Uganda: Bidco Palm Oil Project On the Edge

So far, some 4,000 hectares of land have been planted with the crop, whose yield is expected in another three years, while government's attempts at finding the extra 6,000 hectares of land are proving too slow and difficult.

Bidco Uganda's managing director, Mr. Kodey Rao said: "The process of buying land is ongoing but it is very slow and that is what is worrying us.

"We have imported seedlings worth millions of dollars and unless the land is made available, the seedlings will become a waste, so we may loose millions of dollars if land is not available."

Rao said Bidco needs to develop 10,000 hectares immediately or run the risk of running a 10,000-hectare capacity palm oil mill, which according to the projects plans should be erected next year.

"If we don't develop 10,000 hectares immediately, the mill will run at low capacity and at a high cost. Both these factors will contribute to the un-viability of the plantations," Rao said.

Bidco Uganda, part of the Kenyan-based edible oils company entered into an agreement with the Uganda government to develop a palm oil project, which took off in 2005.

On the table was a raft of incentives that were viewed by many Ugandans negatively.

One such incentive saw the Uganda government commit itself to providing 26,500 hectares of land. Of the total amount of land, 10,000 hectares was to be found on the islands where Bidco would develop its nucleus plantation.

The government had anticipated that landowners would readily sell their land.

So far, the project has acquired 70% of the 10,000 hectares for the nucleus project on Bugala Island but according to Rao, 1,500 hectares is not plantable as per National Environment Management Authority (NEMA) regulations.

Reports in the media have pointed to the fact that landowners have refused to sell their land to government and the only option now is an expanded out grower scheme to save the project.

The International Fund for Agricultural Development (Ifad) through the Uganda government funds the 3,500 hectares out grower scheme.

But Rao has told Business Week that changing course at this point in time is not prudent.

"I think everybody knows the plan and we should stick to it," Rao told Business Week at his office at the company's oils and soap plant in Jinja.

He said that if the project fails at this stage, palm oil development will not be feasible in Uganda for another 100 years.

Today, Uganda imports crude palm oil in excess of $150 million while the region put together imports crude oil worth a $1billion annually.

Bidco's investment in Uganda includes oil palm plantation development in Kalangala district and the Jinja plant with an edible oil fractionating and refining plant, a soap making and plastics producing factory.

Under the out grower scheme, which has seen the farmers organise themselves into a cooperative called the Kalangala Oil Palm Growers Trust, 300 hectares have been planted with palm.

Under the scheme, which is made up of 3,500 farmers, outgrowers will be given advance financing for clearing land, buying fertilisers, seeds while Bidco will be available to offer technical support.

Away from the nucleus plantation, trials have been started to identify suitable areas in the country where palm trees can grow.

The crop is being tried in other areas like Mukono, Hoima, Masindi, Bundibugyo, Masaka, Iganga, Bigiri, Jinja and Lira.

Source: allafrica.com