By Anthony Wanyoto
Vegetable oils are a major element in the global food systems; an important economic commodity internationally, and at various national levels. Since 1980, the global use of vegetable oils has increased across a diversity of industries and consumer segments, leading to increased economic activity. The industry provides jobs and livelihoods to hundreds of millions of people across the globe, thereby making a significant contribution to the economic welfare of many countries.
Growth in vegetable oils’ production as a consequence of rising demand, has attracted a lot of attention and action. On the positive side, it has led to higher incomes, generated employment, and reduced poverty among farm as well as non-farm households.
The UN has been playing a pivotal role in the growth of humankind, by ensuring a basic level of food, health, and security to everyone, while working for environmental conservation and sustainable development. The SDGs were adopted by the UN in Paris in 2015, to produce a set of universal goals that could meet the urgent environmental, political, and economic challenges facing the world, “Leaving no one behind”.
Examples and experiences of different countries show that while it is possible to make significant progress towards leaving no one behind in short periods, to achieve it in a true sense requires a complete transformation of strongly established deep-rooted economic and political systems and business models. Much of these are often based on unequal wealth distribution. To leave no country behind, there lies an inherent need to have transformative social policies that integrate universal and targeted actions.
To achieve the real objective of leaving no one behind, the international action must be supportive, financing development strategies of countries that lag, and ensuring that effective channels are in place working on global wealth distribution. The goal should be to have a system where equal distribution of income and development opportunities are provided at the international level.
The Kalangala Local Economy-Wide Impact Evaluation (LEWIE) was designed to evaluate the impact of oil palm production on incomes, welfare, production activities of project beneficiaries (oil palm farmer households) as well as non-beneficiaries in Kalangala district. The LEWIE was led by Prof. Edward Taylor of University of California, Davis, who worked with a team from the Ministry of Agriculture, Animal Industry and Fisheries and completed in October 2017. Below is a summary of the findings:
-Per capita income: The per-capita expenditures of both permanent residents (both oil palm farmers and non-oil palm farmers) and workers in the estates (both nucleus and smallholder) exceed the average per capita income of Uganda. Kalangala residents were found to earn approximately UGX 3.3 million (USD 908), the worker households’ expenditure was UGX 2.8 million (USD 778) while the average per capita GDP for Uganda was USD 615.3 in 2016.
– Business formation: There has been an evident increasein the establishment of businesses in Kalangala. The study found that 20% of all oil palm households operate at least one small business in Kalangala while 50% of non-oil palm farmers operate at least one business in Kalangala. The average age of the businesses was 5.2 years and business formation increased after 2007 and especially after 2010, when oil palm harvesting started in Kalangala.
– Impact of additional acreage of oil palm: A 1 acre expansion of oil palm increases the total real income earned in Kalangala to sh1.93 million annually. The additional acre also increases employment in oil palm by approximately 31 additional worker days. The largest income gain is to the oil palm producing households whose real income raises by sh1.02 million per additional acre of oil palm. The findings showed that the real income in households that do not cultivate oil palm increases by sh800,000 and oil palm worker households by sh110,000. The additional acre also increases retail sales in Kalangala by sh660,000 and expands non-agricultural production by sh490,000.
The study also showed that a 1% increase in mature oil palm acreage (equivalent to 108.7 additional acres of mature oil palm) increased the real income in Kalangala by sh210 million.
– Impact of the change in price for oil palm fresh fruit bunches: The findings showed that a 1% price increase raises the value of oil palm fruit production by sh187.5m. This results in a sh410m real income increase in Kalangala. The study showed that the price increase stimulates production in all sectors except fish. The retail sales rise by sh141m while crop and livestock production increase by sh15m and sh14m respectively, and other production in Kalangala increases by sh105m.
– Impact of increased productivity on oil palm plantations: The study found that a 10% increase in oil palm productivity for smallholder farmers raises real income in Kalangala by sh4.3 billion shillings with sh1.8bn being gained by non-oil palm producing households and sh2.2bn being gained by oil palm farming households. Households of the oil palm laborers also benefit from higher productivity on the oil palm plantations with a real income of sh225bn.
The LEWIE findings revealed the importance of oil palm cultivation not only for oil palm farmers but also for the Kalangala economy as a whole. First of all, as oil palm acreage expands, the farmers’ demand for labor and other inputs also increases, and payments to the oil palm laborers spreads benefits to their households.
As profits increase in oil palm farmer households and wages rise in laborers’ households, these households’ expenditures on goods and services supplied by other households and businesses in Kalangala increase.
Market linkages spread the benefits of oil palm production through the entire Kalangala economy. The study reveals how the Kalangala economy has grown in tandem with oil palm expansion, and why there is a high correlation between acreage in oil palm and new business formation.
Government of Uganda is expanding Oil Palm growing to Buvuma, Mayuge, Bugiri, Namayingo, Mukono, Buikwe, Masaka, Kalungu, Rakai and Kyotera Districts inclusively and sustainably.
Anthony William Wanyoto
Communications & Knowledge Management
National Oil Palm Project