oppong, an oil palm farmer from Ghana, pointed out that many farmers lack access to essential tools and infrastructure, resulting in stagnant productivity and limited income potential. “We need consistent, targeted support to break through these barriers,” he stated, suggesting that with adequate assistance, smallholders could make substantial contributions to the global palm oil market.
The persistent issues of underinvestment and inequitable revenue distribution pose significant risks to the palm oil sector. Smallholders, faced with financial challenges, often resort to short-term strategies that can lead to environmental harm, compounded by ongoing land tenure insecurities that discourage sustainable practices and compliance with environmental regulations.
To address these challenges, the Palm Oil Barometer proposes a shift towards a “Procurement for Prosperity” framework. This new approach aims to redefine palm oil sourcing practices, focusing on positive impacts for suppliers, particularly independent smallholders. The report delineates four fundamental principles essential for this transition:
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Policy: Companies should incorporate procurement practices that acknowledge independent smallholders within their strategic frameworks.
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Pricing: Companies must ensure fair pricing and payment structures that reward sustainable practices while addressing farmers’ living income challenges.
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Partnerships: Collaborations across the supply chain should integrate farmers’ insights, allowing them a stake in decision-making, particularly regarding pricing mechanisms.
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Programmes: Downstream companies should facilitate support for suppliers by enhancing their organisational capabilities, technical knowledge, and financial access.
Marieke Leegwater, Senior Policy Advisor at Solidaridad Europe, remarked on the inadequacy of merely demanding sustainable production. She urged companies to commit to an inclusive value chain that considers smallholder perspectives and fosters viable production through fair pricing.
As new regulations, such as the European Union Deforestation Regulation (EUDR), are anticipated, the report advocates for balanced strategies that address both large-scale deforestation and the inclusion of smallholders, aiming to create a stable, responsible supply chain that mitigates risk.
The Palm Oil Barometer 2025 serves as a call to action for stakeholders across the palm oil value chain, offering explicit recommendations for enhancing smallholder inclusivity and strengthening the resilience of the palm oil industry. Each participant in this ecosystem has a role to play in ensuring an equitable distribution of value and support for the smallholders whose contributions are pivotal to the sector’s sustainability and growth.
Source: Noah Wire Services
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