Experts forecast surge in the price of palm oil
Many institutional and high worth investors from the Middle East, China and Europe are pouring money into the palm oil projects in western Africa. The main cause for the rise in investments in palm oil is the rise in the price of cooking oil post recession.
Investments in palm oil barrels and palm oil plantation projects are attracting investors because the market experts predict a surge in the price of palm oil in the second half of the year 2012.
It has been found that the share price of companies based on palm oil production has increased in the second quarter.
Experts believe the price of palm oil will surge by at least 16%, however, investment in palm oil plantation projects in western Africa face a range of risks such as
- The unpredictability related to the political conditions, economy and the social instability
- The changing regulations related to the FDI projects
- Local oppositions to the FDIs
- The current land holding regulations
- The judicial system
- The poor infrastructure and the facilities of logistics
Challenges of agricultural land investments in western Africa
The firms offering investment opportunities in the western Africa face the issues of land development targets, corporate social responsibility, obligations to the government / local communities and the development of value added services to create beneficial Agri- development projects.
The factors of human resources which involve, education, Agri labour, health care, technical conditions and management is also imperative in this regard. The cultural compatibility and working with local hierarchies pose risks to these development projects.
The rights of the indigenous people who are living in the area and the negotiation with the indigenous people who belong to the border regions are the main challenges faced by the project developers and the management team. The countries which have been facing internal conflicts and confusion over the borders and its natural surroundings may not provide the appropriate resolution in the matter of dispute. The participation of government of both the countries is important to ensure the deals are safe.
Labour pool in western Africa
The plantation projects in western Africa involve employment of local communities who have benefited in many ways by these investments as it provides employment to the people living in the palm oil plantation belt. Many young unemployed individuals join these projects and earn a living through it. Many workers in these regions are underemployed. Agriculture offers employment to 70% of the people and plantation projects provide many other benefits along with employment.
The literacy rate in the region is very low and the skill level is also very low. The young men and women who are interested in joining these projects are offered training and a skill development programme is also conducted to allow the youngsters to secure jobs.
The cost of handling the plantation projects in the region depends on factors -
- The fuel cost / transportation costs ( which can be 50% higher)
- The cost of importation or consumables
- Cost of development of resources in plantation sector
- The cost of development of uncultivated land into usable land
- Labour costs and taxes
– by Leesa Milano