IPP205. Social Assessment Report for the. Smallholder Agriculture Development Project (SADP) Papua New Guinea. January 2007

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Social Assessment Report for the IPP205 Smallholder Agriculture Development Project (SADP) Papua New Guinea January 2007 Curry, G.N., Koczberski, G., Omuru, E., Duigu, J., Yala, C. and Imbun, B.

2 SOCIAL ASSESSMENT REPORT List of Tables List of Figures List of Appendices Executive Summary iv vi vi viii 1. Introduction Project Description Purpose of the Social Assessment Conceptual Approach and Methodological Framework Background to Oil Palm in Papua New Guinea Notes 6 2. Land Access and Tenure Security among Oil Palm Smallholder Introduction Land Settlement Schemes (State Agricultural Leasehold Land) Transmission of Land Titles Customary Landowner Demands for the Return of Leasehold Blocks to Customary Ownership Disputes Between Long-term Caretakers and Leaseholders Arrears in Land Rentals Rising Population Pressure on Leasehold Blocks Village Oil Palm (VOP) Holdings on Customary Land Land Tenure Conflicts between Customary Landowners and other VOP Growers Land Tenure Conversion (LTC) Blocks (Popondetta) Customary Purchase Blocks (CPBs) Undocumented Land Transactions Strategies to Achieve Social Development Outcomes: Recommendations to Address Land Issues Agricultural State Leasehold land on Land Settlement Schemes Village Oil Palm (VOP) Holdings on Customary Land Land Tenure Conversion blocks Customary Purchase Blocks Notes 32 ii

3 3. Key Social Issues: Socio-economic and Political Context Introduction 3.2 Changing Demographic Environment: Population Growth Changing Harvesting Strategies Among Smallholders Under-harvesting and Household Labour Constraints: Gender and Youth Issues Food Security and Access to Gardening Land A Diversifying Rural Economy Roads and Transport Material Welfare Savings and Loan Repayments HIV/AIDS Law and Order 3.12 Strategies For Achieving Social Development Outcomes: Recommendations to Address Socio-economic and 54 Political Context Loan Repayments for Replant Blocks and Infill Blocks Improving Living Standards through New Savings 57 Mechanisms Improving Living Standards Through Broadening Research and Extension Programs Improving Income Security by Diversifying the Rural 63 Economy Notes Institutional Assessment Introduction 4.2 Local-Level Government Organisational Structure and Responsibilities Administrative and budgetary management practices LLG Relationships with their Communities Summary 4.3 Local Community Organisations Church Groups Non-Government Organisations Community and Village-based Groups Oil Palm Grower Associations Organisational Structure and Responsibilities Administrative and budgetary management practices Relationship with the Smallholder Community Summary 4.5 Oil Palm Industry Corporation (OPIC) Organisational Structure and Responsibilities Administrative and Budgetary Management Practices Relationship with Smallholder Community Summary 4.6 Papua New Guinea Oil Palm Research Association 85 (OPRA) iii

4 4.6.1 Organisational Structure and Responsibilities Administrative and Budgetary Management Practices Relationship with Smallholder Community Summary Strategies to Achieve Social Development Outcomes: Recommendations to Address Community Driven Development Strategies to Achieve Social Development Outcomes: Recommendations to Strengthen the Capacity of Oil Palm Institutions in meeting the needs of smallholders Notes Monitoring and Evaluation Household-level Baseline Survey Household Questionnaire Survey Participatory Focus Group Discussions Action Plan Estimated Costing Key Socio-economic Indicators Socio-Economic Indicators for Component Socio-Economic Indicators for Component Socio-Economic Indicators for Component Annex 1: Annex 2: Annex 3: 6. Bibliography Template for SADP household baseline and monitoring survey for replant blocks. 108 Template for SADP household baseline and monitoring survey for infill blocks. 117 Template for SADP household baseline and monitoring survey (general survey) List of Tables Table 1.1 Areas planted to oil palm in each scheme and potential for infill. Table 1.2. Table 2.1. Table 2.2. Table 2.3. Estate and smaliholder production details for Hoskins, Bialla and Popondetta. The numbers and areas of LSS blocks at Bialla, Hoskins and Popondetta. The numbers and area of VOP blocks at Bialla, Hoskins and Popondetta. Potential risks and risk mitigation strategies on I iv

5 Table 3.1. Customary Purchase Blocks. 31 Numbers of persons per block from the early l 990s projected through to 2011 for LSS blocks at Bialla, Hoskins and Popondetta. Table 3.2. Population growth and changing harvesting practices. 38 Table 3.3. Table 4.1. Table 4.2: Table 4.3. Table 4.4: Table 4.5. Table 4.5. Table 4.6. Table 4.7. Percentages of LSS and VOP blockholders with export cash crops other than oil palm. 44 Oro Province: Mandated minimum and actual LLG and Village Services Grants (8 rural LLGs). 69 West New Britain: Mandated minimum and actual LLG and Village Services Grants (10 rural LLGs). 69 Organisational strengths and weaknesses and capacity building needs of LLGs in the oil palm growing regions of WNB and Oro provinces. The main NGO, CBO and church-related groups present in the three project areas. Organisational strengths and weaknesses and capacity building needs of the various Church groups in WNB and Oro provinces. Organisational strengths and weaknesses and capacity building needs of the grower associations in WNB and Oro provinces. Smallholder initiatives and extension programmes at Bialla, Hoskins and Popondetta. 81 Organisational strengths and weaknesses and capacity building needs of the OPIC in WNB and Oro Province. 84 Table PNGOPRA research projects. 86 Table 4.9. Table 5.1. Table 5.2. Organisational strengths and weaknesses and capacity building needs of PNGOPRA. Matrix of data collection sites by type of smaliholder grower in each project area. 99 Action plan for household surveys and focus group from survey design to report writing. 100 Table 5.3: Socio-economic indicators for Component 1: v

6 Smallholder Productivity Enhancement. 103 Table 5.4. Socio-economic indicators for Component 2: Local Governance and Community Participation. 105 Table 5.5. Socio-economic indicators for Component 3: Project Management and Institutional Support. 107 List of Figures Figure Schematic representation of the relationships among the major tasks of the Social Assessment. 3 Figure 3.1. Housing type among VOP and LSS smallholders at Bialla. 47 Figure 3.2. Housing type among LSS smaliholders at Hoskins. 48 Figure 3.3. Figure 3.4. Figure 3.5. Figure 3.6. Housing type among VOP and LSS smallholders at Popondetta. Main types of water supply among VOP and LSS smallholders at Bialla. Main types of water supply among LSS smallholders at Hoskins. Main types of water supply among VOP and LSS smallholders at Popondetta List of Appendices 1. Terms of Reference (TOR) for the Social Assessment of the "Smallholder Agriculture Development Project" List of people and groups consulted at Hoskins List of people and groups consulted at Bialla List of people and groups consulted at Popondetta Institutional Capacity Assessment of Bialla Rural LLG Institutional Capacity Assessment of Ward Development Committee, Bialla Rural LLG. 7. Institutional Capacity Assessment of Hoskins LLG Institutional Capacity Assessment of Mosa LLG Institutional Capacity Assessment of Kokoda Rural LLG Institutional Capacity Assessment of Oro Bay Rural LLG vi

7 EXECUTIVE SUMMARY The development objective of the proposed SADP is to improve the living standards of rural communities in selected areas of oil palm growing provinces. This is to be achieved through: (a) increasing smallholder oil palm sector productivity through capitalising on existing infrastructure, and (b) promoting sustainable local governance and community participation mechanisms. Three oil palm schemes are included in the Project; these are located at Hoskins, Bialla and Oro. These objectives are to be achieved through three project components: Component 1: This component will support: (a) planting additional oil palm blocks, each 2 ha in extent (up to 9,000 ha) along existing provincial access roads through in-filling on land still available within the areas covered by oil palm infrastructure in response to smallholder demand; (b) the upgrading (reconstruction) of provincial access roads to existing smallholder oil palm blocks (about 600 km), and maintaining all existing and upgraded roads used for Fresh Fruit Bunch (FFB) collection, with the establishment of sustainable financing mechanisms for road maintenance; and (c) enhancement of smallholder productivity through improved extension services. Component 2: This component will develop and demonstrate sustainable mechanisms for community participation into local development, through the provision of grants to community groups in the project areas and promoting participatory planning and local accountability at local government and community level. This component will promote self-reliant local development through: (a) community mobilisation, facilitated by local facilitators; (b) identification and prioritisation of activities that would provide suitable solutions to local development constraints, through transparent processes at ward or community level; (c) participatory planning and budgeting at LLG level; (d) provision of small grant funding, with transparent conditions to ensure accountability and effective use of funds by recipient communities; (e) design and implementation of planned activities by the communities themselves, with support from district and LLGs, local CBOs, NGOs and service providers; and (f) capacity-development of CBOs, ward development committees, LLGs and province/district administration. Component 3: This component will strengthen OPIC capacity in improving smallholder productivity through the provision of technical assistance and the establishment of a Monitoring and Evaluation (M&E) system; strengthen OPIC and the institutions involved in assisting rural communities to define their priority needs, and the capacity of service providers to respond to these needs; and through OPIC provide support to and coordinate with existing HIV/AIDS awareness/prevention campaigns in the project area. OPIC will take overall responsibility for project management, coordination and performance of the project components. Component 1 implementation will be undertaken through OPIC and its field offices with the support of the milling companies and PNGOPRA. Component 2 implementation will be managed by a management agency contracted out by OPIC to i) set up Local Coordination Teams (LCT) at provincial level; ii) select and contract consultants and service vii

8 providers to carry out all capacity building activities; iii) carry out M&E activities; iv) assist OPIC in management and transfer of the grants themselves, and manage the grant accounts at the LLG levels. The objectives of the Social and Institutional Assessment are to: * Increase opportunities for optimising social development through outcomes identifying the project beneficiaries and their needs, expectations; ideas, and verify the validity and outcomes of the consultation that have process given rise to the proposed SADP activities; possibilities and examine for effective community participation in interacting relevant service with providers to meet communities' needs. * Minimise adverse social impacts which might be caused * Mitigate by SADP. unavoidable adverse social impacts and social Project. costs of the * Propose guidelines for adopting a socially sustainable * project Prepare design. key socio-economic and social indicators for project monitoring and evaluation. There are two additional reports which complement this report, the second of which contains an overview of the non-oil palm communities in the project areas: * Curry, G.N. and Koczberski, G The Resettlement Policy Framework Report for the Smallholder Agriculture Development Project, Papua New Guinea. Report to the Oil Palm Industry Corporation. * Koczberski, G., & Curry, G.N Beneficiaries Assessment Report for the Smallholder Agriculture Development Project, Papua New Guinea. Report to the Oil Palm Industry Corporation. The methodological framework for this study involved a mix of participatory and rapid rural assessment techniques. These techniques included interviews, workshops and focus group meetings with key beneficiaries and stakeholders, and analyses of existing studies and data on smallholder oil palm production in the two provinces of WNB and Oro. Land Access and Tenure Security among Oil Palm Smallholders Land conflicts take many forms in the oil palm industry, compensation from the large claims of customary landowners for land settlement alienated schemes for land (LSS) and estate plantations to inter- and disputes intra-household over block ownership. Land disputes are critical because production they issues can reduce smallholder productivity by stands taking out disputed of production, oil palm reducing the capacity of smallholders by lowering to repay smallholder loans and incentives to invest in their principal long-term land futures. tenure arrangements The under which smallholder in oil PNG palm are: is cultivated * Agricultural State leasehold land on LSSs; viii

9 Village oil palm (VOP) holdings on customary land by major and minor clans; * Land Tenure Conversion blocks; * Customary Purchase Blocks (CPBs) on customary land. Agricultural State leasehold land Approximately 49% of the total area of smallholder oil palm is planted on agricultural State leasehold land in LSSs at Bialla, Hoskins and Popondetta. The main concerns regarding land tenure for LSS growers relate to: * Transmission of leasehold titles (e.g., disputes over inheritance); Customary landowner demands for the return of leasehold blocks to customary ownership (or that additional compensation payments be made to customary landowners for alienated land); * Disputes between long-term caretakers and leaseholders over block ownership; * Arrears in land rentals; * Rising population pressure on leasehold blocks. The transmission of leasehold titles poses land administration problems for LSS growers and other industry stakeholders. The problem has arisen because the large majority of LSS growers has tended to follow informal mechanisms of transferring tenure rights in LSS blocks. Typically, these are modelled on traditional systems of land tenure from settlers' home communities. Also, leasehold titles are not updated to reflect current ownership arrangements. Recommendation: Update leasehold titles to strengthen tenure security. This requires a coordinated approach by OPIC, the Department of Lands and Physical Planning, and the provincial lands offices. Priority should be given to: * Conducting an audit of state leasehold titles to update and clarify the status of each leasehold title. * Reducing the potential for disputes of the inheritance of leases by introducing a standardised Will for LSS farmers in the three project areas. * OPIC should encourage title transfers in Wills that protect the rights of widows to remain on the block after the death of the leaseholder. Recommendation: Establish new approaches for the collection of LSS leasehold rentals and a more equitable method of setting rental fees. The National Department of Lands and Physical Planning should be encouraged to outsource the collection of land rental fees to OPIC or the milling companies. Recommendation: Develop strategies to afford greater tenure security to LSS growers at Popondetta. OPIC, customary landowners and LSS growers must address the continuing insecurity of LSS growers by encouraging constructive dialogue between the groups to formulate strategies to improve the lease tenure security of LSS growers. The question of a land rental fee paid to customary landowners by LSS growers should be discussed as a potential solution to these disputes. ix

10 Recommendation: Address problematic caretaker arrangements. between Relationships long-term caretakers and leaseholder/vop blockowners formalised should by OPIC be with the introduction of a contract agreement Arrangement (a Caretaker Agreement) between the caretaker and the leaseholder/blockowner. The contract should specify the contract period, the type of work caretaker, to be done the terms by the and conditions of the caretaker arrangements proportion and of the the value of the harvested fruit paid to the caretaker. Village oil palm (VOP) holdings on customary land Approximately 46% of the total area of smallholder oil palm is plantings. classified as Oil VOP palm cultivated on village land is subject to regulations the rules and of customary law and land tenure principles. Clan planting agreements of individual to the oil palm holdings are either informal social contracts outlined in or a are Clan Land Usage Agreement (CLUA) which is a between signed a agreement clan and an individual acknowledging the latter's right and under custom native to law have access to the land to plant oil palm. The road access requirement for oil palm means that landowner groups without a feeder road on their land are dependent on the generosity of other landowner groups (clans or subclans) for access to land for oil palm. The road network is an important determinant of the income potential of different landowning groups within villages. Recommendation: OPIC to adopt strategies during infill and replanting that i) strengthen the tenure rights of growers on non-clan land, and ii) promote more equitable access to oil palm across village landowning groups. Possible strategies to be discussed with landowner groups include: 1. Encourage a form of 'compensation' or 'gift' payment to landowners at the replanting stage for disputed blocks in line with existing customary practices. 2. Introduce a land rental fee which generates an income for the landowning group and thus provides some tenure security for the 'tenant'. 3. Site feeder and linking roads during infill to maximise the number of landowning groups within each village with access to a feeder road on their own land. Land Tenure Conversion (LTC) blocks (Popondetta) Approximately 450 ha of VOP oil palm at Popondetta is classified In the as early LTC 1960s, blocks. the Australian administration introduced the Land Conversion) (Tenure Act 1963 to enable customary tenure to freehold be converted title. to The individual designated land was removed from customary registered control in the and name of an individual. Most of the land holdings to did full not title proceed registration in the name of an individual, and so subject technically to principles are still of customary land tenure. x

11 Recommendation: In addition to addressing tenure insecurity on LTC blocks in same way as recommended for VOP blocks, the legal status of each LTC block must be determined. Customary Purchase Blocks (CPBs) on customary land The 'purchase' of customary land by non-clan members for oil palm development is a recent trend, first emerging at Hoskins in the mid 1980s and later, around the mid 1990s to 2000, at Bialla and Popondetta. Approximately 200 ha and 50 ha of land have been 'sold' at Bialla and Popondetta respectively to 'outsiders' for oil palm development. At Hoskins, 2,567 ha of customary land have been developed as CPBs, representing about 30% of the total area of land classified as VOP plantings. The majority of CPB transactions are informal and not conducted in accordance with customary law. Detailed land surveys are rarely undertaken, and written agreements often do not specify the agreed sale price of the land, the amount and timing of payment instalments, and the specific use rights of the purchaser. Recommendation: OPIC to develop a new land administrative system for oil palm developments on CPBs. This should have three elements: 1. The design of a Customary Land Tenancy Agreement (CLTA) in consultation with legal experts and customary landowners. 2. Completion of a Land Investigation Report. 3. The Design of a Statutory Declaration Form to specify the transfer of userrights in the event of the death of the blockholder. Key Social Issues: Socio-economic and Political Context Changing demographic environment: population growth Population density on the Hoskins LSS has risen from 5.9 persons per block in the early 1970s (Ploeg, 1972) to 13.3 persons per block in 2000, and in 2002 the Bialla LSS averaged 11.1 persons per block. By 2011 (expected completion of the SADP), there will be an average block population of 15 at Bialla, 20 at Hoskins and 10 at Popondetta. Rising population density on the LSS blocks is leading to: Increased economic pressures on blocks. * Diversification into non-oil palm income sources. * Social instability and conflict including inter and intra-household disputes over the allocation of oil palm work and income. * Resistance to replanting by younger households residing on their parents' block (because of short-term loss of income). * Increased pressure on co-resident families to seek additional land to plant oil palm, most often with insecure tenure. * Increased disputes over the inheritance and 'ownership' of blocks. * The displacement of cooperative household harvesting systems by more individualised units of production where the harvesting is rotated amongst xi

12 co-resident households. This change is reducing smallholder motivation to invest in farm inputs, carry out block maintenance and service loans. There are clear long-term income advantages for smaliholders tall to replant stands old of oil and palms. However, there is a sizable group of replanting growers for will whom result in short-term economic hardship. Smallholders be hardest that hit would financially during replanting are: * Smallholders with the majority of their palms over 15 years old. VOP producers with a single, 2 ha stand of oil palm. * Elderly or widowed farmers who are part-time/semi-retired smallholders. * Families on populated multiple household blocks where oil palm income is already thinly spread across households. Recommendation: Implement short-term strategies to lessen the financial of loan repayments hardship for smallholders undertaking replanting. rates should Loan not repayment normally exceed 30% of gross monthly oil recommendations palm income. Other to ease the financial pressure on growers include: during replanting * Giving VOP producers with only 2 ha of oil palm the option of poisoning I ha at a time. a Arranging Mobile Card contracts as part of a replanting package heavily populated for blocks. * Encouraging income diversification on newly replanted LSS as blocks the cultivation such of profitable market crops on newly replanted until young blocks palms come into production. * Increasing block productivity by raising harvesting rates. Recommendation: Implement long-term strategies to lessen the financial hardship of loan repayments for smallholders undertaking replanting. The industry should consider moving towards some form of replanting levy as suggested by Brophy (n.d., p3). Advantages of a replanting levy include: * Relief from some of the short-term financial pressures of replanting by removing the 'double-disadvantage' during replanting of reduced income and increased loan repayments. * Reduced financial risks associated with replanting. * Elimination of the incentives to shift fruit because there would be a financial cost of doing so (levy deductions paid into the account of the block through which fruit is sold). * Enhanced success of other initiatives to raise productivity (e.g., Mama Loose Fruit Scheme and Mobile Card which are sometimes used to avoid loan repayments). xii

13 Under-harvesting and household labour constraints: gender and youth issues Under-harvesting is a major cause of low productivity among growers. Data from the Hoskins scheme revealed that LSS growers achieved 60% of plantation levels of production (tonnes/ha) while VOP growers achieved only 38% of plantation levels. The main types of labour supply constraints explaining under-harvesting include: * Absolute shortages of household labour (e.g., small family size, old age, short and long-term illness and physical disability). * Under-utilisation of available household labour or caretaker labour due to contested tenure rights, or disputes over the remuneration of labour. * Reduced availability of household labour due to social commitments or competing economic activities. * The absence of a market in hired labour. The Mama Loose Fruit Scheme, which pays women separately for the collection of loose fruit, has successfully overcome constraints on the supply of women's labour. Around 85% of female smallholders in all three schemes now have their own harvesting card and the proportions of total smallholder oil palm income paid directly to women vary from approximately 20% at Bialla to 30% at Popondetta. Women expressed an interest in training in household budgeting, which could be usefully extended to small business training. Some female smallholders would like company credit for wheelbarrows with repayments deducted from their Loose Fruit Mama payments. Other payment initiatives such as the Mobile Card where the labourer is paid an agreed proportion of the FFB harvested and weighed on the Mobile Card, have proven successful in raising smallholder productivity and incomes. The success of the Mobile Card trial and the Mama Loose Fruit Scheme demonstrates the effectiveness of payment systems that guarantee the payment of family or hired labour. Such payment mechanisms can also resolve intra-household conflicts over labour and allow for a more equitable distribution of income among household members. Recommendation: OPIC and PNGOPRA to pursue strategies to increase smallholder harvesting rates thereby creating more employment opportunities for youth and women and improving debt servicing. New payment initiatives like the Mama Loose Fruit Scheme and the Mobile Card should be encouraged where necessary on infill and replant blocks to maximise smallholder productivity, create employment opportunities for youth, women and caretakers, and to improve debt servicing. Food security and access to gardening land Garden production, whether for domestic consumption or for sale at local markets, is a fundamental component of the livelihood strategies of the vast majority of LSS and VOP smallholders, particularly women. Some families on multiple household blocks where oil palm production and income is rotated amongst households each month depend primarily on income from sales of garden food to xiii

14 support the household during the months when they do not have income. access The to oil palm long-term viability of the smallholder sector considerable depends extent to a on the food and income security provided gardening by access land. to A diversifying rural economy Most VOP and LSS smallholders develop supplementary income sources to augment oil palm income and to strengthen livelihood security. It is probable that as population and land pressures continue to rise on the LSSs, an increasing proportion of LSS settlers will be engaged in non-oil palm income activities, both on and off-farm. Non-oil palm activities are sometimes viewed as distractions smallholders' drawing time and energy away from oil palm production. ignoring income Rather diversification, than the challenge for extension smallholder services development and policies is to consolidate and build trends on through these income policies that strengthen linkages between the and smallholder the broader sector regional economy. Income diversification and should actively be encouraged fostered as a way of improving the economic and the social LSSs. stability of Recommendation: Develop strategies to support the diversification of the rural economy. Income diversification could be facilitated by providing small business- and employment-related skills training for under-employed youth on the LSSs, CPBs and VOPs. As part of the SADP, a small business/welfare officer should be employed by OPIC in each project area to coordinate training by external organisations and to provide advice and training to smallholders and the wider community. Roads and transport The road systems in the smallholder oil palm areas of WNB and Popondetta have been steadily deteriorating over the years due to lack of road maintenance by government agencies. Poor road conditions and unreliable harvest pickups undermine grower commitment to oil palm production, including replanting. Growers will shift their labour to activities where the retums to their labour are assured. Smallholders are risk averse for good reason, and are reluctant to risk labour and capital where returns cannot be assured. Material welfare In all three project areas smallholders complained about how little material improvement there had been in their lives following the introduction of oil palm. Living conditions, particularly on the land settlement subdivisions, have deteriorated through time. Over the years there has been little or no maintenance of the original houses so that many are in very poor condition or uninhabitable. Water tanks have rusted out and not been replaced, and most aid posts are closed xiv

15 or lack medical supplies because of inadequate funding by the provincial governments. The fall in living standards is more than simply a development problem or a health issue for smallholders. It is an important productivity issue for the industry because it is well established in PNG that housing, water supply, and other material improvements such as access to vehicles are powerful forces for motivating workers, both as employees and as cash crop producers. This decline in living standards is paradoxical because oil palm smallholders for a long period have had levels of cash income significantly above those of other smallholder cash crop producers. Smallholders themselves offered two main explanations for the decline. First, an ever increasing population on the land settlement subdivisions undermines people's capacity to save; and, second, there is no effective savings mechanism for growers. Recommendation: Introduce a savings mechanism to enhance improvements in living standards. HIVWAIDS HIV/AIDS is expected to impact severely on the oil palm industry and has the potential to undermine the objectives of the SADP. To date, 70% of all reported HIV infections in PNG are in rural areas. Sales (2004) has predicted that over 17% of the oil palm population in WNB could be HIV positive by The industry cannot rely fully on the public sector to address the problem. Thus, it is necessary for the industry itself to take some preventative actions to address the rising incidences of HIV/AIDS among the oil palm communities. Recommendation: PNGOPRA in association with the milling companies and an external organisation (e.g., PNG Institute of Medical Research and/or Anglicare) should undertake a comprehensive HIV/AIDS risk assessment for the industry. Law and order Many law and order problems, especially on the LSSs, are exacerbated by the growth in the number of under-employed young men, and the high level of male drunkenness on oil palm paydays. Institutional Assessment The institutional assessment component was to assess the capacity of the various institutions representing the communities potentially affected by SADP activities. The Institutional Assessment examined the LLGs, community and village-based groups, women's groups, church groups, grower associations, OPIC and PNGOPRA. Local Level Government xv

16 The Organic Law on Provincial Governments and Local-level 1995, Governments, defined a new system of relationships amongst the national, local provincial governments and which provided the foundation and structure Government for Local (LLG). Level Under the law, LLGs were given responsibilities new powers to and be providers of local development and service water delivery and power (e.g., supply, social services, housing, aid maintaining posts and clinics, peace, and providing community sport, recreation, industrial and cultural shows), and and to enact laws, with the aim of improving basic the services. delivery of The structure of the LLGs, with member representation from local wards, including female representatives from local women's organisations, provides a solid foundation for establishing strong links into their communities for the initiation of projects and the delivery of services. However, whilst the structures are in place, LLG activities are generally severely constrained by funding shortfalls to the extent that basic services for the community cannot be delivered. Typically, LLGs lack the resources to perform even basic administrative functions. Another factor constraining the ability of the LLGs to deliver services is their lack of management skills, particularly in relation to administrative and budgetary functions. The skills identified most frequently in need of upgrading included: project planning, design and management; * budget planning; * administrative and technical skills; * community needs analysis. The under-resourcing of LLGs together with limited management and administrative skills, mean that there are few opportunities for the poor to access basic services and community development programs. Recommendation: Provide capacity building activities for LLGs to improve the success of the community development component of committing the SADP. funds to LLGs, SADP should first give attention to: Before * Awareness programmes for LLG representatives on governance issues and their roles and responsibilities under the Organic Law. * Improving the capacity of LLG representatives to prepare project funding proposals and financial plans. Developing the management and organisational capacity of LLGs to coordinate and manage community projects. * Training LLG representatives in community needs assessment and participatory approaches to community development. * Training LLG representatives in project monitoring and evaluation techniques. * Fostering community trust in and respect for the LLG system through improving awareness of how the LLG system operates and the financial and bureaucratic obstacles faced by LLGs in performing their duties. xvi

17 Initiating dialogue between LLGs and CBOs to turn around CBOs' negative perceptions of LLG operations and performance. Recommendation: LLGs should be partnered with community organisations that are well established with proven track records in community development. Local community organisations As in other areas of PNG, civil society groups such as NGOs and CBOs do not have a strong effective presence in WNB and Oro. The main providers of nonstate services in WNB and Popondetta, and the most stable and effective organisations, are those associated with the various churches. Churches The churches in WNB and Oro provinces, like most other regions of PNG, have long been primary providers of local services such as education and health. Moreover, they are the most important vehicles through which the local population, particularly women, participate in civil society. In the Hoskins and Bialla regions, the Catholic Church and United Church are the main established church organisations servicing the local population, while at Popondetta, the Anglican Church is the dominant church providing health care, education and community and pastoral services. It is estimated that around 80%-90% of the population of Oro Province belong to the Anglican Church, and in WNBP, the Catholic Church runs approximately 90% of the schools. The churches, especially the larger established churches, have a demonstrated capacity to manage a range of community programmes and health and education services that display: sound administrative and financial management; quality leadership, in terms of experience, commitment and general business acumen; and very efficient and cost-effective service delivery. For example, the Anglican Health Service in Popondetta runs three health centres, 12 health sub-centres, 12 aid posts and has trained numerous village health volunteers. Similarly, the Kimbe Catholic Diocese manages schools and health clinics in each of their 19 parishes. The effective network and management structures of the churches and their culture of honesty and transparency make them excellent local coordinators and facilitators of community development. Non-government organisations Some of the environmental NGOs have well developed administrative capacity and financial management skills. The Nature Conservancy (TNC) in WNB and Conservation Melanesia in Popondetta both have international links and strong on-the-ground presences. Community and village-based groups In addition to the formal organisations of church organisations and environmental NGOs, there are numerous, usually ephemeral, informal community and villagebased groups and committees. These groups tend to wax and wane depending on the perceived needs of the community or kinship group at a point in time. Sports, music and youth groups are some of the more important social and civil organisations available to young men in the villages. xvii

18 The two most important constraints/weaknesses affecting the performance and effectiveness of local community groups are: 1. Insufficient capacity, in terms of personnel and other resources undertake to project tasks. Most groups lack basic skills in budgeting, literacy, record keeping, and project management. They also fiscal lack discipline the to keep projects on track for timely completion. 2. The widespread practice of group leaders 'personalising' the assets group's such as outboard motors, drum ovens and other equipment. Recommendation: Address the weak institutional capacity community among local and village based groups. The main areas of weakness and knowledge are in skills related to the following areas: * book keeping and general budgeting; * literacy and record keeping skills; * project management; * understanding the project purposes; * distinguishing between personal and group objectives/purposes of projects; * absence of skilled support staff. Recommendation: The community development component of the SADP investigate the potential for facilitating partnerships between local entrepreneurs and LLGs/community groups to develop sustainable livelihoods for villagers without access to oil palm income. Oil palm grower associations Each project area is served by its own grower association: Bialla Growers' Oil Palm Association (BOPGA); Hoskins Oil Palm Growers' (HOPGA); Association and Popondetta Oil Palm Growers' Association (POPGA). association Each is governed by a constitution and is made up of voluntary from members the VOP and LSS smallholder community. The annual subscription K36 is deducted fee of from members' oil palm payments. Membership fees of the fund operating most costs of the associations. The role of the associations represent the is interests to of smallholders to industry bodies such as OPIC the companies, and PNGOPRA, and to national and provincial governments. The grower associations consist of an elected executive committee Chairman headed by and a Deputy Chairman and a representative division. from each Popondetta smallholder holds elections for executive positions while every BOPGA four years and H-OPGA hold their elections every two years. Secretary The of Chair each and association sits on the board of OPIC and represent at Local smallholders Planning Committee (LPC) meetings. The capacity of the grower associations to carry out their functions through varies greatly time. The effectiveness of an association depends managerial largely on abilities the of the executive committee, membership numbers (income), xviii

19 and the quality of the relationship between the executive and OPIC and the milling company. The extent of smaliholder involvement in the grower associations varies amongst project areas and through time, reflecting the level of smallholder confidence in the associations to deliver benefits to members. Women are seriously under-represented in the grower associations. Although they now account for over one-quarter of total smallholder production, there is not one female representative in any of the associations. Recommendation: Strengthen the capacity of the grower associations to represent the needs and interest of their members. It is recommended that: * Executive and long-term administration staff of each of the grower associations receives training in book keeping, record keeping, and in governance and transparency issues. * Grower associations should aim to enhance accountability standards and transparency regarding the disbursement of membership fees. * An additional place reserved for women on the executive. * Grower associations be encouraged to take on more responsibility for services that address some of the social and economic problems confronting growers. Potential activities include funding workshops on household budgeting and savings, health issues (e.g., HIV/AIDs, STDs, family planning and nutrition), youth issues (e.g., alcohol and drug abuse), law and order and alternative income opportunities. Oil Palm Industry Corporation (OPIC) In 1992, as part of the government's corporatisation and agricultural reform policies, OPIC was established as a semi-government agency. Under the OPIC Act, the central role of OPIC is to promote and encourage increases in smallholder productivity by the more efficient provision of extension services to smallholders. Whilst the overall management of OPIC is sound, governance problems exist at the national level due largely to the ongoing problem of obtaining government gazettal of formal appointments such as the General Secretary and the OPIC Board. Under the OPIC Act, an OPIC Board consisting of seven directors (three smallholders, two state representatives, and one representative each from POPA and PNGOPRA) should be directing the management of the Corporation. However, the Board has not been functioning officially for several years. The OPIC Secretariat, based in Port Moresby, co-ordinates the programs in the five project areas. It is also responsible for policy development, planning, training, sourcing funds, and liaising with all stakeholders in the oil palm industry. An OPIC field office is established at each project site and managed by a Project Manager. To facilitate OPIC's role, Local Planning Committees (LPC) have been established in each of the five project areas. The LPC consists of the OPIC project manager and representatives from the local growers' association, xix

20 provincial government, milling company and PNGOPRA. The Committee regularly meets to discuss, plan and monitor the work of OPIC and to act as a forum stakeholders for to raise various issues of interest or concern. The functioning LPCs were well in each project site visited as part of the institutional assessment. OPIC is financed by a smaliholder crop levy of K4.00/tonne matched voluntary by company a contribution. Together they account for approximately of OPIC's 93% income. The balance of funds is provided by annual grants national from the government. OPIC has difficulty covering its operating particularly expenses, at Bialla and Popondetta, because of the declining contribution funding from the national government. To address these budget the pressures, organisation is cutting costs by lowering the ratio of extension smallholder officers to blocks (now approximately one extension officer to 300 blocks). OPIC usually performs well in meeting its annual smallholder replanting production targets, and and has worked well with the companies in smallholder coordinating harvesting schedules. It has been active in introducing successful a range initiatives of to raise smallholder productivity such as the Mama Fruit Scheme. Loose Fertiliser application has long been the central plank of OPIC's extension to increase program smallholder production, but sometimes the promotion amongst of fertiliser growers has been in isolation from other important factors productivity influencing such as harvesting rates and other broader social and demographic factors which, for example, affect the supply of smallholder labour. Whilst Mama the Loose Fruit Scheme, Mobile Card trials, Growers' Fund, awareness, HIV/AIDS and the recent attention to land tenure issues, indicate OPIC's a broadening approach of to smallholder productivity, the promotion of fertiliser the most remains dominant extension strategy. Given that a significant proportion of smallholders (both LSS and VOP) regularly under-harvest, then strategies to promote fertiliser application rates, must be undertaken in conjunction with strategies to raise harvesting rates. Generally, OPIC extension officers have a good relationship with smallholders, but relationships can become strained when deteriorating road conditions lead to late, irregular or cancelled pickups of smallholder fruit (a problem in the past at Bialla and Popondetta). Given the limited channels for female representation in the industry, further efforts to increase the number of female extension officers and female representation at LPC meetings should be a priority for OPIC. Recommendation: Strengthen the capacity of OPIC to better perform its roles and responsibilities effectively. It is recommended that: * The government be encouraged to proceed with the gazettal of the OPIC Board and the General Secretary position. * A training needs analysis be conducted to identify the training requirements of OPIC extension staff. xx

21 A small business/welfare officer should be recruited to establish and coordinate collaborative programs with external organisations to address some of the emerging needs of smaliholders which are now affecting smallholder productivity (e.g., budgeting, HIV/AIDS, small business training, etc.). * Each scheme should have a female smallholder representative attend LPC meetings. * Female extension officers should be recruited at Bialla and Popondetta. * The capacity of the Land Sections of OPIC be strengthened to deal with the range of land issues affecting smallholder production Recommendation: OPIC to combine its extension efforts to promote fertiliser with broader strategies to raise smallholder harvesting rates (e.g., Mobile Card). PNG Oil Palm Research Association (OPRA) OPRA is a not-for-profit organisation that constitutes the research arm of the oil palm industry. It conducts agricultural research and development for the milling companies and smallholder growers, and provides technical support and services to the industry. The five principal areas of research include: agronomy, crop nutrition, entomology, plant pathology and smallholder livelihood studies. OPRA is financed by a research levy of Kl.77/tonne of FFB on member companies and smallholders. Levies account for approximately 64% of PNGOPRA's income, with external funding from the PNG government and overseas donors accounting for the remainder. Oil palm levies finance PNGOPRA's recurrent costs and external funds are used to support specific research projects. Two areas of research that require further strengthening are studies on strategies to minimise the environmental impacts of oil palm activities and an increased focus on smallholder research. The latter is becoming more important with the rapidly changing socio-demographic context of smallholder production (population growth, generational change, land tenure issues, food security, growing threat of HIV/AIDS), and the high rates of under-harvesting amongst smallholders. Recommendation: Expand the smallholder livelihood studies section of PNGOPRA to support further research that will enhance smallholder productivity and incomes with an emphasis on achieving a more economically, socially and environmentally sustainable smallholder sector. A smallholder research officer with a diploma/degree in agriculture and with training in social science research methods, preferably to Masters level should be recruited. PNGOPRA should also develop priority areas for smallholder research which aim to: * Improve smallholder productivity through research that promotes a greater understanding of intra-household relations of production and constraints on the supply of family and hired labour. xxi

22 * Seek a better understanding of the many socio-economic and demographic factors affecting smallholder productivity (e.g., population growth, land tenure issues, HIV/AIDS, etc.). * Focus on developing economic and environmental cost-benefit analysis of research innovations/production strategies tailored to accommodate the broad typology of household types and production strategies pursued by smallholders. * Understand the influence of quality of life issues (e.g., housing, water supply, social stability, family relationships, etc.) on smallholder productivity. * Examine the role of food gardens in food/livelihood security, especially given the trend amongst LSS growers to plant all their blocks to oil palm. Recommendation: Strengthen links between PNGOPRA and the smallholder sector. Possible directions include: * Establishing a network of part-time, "barefoot research assistants" in each project area. * Greater smallholder attendance at research presentations at PNGOPRA's annual SAC meetings. * Encouraging OPIC project managers from each project area to attend research presentations at PNGOPRA SAC meetings. * Enhance the dissemination of research findings presented at PNGOPRA's annual SAC meeting in a form suitable for the growing educated population of smallholders. * Expand PNGOPRA's involvement in OPIC field days at Hoskins and Bialla. Recommendation: PNGOPRA to initiate collaborative work with OPIC to target under-harvesting in extension activities, especially during field days. Monitoring and Evaluation The household-level baseline survey has been designed to assist with: * Monitoring of the socio-economic impacts of the SADP, including the degree of inclusiveness in SADP activities. * Measuring project performance during and after SADP's implementation phase. The proposed baseline survey is comprised of two main data collection instruments: a household questionnaire survey to be conducted among smallholder households and a series of focus group discussions with identified communities in each project area. Three household surveys have been designed, each of which is designed specifically for smallholders undertaking infill and replanting while being affected by road maintenance and upgrading. The broad topic areas covered in the household surveys include: xxii