IMPROVING THE PRODUCTIVITY OF THE SMALLHOLDER OIL PALM SECTOR IN PAPUA NEW GUINEA: A STUDY OF THE BIO-PHYSICAL AND SOCIO-ECONOMIC INTERACTIONS

Smallholder oil palm fruit is weighed before being transported to the mill for processing.

The oil palm industry is one of the more successful rural developments in Papua New Guinea. A major issue confronting the viability of the industry is that smallholders control 45% of the planted area under oil palm but account for only 25% of the production.

In 2000/2001 Gina Koczberski and George Curry, in collaboration with the ANU and the PNG Oil Palm Research Association (OPRA) undertook an ACIAR (Australian Centre for International Agricultural Research) funded research project to study the biophysical and socioeconomic interactions influencing smallholder productivity. The Oil Palm Industry Corporation � the body that offers agricultural extension to the smallholders � also took great interest in and supported the research.

The project surveyed growers in two of the largest and most established oil palm project areas at Hoskins (West New Britain Province) and Popondetta (Oro Province). In both places the corporations (New Britain Palm Oil Ltd and Higaturu Oil Palm) offered cooperation with the project. At Hoskins, New Britain Palm Oil Ltd has already acted upon initial findings of the research project.

The research employed semi-structured interviews, case-studies, questionnaire surveys, workshops, focus groups, analysis of industry smallholder databases and the review of relevant reports and published literature. The main initial effort was focused upon in-depth qualitative interviews with 21 smallholder families. Repeated visits were made to each family over an 8 week period. Based upon this qualitative data a more extensive survey of 100 growers, block conditions and soil quality was designed to be conducted in each of the two project areas. The multi-method approach provided for a comprehensive understanding of the factors influencing smallholder production from the perspective of smallholders themselves.

Key stakeholder groups that participated in the research included:

• Smallholders and family members on Land Settlement Schemes (LSS)
• Smallholders and family members on Village Oil Palm Schemes (VOP)
• Oil palm companies�New Britain Palm Oil Limited (NBPOL) and Higaturu Oil Palm Limited (HOPL).
• Oil Palm Industry Corporation (OPIC) � the extensions agency
• Industry associations, such as the oil palm growers associations, and
• Customary landowners.
  

Most data were collected from August 2000 to the end of January 2001. The study identified the following factors affecting smallholder productivity:

1. Oil Palm is one of many economic activities smallholders pursue

• In addition to oil palm, smallholders are involved in a range of economic activities which we define as livelihood strategies. Smallholder livelihood strategies promote household economic and social security by increasing income and diversifying income sources, strengthening people's capacity to meet their needs, increasing the range of options and choices available to households, enhancing food security and reducing household risks.
• The main smallholder livelihood strategies include managing a range of cash crops, wage employment, operating small business enterprises, garden production for home consumption and local markets, and indigenous exchange. These non-oil palm activities sometimes compete for labour and time with oil palm production; at other times they have a positive influence where they contribute to income and food security thereby adding to household well-being and broader social stability on the schemes.
• For many smallholders, access to alternative income sources is necessary to meet household needs, especially on highly populated LSS blocks and/or during times of depressed oil palm prices. An important reason why smallholders pursue income diversification is to even out income variations due to the fluctuating price of oil palm.
• For many VOP smallholders in Hoskins and Popondetta, entry into oil palm production is relatively recent and many retain holdings of other export cash crops, especially cocoa and copra. In a survey of 100 VOP and LSS smallholder blocks at Hoskins, 72% and 26% respectively had access to other export cash crops. Of the Hoskins VOP blocks with cash crops, 83.5% had two or more types of cash crops in addition to oil palm.
• The oil palm plantation estates provide opportunities for short-term casual employment and long-term employment of smallholders. The former often provides temporary financial relief for block residents at periods of peak cash demand such as when school fees are due, or payments must be made for customary obligations.
• Access to off-block wage employment can add significantly to material standards of living on smallholder blocks. Whether off-block employment or self-employment adversely affects oil palm productivity requires further research, though the evidence suggests that off-block employment is only a problem when it limits labour availability at harvest times. On the more heavily populated blocks at Hoskins, off-block employment provides very important supplementary income, and relieves some of the economic and population pressures on the blocks.
• Food garden production is extremely important for LSS and VOP smallholders in terms of labour demands and for meeting household consumption requirements. At Hoskins labour allocated to gardening exceeds that allocated to oil palm and is the dominant activity carried out by smallholders. This is most notable among women who allocate almost 2.5 times as much labour to food gardening as to oil palm; for Hoskins men, gardening and oil palm are of about equal importance in terms of the amounts of time allocated to each activity. At Popondetta, men spend more time in oil palm related work than gardening, and women spend considerably more time in garden production than in oil palm.
• Approximately 80% of categories of meal ingredients at Kavui LSS and Popondetta were from food gardens compared with about 50% of meal ingredients from food gardens at Gaungo VOP. The balance at Gaungo is made up of store foods, (mostly tinned fish and rice) and fresh fish and meat. The higher protein diets of VOP smallholders at Hoskins are partly a reflection of the wider range of income choices available to VOP smallholders and the greater population pressure on LSS blocks, where falling per capita incomes from oil palm are increasing settlers' dependence on subsistence food production.
• The marketing of food crops, coconuts, betel nut, tobacco, processed foods and manufactured items at local markets provides a regular additional income for women at both Hoskins and Popondetta. At Hoskins, market income is especially important for women from the LSS schemes. A survey of women selling at several markets around Kimbe and Hoskins, revealed that 54% of sellers were from LSS schemes and 8% were settlers residing on village land, and LSS women were disproportionately over-represented in local markets in terms of the values of items for sale, especially garden produce. At Hoskins, VOP women are not as heavily involved in marketing garden produce. Average earnings per market visit were K10.91 at Hoskins and K4.64 at Popondetta.
• Most smallholders are involved in various forms of customary production and exchange, especially VOP producers. For many VOP smallholders, the motivation to harvest is not so much concerned with accumulating savings for capital investments or consumption in the market economy, but with redistributing wealth through kin-based exchange. Some smallholders with intermittent involvement in oil palm production may not harvest for several months but will do so to contribute to a communal feast or customary exchange. For more regular VOP producers, oil palm production may increase significantly when customary demands are unusually high. Thus, the requirements of customary exchange can drive people's involvement in oil palm production.
  
  

2. Population growth is creating economic and social pressures on the LSSs

• Population pressure is beginning to emerge on the older LSS schemes such as Hoskins as second generation settlers marry and establish their own households on the block. Many blocks are now supporting several families.
• Population density per LSS block at Hoskins has increased from 8.6 persons per block in 1990 to 13.3 in 2000 with an average of 2.9 families per block. The current high numbers of households per LSS block at Hoskins partly reflect the difficulties settlers now face in returning to their "home" villages or acquiring land or off-block employment in WNB or elsewhere in Papua New Guinea.
• The more populated blocks are complex economic and social units and very different to the single families that first settled on the LSSs in the late 1960s and early 1970s.
• Social instability and conflict is associated with heavily populated blocks. Many multiple household blocks experience economic and population pressure, and disputes and violence often occur on payday over the distribution of oil palm income. Inter- and intra-household disputes reduce social harmony and can sometimes lead to significant disruption of oil palm production. In the longer term they are a disincentive for smallholder investment in their blocks.
• Economic pressure on populated blocks is leading to the development of supplementary income sources to maintain household livelihoods. The trend to increased reliance on non-oil palm income sources is likely to continue as population grows and as it becomes more difficult through time for second generation settlers to return "home".
• Acquiring additional land is the primary desire of most smallholders experiencing population pressure on their blocks. However, opportunities for second generation smallholders to purchase LSS blocks are becoming constrained by limited savings potential and the inflation of LSS block prices. In response, some LSS settlers are "purchasing" land from customary landowners, squatting illegally on government or private land, seeking land in other provinces or moving into informal (squatter) settlements in urban centres.
• The growing numbers of smallholders illegally residing on government or company land, or "purchasing" insecure VOP land have the potential to seriously undermine social stability in the future.
• There are increasing numbers of under-employed people on blocks, especially youth, who are unable to participate fully in oil palm production. They are an under-utilised resource for the industry, and in the longer term may pose a threat to the social sustainability of the schemes as they become more disaffected and alienated.
• With population increase it appears LSS smallholders are becoming more reliant on garden production, although the Mama Lus Frut Scheme may have offset this reliance to some extent in Hoskins. Those blocks with high populations, which do not have alternative sources of income, are reverting to more subsistence-like lifestyles in which garden production is assuming much more importance.
  
  3.Smallholder household types and patterns of labour organisation are diverse
• As the smallholder sector develops over time, diverse household types are emerging. A major finding of the study is the transition occurring on LSSs where the single nuclear family managing a block is being displaced by other household configurations. Single, caretaker and multiple household types are all now present on the schemes. The multiple household block is steadily replacing the single household block.
• Single household blocks are largely found on VOPs and on the LSS at Popondetta where population pressures are less. Thus, on the older LSS schemes like Hoskins, single households are being replaced by multiple families co-resident on a block.
• Alongside the diversification of household types new ways of organising and remunerating labour are emerging. The shared wok bung (work together) production system where all or most family members or co-resident households participate in harvesting and block maintenance is no longer the only form of labour organisation on the blocks.
• At Hoskins, some blocks with multiple households have moved away from a shared wok bung style of work organisation (where most adults from all co-resident households contribute to harvesting), to more individualised units of production where harvesting is rotated between co-resident households with less shared inter-household labour harvesting and block maintenance. This style of production organisation is referred to as �markim mun' (allocated month) by smallholders. Rotation (markim mun) production usually emerges in response to the increasing number of co-resident households on blocks.
• In the shared wok bung production system, labour remuneration is not necessarily commensurate with labour input, but rather payment is governed more by gender, age or kinship status. Labour remuneration on a rotation (markim mun) system is usually expected to be commensurate with labour input and there is less in-kind payment. Income distribution is often a source of disputes on blocks and can result in the withdrawal of labour, disruptions to harvesting or a shift in the production strategy from a shared wok bung system to a markim mun system.
• The markim mun production system, which appears to be increasing, may be less efficient than shared family labour harvests. There is some evidence to suggest that oil palm productivity is lower per hectare on highly populated blocks that employ a markim mun system than on highly populated blocks that continue to practice shared family labour harvesting where more adults tend to participate in harvesting. Also, under a markim mun system there is a higher probability that block maintenance will be neglected or disputed, replanting delayed and greater avoidance of loan repayments.
• The shift to a markim mun system on highly populated blocks where households are operating more like independent nuclear family units is a major socio-agronomic transformation occurring on the LSS at Hoskins (and probably at Bialla). At Popondetta this study did not record the rotation (markim mun) system among smallholders, and OPIC staff recalled only a small number of blocks that had this style of production organisation.
• The study of household types and labour organisation reveals that the deployment of household labour in oil palm production is an outcome of interactions between household decision-making, income distribution, family/gender relations, the range of livelihood strategies pursued and production motivation. All these factors affect oil palm productivity.
  
  

4. Land disputes and tenure insecurity undermining smallholder commitment to oil palm and the long-term viability of the industry

• Land conflicts take many forms in the oil palm smallholder sector, from the large compensation claims demanded by customary landowners for land alienated for estate plantations and land settlement schemes to inter- and intra-household disputes over block ownership.
• Land conflicts are critical production issues. Land disputes reduce smallholder productivity by removing disputed stands of oil palm from production and lowering smallholder incentives to invest in their long-term futures (e.g., replanting or fertiliser uptake). Also, insecure tenure undermines smallholder confidence in and commitment to oil palm, and deters economic development.
• Land conflicts on both VOP and LSS blocks are particularly serious in Popondetta and are a major constraint on and challenge to improving smallholder production.
• The "sale" of customary land in some VOPs at Hoskins is leading to land disputes between settlers and some landowning clan members, especially younger clan members who perceive future land shortages for themselves. These disputes are undermining the future tenure security of settlers "owning" VOP blocks.
• At Hoskins and Popondetta there is growing intolerance and resentment of settlers ("outsiders") who landowners believe are reaping most of the rewards of economic development and are the cause of growing land shortages in the region.
  
  

Mama Lus Frut Scheme


Women collect the "loose fruit" dislodged from the main bunches during harvesting

• The most successful smallholder intervention has been a new payment system for women known as the Mama Lus Frut Scheme. To increase smallholder output and bring women into oil palm production in West New Britain, the oil palm extension service (OPIC) and the oil palm company (New Britain Palm Oil Limited) introduced the Mama Lus Frut Scheme � a scheme to remunerate women directly for harvesting loose fruit.
  Prior to the scheme most women refused to work on oil palm as the income earned went directly to the husband. Much of this income remained under the control of the husband. With few economic rewards from oil palm and little recognition of their role in the industry, most women withdrew their labour from oil palm production. Instead, they concentrated their efforts in food gardening where they had more control over production and the income gained from selling garden food. A problem the industry faced with women refusing to contribute labour to household oil palm harvesting was the high rate of loose fruit wastage among smallholders. When fruit is harvested, or over ripe, oil palm fruitlets become dislodged from the main bunch and can account for 14% of the total harvest.
• Because loose fruit collection was a gendered female task, estimates suggested that between 60-70% of loose fruit was left to rot on the ground, representing a substantial loss of revenue for the industry and income for smallholders. It has provided substantial financial benefits for the company and women. In 2000, participating women earned an average of K1,443 each. Women spend a high proportion of their oil palm income on food and family needs and this partly explains why smallholders view the scheme as significantly improving the social environment and general quality of life on the blocks.
• The Mama Lus Frut Scheme has helped households to better meet their needs by strengthening livelihoods through improving income distribution and labour arrangements within households, reducing reliance on garden/market income, enabling households to meet short-term cash demands and social obligations, and opening up new avenues for men to contribute to the household economy.
• The success of the scheme can be explained partly by the scheme's guaranteed payment for women's labour, the way it was introduced, the employment of female extension officers in OPIC, and the high level of support for the scheme by OPIC and NBPOL. Also, there were few structural/cost barriers to participation in the scheme, and loose fruit collection was easily incorporated into existing gendered work roles and patterns. Most importantly, it strengthened household livelihood security through increased financial and social benefits for women.
• In the process of weighing up an industry or OPIC intervention, smallholders often focus on how a proposed intervention fits into, strengthens or adds to their existing livelihood strategies. OPIC or company initiatives for smallholders are more likely to be successful if they are compatible with household livelihood strategies which smallholders see as important in maintaining economic and social well-being.
  
  

Recommendations

• Smallholder initiatives by the companies or OPIC to increase smallholder production or productivity should aim to promote sustainable livelihoods through increasing household choices, incomes, land security and social harmony.
• Develop more flexible payment systems to encourage greater labour mobility between blocks and more equitable distribution of income between co-resident households.
• Encourage the development of supplementary income sources that do not draw labour away from oil palm production. This will help relieve some of the economic pressures on smallholder LSS blocks at Hoskins.
• Maintain and enhance food security by encouraging strategies of sustainable food garden production, like improving garden soil fertility through the composting of empty fruit bunches and the application of fertilisers. OPIC's policy of encouraging infill planting of oil palm on LSS blocks should be reassesed.
• Address land disputes to ensure future land security and social stability, and conduct further research into the long-term socio-economic impacts of mini-estate development.
• Provide incentives for replanting by smallholders. Replanting "packages" could include interest free credit and flexible loan repayment rates that take account of prevailing oil palm prices. Promote high value market crops to compensate for short-term losses in oil palm income during replanting.
• Continue the interest free credit schemes currently available to smallholders from the oil palm companies. The value of these schemes to smallholders could be enhanced significantly by making repayment rates more flexible to take account of fluctuations in oil palm prices.
• Promote family planning and budgeting among smallholders. This should be supported by all stakeholders in the industry and the Department of Health. As all smallholders will soon be required to have bank accounts for the direct payment of oil palm income, bank staff should regularly participate in industry field days to provide advice on banking and budgeting. Finally, as the long-term social and economic sustainability of the schemes is being eroded by population growth, it is imperative that family planning advice be made available to smallholders. As a matter of course, Department of Health staff should participate in field days to provide advice on family planning matters.

Poor accessibility, especially during the wet season, means that trucks are sometimes unable to reach smallholder blocks to collect the harvested fruit

Copies of the full report are available for $20. Details below:

Koczberski, G., Curry, G.N. and Gibson, K. (2001). Improving Productivity of the Smallholder Oil Palm Sector in Papua New Guinea: a Socio-economic Study of the Hoskins and Popondetta Schemes. Research School of Pacific and Asian Studies, Australian National University, Canberra. ISBN 0-9580165-0-X. 260pp.

Order from:
Pandanus Books
Research School of Pacific and Asian Studies
The Australian National University
Canberra
ACT 0200

Tel: +61 2 6125 3269; Fax: +61 2 6125 9975
Email: Thelma.sims@anu.edu.au

MONITORING INTERVENTIONS DERIVING FROM THE STUDY ON IMPROVING PRODUCTIVITY IN THE SMALLHOLDER OIL PALM SECTOR OF PAPUA NEW GUINEA.

The ACIAR-funded smallholder study examining socio-economic factors affecting productivity among LSS and VOP smallholders ended in December 2001. The project received strong support from the oil palm companies, Oil Palm Industry Corporation (OPIC) and the smallholders. The results of the study have been disseminated at several seminars/workshops both in PNG and in Australia and a report from the study was completed in January 2002.

At the beginning of 2002 ACIAR extended funding of the smallholder project for a further 12 months to help implement some of the recommendations of the study. It is a collaborative project between Curtin University (Gina Koczberski and George Curry) the ANU and the PNG Oil Palm Research Association (OPRA).

The project has the following objectives:

• Monitor and evaluate the introduction of a new payment card for smallholders.
• Strengthen the Mama Lus Frut Scheme at Popondetta, through working with OPIC and the company and using OPRA staff to support the project.
• Make a preliminary exploration of the land tenure issues associated with mini-estates and potential risks of this intervention.
• Communicate the success of recent smallholder interventions in the oil palm industry to other tree-crop export industries in PNG.
  The main focus of the extension project is for the research team to work in collaboration with OPIC and the company to help design, monitor and support the introduction of a new payment card for smallholders. The new card is called the Mobile Card. The project extension will allow the research team to examine the impact of the Mobile Card upon production, household income, income distribution and family and community cohesion.
  
  

Alternative Payment Systems for Smallholders � the Mobile Card
A major finding of the research to date is that incomplete harvesting is a primary determinant of low yields from smallholdings. The research traced underharvesting, among other factors, to both labour shortages and under-utilisation of labour.

Labour shortages can be ongoing as in the case of young families, elderly settlers without sons living on the block, or blockowners with multiple blocks or off-block employment. Labour shortages can also be temporary, the result of illness, or, as in the case of coastal village oil palm growers, a seasonal abundance of fish or better returns on other cash crops.

However, underharvesting also results from complex social forces and structural barriers that prevent labour from being deployed and adequately remunerated. For example, because of incomplete, deferred or non-payment of family labour (e.g., to brothers, wives, children), or of hired labour (e.g., youth groups), the supply of labour for oil palm harvesting and block maintenance is constrained as people withdraw their labour. This results in a great deal of under-utilised labour, particularly among the under-employed youth on the more heavily populated blocks on the LSS schemes. Thus, one solution to underharvesting is to find a way to tap this under-utilised labour on the smallholder blocks.

Our research in 2000-01 into the reasons for the success of the Mama Lus Frut Scheme provided ideas about how an alternative smallholder payment system should be designed to encourage full harvesting. The study identified the following three key principles underpinning the success of the Lus Frut Mama Card. These included:

Direct payment for labour by the company. Low rates of loose fruit collection by women prior to the mama card were the result of limited remuneration for their labour and lack of payment certainty for their labour spent in loose fruit collection. Women relied on their husbands to give them some of the oil palm income on paydays, but the social pressures on men to redistribute this income and engage in beer drinking meant that wives, who received less priority in this redistribution than other claimants, often missed out or received an amount less than the value of their labour contribution.

The under-utilisation of women's labour was correctly identified by OPIC as resulting from an ineffective payment mechanism for their labour. OPIC saw that this problem could be overcome by a payment system that guaranteed direct payment to women. By paying women directly for loose fruit collection, NBPOL removed much of the uncertainty surrounding payment to women when they relied on their husbands to remunerate them for their labour. Because loose fruit collection is a separate process from harvesting fresh fruit bunches (FFB) and loose fruit can be easily distinguished from FFB, it was relatively easy for the loose fruit to be stacked and weighed separately from the FFB, thereby making it possible to guarantee payments to women. Thus, a "labour contract" between the company and women was able to fulfilled.

The separate payment card for women also means that it is easier for men to remunerate women's labour for other forms of work such as block maintenance (and also to contribute to the upkeep of the household). Payment for work in fruit by placing FFB on the mama net means that men are able to circumvent the often considerable social pressures on them to redistribute income when this income is in the form of cash. In this way, payment in fruit rather than cash is more likely to lead to the "labour contract" being fulfilled between husband and wife.

Cashless transactions are attractive forms of payment for blockholders. For the reasons outlined above, many blockowners are reluctant or unable to pay cash for labour. Yet, most men are willing to place FFB bunches on the mama card which they see as their financial contribution to the upkeep of the household. Prior to the introduction of the mama card many men were reluctant or unable to hand over a share of the oil palm income to their wives and this was the cause of many domestic disputes. It is much easier for men to give FFB to their wives rather than cash because competing claims on fruit are virtually absent. So, the cashless transaction of placing FFB on the mama card circumvents the excessive demands on cash, and women are effectively guaranteed a contribution to the household from their husbands.

Allowed for flexible labour practices and new payment arrangements to emerge . Because of the absence of loan deductions on the mama card when it was initially introduced, it has enabled more flexible labour practices and payment systems to emerge both within and between blocks. Some examples of the labour flexibility afforded by the mama card are lending the card to children to pay school fees, to visitors for the purchase of travel tickets home, or to help relatives out of financial difficulties or to fulfil customary obligations. It has also become an important avenue for women to organise their own cash and labour transactions. This not only raises women's social status, but increases oil palm productivity as inter-block co-operation in oil palm production rises. The enhanced labour flexibility provided by the scheme has increased smallholders' motivation to produce oil palm as they are now more able to meet their socio-economic needs and obligations.

Also, the existence of two payment cards on the one block has opened up multiple ways of allocating oil palm income within and between households. This has enabled smallholders to tailor their labour and income strategies to their own particular situations on the blocks. This is especially useful to smallholders given the complexity and diversity of family situations and needs now characterising Hoskins LSS. In essence, the mama card has broadened the range of options and choices open to families and has given them greater flexibility in how work and income are allocated, usually in ways that have tended to raise smallholder productivity.

In reviewing the reasons for the success of the Mama Card we identified how a new payment system that guarantees payment for labour and allows for greater labour and payment flexibility might work. The idea here was to trial an initiative to facilitate across-block labour flexibility to encourage more complete harvesting and thus raise productivity. The trial entails a payment card that differs from the existing mama and papa cards in that it is not tied to a particular block. The new card is mobile in the sense that it can be used to pay labour for harvesting and block maintenance on any LSS or VOP block which requests labour. The mobile card has the potential to facilitate labour mobility across blocks and sections, and even subdivisions.

Payment for the labour of the mobile card worker/team is in oil palm fruit with a specified proportion of the harvested fruit being used to remunerate the mobile cardholder. In this way the reluctance or inability of blockholders to pay cash for labour is circumvented, and the work team is guaranteed timely payment. Also, because the transaction is cashless, this labour arrangement will probably be much more attractive to blockholders because they are not required to outlay any cash in advance, and nor is it necessary for them to retain a portion of their monthly oil palm cheque for the payment of hired labour. Thus the probability of the blockholder not complying with the labour contract is greatly reduced.

For blockholders experiencing labour shortages and village smallholders with a range of cash crops and subsistence options, the mobile card offers a way to significantly increase income without additional inputs of their own labour. Also, for smallholders experiencing temporary disruptions to oil palm production through illness or cultural proscriptions against working during mourning periods, for example, the mobile card offers a means to maintain productivity and income.

In terms of a target group for this intervention, it is important that potential participants in the scheme have the labour capacity to commit fully to the scheme. The Mama Lus Fruit Scheme was successful because a previously unremunerated group of people (women) were brought into oil palm production. Another group currently being identified to participate in the trial is the large number of under-employed young men, many of whom are the sons of settlers living on highly populated blocks.

Introduction and Monitoring of the Mobile Card
In May 2002 Gina Koczberski (GK) and George Curry (GC) began fieldwork (for three months) in PNG and worked in collaboration with OPRA and OPIC (Hoskins) in the design and establishment of the mobile card trial. The trial commenced in mid July. ACIAR project funds have been used to employ an OPIC officer to assist with the introduction of the mobile card and the identification of potential mobile cardholders and blockholders interested in employing mobile card labourers. The officer is assisting with the negotiation of contracts between blockowners and mobile card holders, and is responsible for monitoring the use of the card and dealing with problems that arise.

As OPIC and the company prepared the groundwork for the introduction of the mobile card trial in July, GK and GC together with OPRA and OPIC have been involved in:

• Formulating the final rules and regulations on how the mobile card will be used and by whom.
• Promoting the mobile card among smallholders. Various mediums have been used including radio programmes, meetings with smallholders and individual block visits.
• Carrying out smallholder post-harvest surveys on LSS and VOP blocks to estimate the amount of fruit lost each harvest round and recording harvesting rates for the various planting phases on the blocks.
• Identifying blocks and individuals that would benefit most from the mobile card.
• Interviewing mobile cardholders selected for the trial to collect information on the economic and social environment on their blocks.
  
  

Following the introduction of the mobile card by OPIC, GK and GC and OPRA will begin monitoring and evaluating the impacts of the card. Data will be collected over a six-month period and will focus on the impacts (both positive and negative) of the mobile card on mobile cardholders' blocks and on blocks where the Mobile Card is used. Surveys will focus on production, farming practices, inter and intra household income distribution and labour arrangements, debt repayments and family welfare.

Mini Estates
A further objective of the project extension is to make a preliminary exploration of land tenure issues associated with mini-estates and the potential risks of this intervention. In all oil palm schemes, except Bialla, the oil palm companies are establishing mini-estates to expand oil palm production.
Mini-estates are arranged under lease, lease-back regulations in which customary landowning groups register as Incorporated Land Groups (ILGs). The ILG then leases the designated land to the State which then leases it back to the ILG (the lease is registered under the Land Registration Act). The ILG then sub-leases the registered land parcel to the company on a 20 or 40 year lease. The company manages the estate, and the land owning group receives annual land rental fees and royalty payments. At Hoskins, ILGs are also issued with company shares. The shift to mini-estate production is driven largely by the restrictions on private companies obtaining alienated state land for plantation development and in part by the interest of local landowners to enter agricultural sub-lease agreements with the oil palm companies.

Mini-estates are a recent phenomenon and undergoing rapid expansion, yet the long-term socio-economic impacts are little understood and difficult to predict. There are also potential investment risks for the companies given the long lease periods and the experiences of other industries of lease, lease-back models of resource development (e.g., mining and forestry). Of particular concern for landowners is how to ensure that the benefits from mini-estate development flow to all members of the community, especially women and groups holding secondary rights in the resource. GK and GC together with OPRA staff have begun examining the various mini-estate models at each project site, and interviewing the companies and landowners to explore land tenure issues, second-generation issues, economic benefits for communities, and the social impacts of mini-estates. To date, work has been carried out at Hoskins and Popondetta and visits to Milne Bay and New Ireland are scheduled for November 2002.

Bialla Oil Palm Scheme
In May 2002 GK and GC together with OPRA and OPIC began work on a smallholder study in the Bialla scheme. The Bialla scheme was omitted from the earlier ACIAR study in 2000-1 because company support for the study was not guaranteed. With a change of management in mid 2001, Hargy Oil Palm Company requested the team to include Bialla in the smallholder study.

Data were collected over a five week period in May/June, 2002. The study began with a workshop with OPIC officers to identify the main constraints on smallholder productivity and the primary factors explaining variations in productivity between growers. Several research questions emerged from the OPIC workshop which helped shape research design and data collection. The research among smallholders employed semi-structured interviews, case studies, questionnaire surveys and community meetings. The main areas of data collection were:

• Block planting and replanting details
• Block population and demographics
• Labour supply and agronomic practices
• Household labour and income decision-making
• Factors influencing household and family members' participation in oil palm production
• Constraints on production
• Impacts and perceptions of agricultural extension.
  

While in Bialla the research team also looked at the Community Oil Palm Estate Developments (COPED). COPED is an alternative model to the mini-estate. In the COPED model the community develops and manages their own oil palm estate (ranging in size from 20 ha to over 600 ha) with technical and credit support provided by the company. The community estates provide an interesting contrast to the lease, lease-back model and a comparison will be made in terms of the financial returns and risks for landowners and companies.