IDH Farmfit

Okomu, Nigeria

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Okomu, located in Edo state, is one of Nigeria’s four largest palm oil producers. The company operates two palm oil mills, processing Fresh Fruit Bunches (FFB) from their own plantation into crude palm oil (CPO). In a second location, Okomu is constructing two new mills to expand its processing capacity, requiring them to increase the supply of FFB. However, due to the land tenure system, the nearby typical forest ecosystems, and the threat of sparking conflicts with surrounding communities, Okomu’s ability to expand their own plantation is limited.

Therefore, as there is a significant number of (prospective) oil palm smallholders located nearby Okomu’s mills, the company aims to integrate 5,000 smallholder farmers (SHFs) into their supply chain to fulfill their processing capacity needs, while investing in the local economy and communities.

This report provides an answer to the question: “How can Okomu source additional FFB from smallholder farmers by implementing a commercially viable outgrower model with SHFs, while improving community livelihoods and limiting deforestation?”, and recommends:

  1. Improving the business case for existing and prospective palm oil SHFs by providing farmer needs-driven services (e.g. GAP training, access to inputs, and access to suitable finance to (re)plant oil palm plantations).
  2. Developing and scaling an efficient service delivery and sourcing infrastructure enabled by collaborating with other value chain partners, and by establishing long-term relations with SFHs Okomu sources from.
  3. Acting on PPI risks and opportunities in the region enabled by a clear understanding of these risks and opportunities, and by implementing measures to mitigate and act against risks or tap into opportunities that impact the business case for Okomu, communities, and the landscape.

 

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