Plantation eyes private sector

THE SEEDS OF GROWTH Pamol Plantations Ltd. is looking for around $3 million to set up a new mill, buy heavy equipment and purchase fertilizers.

Commercial planting of oil palms in Cameroon began in the 1920s when German planters obtained native palms from the central African region now part of Benin, and the Democratic Republic of Congo. Hybrid palms and resistant genetic strains such as DxP were developed in the 1950s and the plantations enjoyed a period of reasonably high yields and steady rates of production, serving a domestic population with palm oil for cooking and soap.
At this time the company Pamol was owned by Unilever, which transferred majority ownership to the state and several national banks, in a debt-equity swap in 1996.

Funds from the 1996 transfer allowed for some modernization of Pamol’s two mills. However, by then, producers in other countries had investment programs underway that left Pamol in an economic crisis. The general manager of Pamol Plantations Ltd., Moses Besong Obenofunde notes that “palm oil is currently coming into Cameroon from the big Malaysian and Indonesian suppliers at low prices. We have had to drop our prices by over 30% and this has damaged our turnover. We have a social duty to employ people but at the moment I have to ask them to take a 20% cut in salary, to become third-party contractors working in our fields, or dismiss them.”

Pamol’s three plantation estates are located in southwestern Cameroon, where it also has two palm mills and technical and research departments. Business amounts to 22,850 acres of palms producing 11,500 metric tons of palm oil, 1,500 metric tons of kernels and 800,000 metric tons of seeds. The estates also boast some rubber production.

The Cameroon government is committed to an economic cycle that is moving the country towards privatization and is observing a hands-off policy towards the company. Mr. Obenofunde came in from the private sector to help this process of change. “We are revising the way we operate, by improving production and reducing costs,” he says. “Then, when you inject capital, proper standards are maintained and you can keep costs down and compete.” His is a message for private investors. “We are looking for about $3 million as working capital to set up a new mill, to buy heavy equipment and enough fertilizers for three years. The payback period will begin in two years when the effect of the fertilizers increase yields. Payback will finish in about eight years.”