OIL PALM II

closed

The Second Oil Palm Project will provide for consolidation of Phase I development of the nucleus plantation and smallholder/outgrower plantings. It will also increase palm oil production through an additional 2,500 ha of outgrower plantings. The main components include: vehicles, equipment, and housing for nucleus estate and oil mill employees; inputs, extension services, and credit to smallholders/outgrowers; consultant services; training; and development of an oil palm research program. There are no unusual technical project risks, and implementation problems are expected to be minimal since the project will be based on the institutions and experience of Phase I. However, the project faces risks related to: (a) the high rate of domestic inflation which, if it continues, could lead to cost over-runs, and (b) the availability of foreign exchange to meet recurrent costs of imported farm inputs. However, in view of satisfactory experience with the Government's contributions under Phase I, and assuming continued efforts by the Government at containing inflation, these risks are significantly reduced.