With palm oil prices down almost two-thirds since March, some producers in Malaysia and Indonesia are trimming production, chopping down mature trees to plant new ones now as they gear up for future growth. But in Papua New Guinea, Cargill continues to expand.
Near Popendetta, a steel skeleton of posts and trusses -- the walls have yet to arrive from the Malaysian manufacturer -- stakes out a football-field-sized mill, one of two new ones Cargill is building. The company has also added two storage tanks at its seaside loading facility, where it already had three.
From here, as well as two other plantations in Papua New Guinea and two in Indonesia, Cargill ships the oil to its refineries in the United States, Malaysia, India, Germany, Belgium, Russia and the Netherlands, then markets the oils to all but three countries in the world.
Cargill now works with 17,000 local farmers such as Asimba, and employs 10,000 permanent workers and 5,000 seasonal workers on its plantations. The plantation workers alone make up half of Cargill's Asia-Pacific employees.
The sprawling operation Cargill runs in Oro Province has at its core a simple idea, said Ratnam Somoo, the plantation's Malaysian manager.
"I'm just a farmer," he said, while giving a tour, "in a corporate way."
Growing an industry
Despite Papua New Guinea's recent push into the global agricultural trade, much of the country remains little changed from the tribal rules that have dictated norms for centuries. Strictly observed tribal borders meant little intermingling between islanders; over time that led to about 800 distinct languages among its 5.8 million people who mostly live a subsistence lifestyle much like their ancestors. It's home to the world's largest butterfly and third-largest rainforest and 12 species of Birds of Paradise.
The promise of oil palms here was heralded by the World Bank when it financed the development of the first plantations in Papua New Guinea in the late 1960s. It marked the beginning of a global effort to open trade and bring market efficiencies to the growing and processing of food.
Instead of trying to grow multiple crops to ensure that they could feed their own people, the World Bank, International Monetary Fund and agribusiness giants encouraged them to concentrate on cash crops that would help raise the standard of living for all.
Oil palm was considered more profitable and easier to grow than other local crops such as coffee, cocoa, vanilla or rubber. The plantations would bring jobs, a cash economy, access to world trade and an industry to a country that had known little but subsistence farming.
Asimba, the farmer, stumbled into oil palms after retirement from his banking job in the city. He planted coffee on his family land at first, but the business failed when he couldn't find an exporter. Oil palms were a more consistent market, and since he started growing them in 2000, he's expanded to 25 acres.
Today, palm oil accounts for one quarter of Papa New Guinea's gross domestic product and 38 percent of its agricultural output, according to the World Bank. Since 2004, the country's GDP has grown 62 percent, to an estimated $6.4 billion in 2008, according to the International Monetary Fund.
Now, oil palms form neat lines along most of the few roads of Oro Province.
This province's 5,700 oil palm farmers sell fruits only to Cargill, the only company operating in the province. Such geographic divisions among palm oil companies -- a handful of others have operations here -- are typical of the industry, giving farmers no choice in selecting a buyer.
Papua New Guineans have long been suspicious of outside companies that might exploit their resource-rich island. Cargill has sought to placate those concerns by building schools, medical clinics and housing for its workers.
About 250 miles southeast of Oro Province, near Cargill's main plantation in Milne Bay, a low slung brick building is home to the office of Siyos Wenama, a field manager for the Oil Palm Industry Corporation, a government entity that helps local oil palm farmers in Papua New Guinea. Wenama said about 600 farmers in the area sell oil palm fruits to Cargill.
Cargill pays those farmers 57 percent of palm oil's selling price, which soared to $1,200 a ton in February. Despite prices falling back to $400, the number of farmers signing up to sell their crop to Cargill had increased to 773 by the end of the summer. To encourage even more planting, Cargill was giving away free seedlings. Wenama expected to have 800 farmers signed up by the end of the year.
The goal is to get to "more than 1,000, maybe 2,000," he said.
