The project is making satisfactory progress with several major objectives met in oil palm and cocoa.
Oil Palm
In oil palm, the mobile card payment scheme which guarantees payment of family and hired labour for work on smallholder oil palm blocks has been introduced at Bialla. The payment initiative, which was developed and trialled under ASEM2002/014, will be introduced to Hoskins smallholders.
In addition, a draft Clan Land Usage Agreement (CLUA) has been developed after extensive consultation with OPIC, customary landowners and migrant smallholders growing oil palm on customary land in Bialla, Hoskins and Popondetta. OPIC supports introducing the new draft CLUA on future smallholder blocks involving land transactions between "outsiders" and customary landowners. The project is in the process of seeking agreement with OPIC to conduct a trial of the new agreement to late 2009 or early 2010.
Cocoa
Cocoa Pod Borer (CPB) is now having a devastating impact on the livelihoods of smallholder cocoa growers in ENBP with almost 90% loss of production in areas with high CPB infestation rates. A social and economic impact assessment of CPB was completed in May 2009, which included a strategy for addressing the problem. Managing CPB requires farmers to raise inputs of labour to undertake CPB management techniques such as weekly harvesting (every mature pod), centralised pod breaking and pod burial. High levels of block management (pruning, shade control and weed control) must also be maintained for effective control of CPB. PNG cocoa farmers conventionally use a low labour input system of production (the foraging strategy) which, with CPB present, can lead to over 90% crop losses. The project is working with commercial sector partners to deliver new forms of extension that aim to mobilise labour for effective control of CPB. While still early days, there are promising results emerging for the monitoring programme with some farmers switching to a high input system and effectively controlling CPB.

The project has two broad objectives: 1) to improve extension delivery through greater commercial sector engagement with smallholders; and 2) to develop effective land use agreements between the commercial sector and customary landowners. The project is making good progress towards these objectives.
In oil palm, the mobile card payment scheme which was designed to mobilise labour in smallholder production by guaranteeing payment of family and hired labour for work on family oil palm blocks has been introduced at Bialla. The payment initiative, which was developed and trialled under ASEM2002/014 is now in the process of being bedded down at Bialla.
In addition, a template for a Clan Land Usage Agreement (CLUA) which was developed last year in consultation with OPIC, customary landowners and migrant smallholders growing oil palm on customary land in Bialla, Hoskins and Popondetta is now available at all OPIC project sites. The template is also being modified for in-fill plantings by the Smallholder Agricultural Development Project, funded by the World-Bank. This new CLUA gives greater recognition to the underlying land tenure rights of the customary landowning group while providing greater tenure security for famers with secondary rights in the land.
The project is also evaluating the range of land use agreements between commercial sector organisations and customary landowners in the cocoa, coffee and oil palm sectors.
In cocoa, the Cocoa Pod Borer (CPB) is having a devastating impact on the livelihoods of smallholder growers in ENBP with almost 90% loss of production in areas with high CPB infestation rates. Provincial production has fallen by around 50% to 10,000 tonnes in 2009, and CPB has now spread to Bougainville where it is anticipated it will decimate the cocoa crop. The pest is causing enormous hardship by undermining people's capacity to earn a living, to meet their needs in education and health and to maintain their general quality of life. However, it is possible for farmers to manage CPB but this requires shifting from the low labour input system of smallholder production that typifies most export cash crop cropping in PNG to a high labour input system involving weekly harvesting, regular pruning and shade control and other new practices to control CPB.
Over the past year project staff have been working with an exporting company, NGIP-Agmark, on new extension strategies to assist farmers make the transition to high input farming. This extension strategy is proving successful with many farmers now adopting the high input system of production. Monitoring of the strategy reveals that those farmers able to make the switch to high input farming are earning good returns on their labour. High input production means much reduced losses from pests and diseases like Black Pod and a yield response to pruning and improved maintenance of cocoa stands. This is leading to much higher yields than those achieved pre-CPB under the low input system of production.
The switch to high input farming involves a lifestyle change for smallholder families. To make the transition easier for families, centralised processing leading to higher quality and higher value dry beans is being trialled by the company. This reduces some of the labour demands on smallholder families by centralising processing, thereby providing more time for growers to undertake maintenance and CPB control practices on their family cocoa blocks. However, not all families are willing or able to make the transition to high input farming. For these farmers the project has been investigating options for diversification into alternative crops that do not depend on the high labour inputs now required for cocoa production in a CPB environment.

The two broad objectives are to: 1) improve extension delivery through greater commercial sector engagement with smallholders; and 2) develop effective land use agreements between the commercial sector and customary landowners.
The mobile card payment mechanism to mobilise labour in smallholder oil palm production by guaranteeing payment of family and hired labour is operating at Bialla. Growers are finding new ways to adapt the payment mechanism to meet their needs. Elderly growers reluctant to hand over block management to their sons because of potential loss of income have adopted the card to guarantee an income in their retirement, thereby lessening the generational conflict and disruption of production often associated with the transfer of block management from fathers to sons. Growers call this the "papa levy".
The new template for a Clan Land Usage Agreement (CLUA) developed in consultation with customary landowners, settlers and other stakeholders is now available at all OPIC project sites, and is being modified for in-fill plantings by the Smallholder Agricultural Development Project, funded by the World-Bank. This new CLUA gives greater recognition to the underlying land tenure rights of the customary landowning group while providing greater tenure security for famers with secondary rights in the land.
The project is also evaluating the range of land use agreements between commercial sector organisations and customary landowners in the cocoa, coffee and oil palm sectors.
The Cocoa Pod Borer (CPB) has spread to eight provinces. By the end of 2010, production in ENBP - the worst affected province - fell by 80% to 5000 t. The pest is causing severe financial hardship to smallholder families with many families reverting to subsistence production as a survival strategy. Smallholders can adapt to living with CPB, but they must adopt much more intensive cocoa management practices including weekly harvesting, regular pruning and shade control and other labour-intensive CPB control techniques.
Working with the exporting company, NGIP-Agmark, the team has been monitoring the delivery, uptake and effectiveness of new extension strategies (Training by Association model) and other services provided by the company. New services for growers include: purchase of cocoa at the roadside edge of the cocoa block, seedling support program including credit and training in cloning techniques and nursery establishment, general extension and advisory services including CPB training and farmer group support, a savings scheme and fermentary credit scheme for farmers, and farm diversification support for growers affected by CPB.
For the 200 farmers participating in NGIP-Agmark's Training by Association model, the results have been remarkable. A relatively high proportion of farmers has successfully made the transition to high input farming, and most of them are achieving yields well above levels of pre-CPB times. General improvements in block maintenance and sanitation mean that losses due to pod rot and Black Pod (around 30% of pods in pre-CPB times) are negligible, and losses to CPB are on average less than one pod per tree.
The switch to high input farming involves a lifestyle change for most smallholder families. However, time allocation surveys reveal that smallholder families that have successfully switched to high input farming have more leisure time and spend more time on community and church activities than families who have not made the transition. This is because the latter group have to spend more time on food garden production for home consumption and sale at local markets. Not all families are willing or able to make the transition to high input farming, and for these farmers the project has been investigating options for diversification into alternative crops that do not require high labour inputs.