How Smallholder Farmers Are Driving Africa’s Palm Oil Economy

Palm oil is one of Africa’s most important agricultural commodities. While large plantations often dominate headlines, it is smallholder farmers who are quietly underpinning the continent’s palm oil economy. From boosting national production, sustaining livelihoods to shaping sustainable value chains, smallholders are central. But their influence comes with challenges—and untapped potential.

In this article, we’ll explore how smallholder farmers contribute to Africa’s palm oil sector, highlight real-life examples of success, examine obstacles, and outline what needs to happen for smallholders to fully power the future of palm oil in Africa.

What is a Smallholder in Palm Oil?

“Smallholder” refers to farmers who cultivate relatively small parcels of land (often under 5-10 hectares in palm oil contexts), typically using family labour, with limited access to capital, inputs or modern infrastructure. In Africa, smallholders can be independent or grouped in cooperatives, but are often less mechanised than industrial plantations; many face issues around access to markets, extension services, credit, etc.

Key Statistics: Smallholders’ Share of Palm Oil in Africa

Several recent reports give us insight into how much smallholders contribute to palm oil production in Africa:

• According to the 2025 Palm Oil Barometer: Procurement for Prosperity (Solidaridad, et al.), smallholders in West Africa manage:

  • ~80% of production in Nigeria
  • ~81% of oil palm area in Ghana
  • ~73% in Côte d’Ivoire
  • ~70% in Sierra Leone 3News+4UkrAgroConsult+4African Examiner+4
• Smallholders in Africa are estimated to produce more than 60% of palm oil demand on the continent; globally, they contribute around 40% of the planted oil palm area and about 40% of global demand for palm oil when smaller growers are included. AGRIS

• However, yield gaps are large. For example, in Cameroon, industrial plantations may average fresh fruit bunch (FFB) yields of ~19.3 tons/ha, whereas smallholders average much less—some estimates show ~5 tons/ha or even lower. Frontiers

These numbers show that while smallholders are heavily present, the productivity and returns they get are often far below potential.

Real-Life Examples: Successes Among Smallholder Smallholders

To see how smallholders are “driving” the industry, we’ll examine concrete initiatives where smallholder performance improved dramatically.

Nigeria: Solidaridad & RSPO Support Raising Yields

• In Nigeria, in Cross River and Akwa Ibom states, a project led by Solidaridad in partnership with RSPO (Roundtable on Sustainable Palm Oil) worked with ~3,000 independent smallholder farmers. Solidaridad Network
• Before the intervention, farm yields (fresh fruit bunches, FFB) were about 2.7 tons per hectare per year. After introducing best management practices (BMPs) like improved pruning, fertilizer application, ground cover management, canopy management, better harvesting techniques, yields rose to ~7.4 tons/ha per year; some farmers even reached ~10.4 tons/ha. Solidaridad Network
• These yield improvements translated into higher incomes, better farm incomes for households, and improved livelihoods. The project also helped smallholders form groups, access training, adopt sustainable practices, and move toward certification. Solidaridad Network

Ghana: Golden Star Oil Palm Independent Smallholder Certification

• Golden Star Oil Palm Farmers Association (GSOPFA) in Ghana became the country’s first independent smallholder RSPO-certified group (and second in Africa). RSPO
• Under this model, smallholders adopt sustainable agriculture practices (including pruning, circle weeding, canopy management, proper harvesting, soil fertility management). As a result, GSOPFA achieved yields of over 18 MT per hectare for certified fresh fruit bunches, roughly three times the national average of smallholders. RSPO
• Certification also enabled access to markets that pay premiums for sustainable produce, improving income and livelihood among participating farmers. RSPO

Innovation in Ghana: Best Management Practices (BMPs)

• A study (“Best management practices for sustainable oil palm production: the case of smallholder farmers’ adoption in Ghana,” 2022) examined how adoption of multiple BMPs affects yields. Taylor & Francis Online+1
• The findings: fertilizer application alone made a statistically significant difference. But smallholders who adopted five or more BMPs saw even greater yield gains. The study also found that plot size, commitment, and the ability to absorb investment costs influenced the effectiveness of BMP adoption. Taylor & Francis Online+1

Cameroon: Practices & Yield Gaps

• In Cameroon, smallholders often use fewer inputs than large industrial plantations. According to a 2025 study in Sustainable Food Systems, smallholders use under 30% of the inputs that industrial producers do. Their FFB yields averaged about 5 tons/ha/year, whereas industrial operators average much higher; some smallholders in certain conditions get up to ~7.7 tons/ha/year. Frontiers

• These gaps reflect both biological/agronomic yield limitations and socioeconomic/infrastructure barriers. Improving access to inputs, training, and better farm management could raise yields substantially. Frontiers+1

How Smallholders Drive More Than Just Production

Beyond volume, smallholders contribute in several key ways to Africa’s palm oil sector:

1. Livelihoods and Poverty Reduction:- Many rural households depend on palm oil farming for income. Even modest improvements in yield or farm management can substantially increase disposable income. In Nigeria, for example, smallholders raised household income through yield increases (Solidaridad project) that allowed them to invest in other farm assets or education. Solidaridad Network

2. Food Security:- Palm oil is both a food staple and a source of daily fat for many families. Smallholders often supply local markets, reducing dependency on imported refined oil. Their contribution matters for national food security. The Palm Oil Barometer 2025 notes that West Africa still consumes more palm oil than it produces. MyJoyOnline+2UkrAgroConsult+2

3. Preservation of Agro-Biodiversity and Traditions:- Smallholders often maintain mixed agroforestry, wild groves, intercropping with food crops. These practices help preserve soil fertility, protect biodiversity, and reduce environmental impacts. For example, in Cameroon smallholders frequently intercrop, use agroforestry, etc. Frontiers

4. Sustainability Innovation:- Through groups and certification initiatives, smallholders are experimenting with more sustainable practices — RSPO certification (e.g. Ghana’s GSOPFA), BMPs, climate-smart practices (e.g., NISCOPS-2 in Nigeria) MSME Africa+2Solidaridad Network+2

Key Challenges that Smallholders Face

Despite their importance, smallholders are often disadvantaged relative to industrial estates. Some of the major challenges include:

1. Yield Gaps and Low Productivity

• As noted in Cameroon, smallholders often produce FFB yields much lower than industrial norms: maybe ~5 tons/ha vs potential of ~20 tons/ha under ideal conditions. Frontiers
• In Ghana, yields are well below what could be achieved if BMPs are widely adopted. A study indicates yields in Ghana’s smallholder sector could increase substantially if harvesting, nutrient management, and other best practices are scaled. Opie J

2. Limited Access to Finance, Inputs, and Infrastructure

• Many smallholders struggle to obtain quality seedlings, fertilizer, mechanised tools, and improved mills.
• Poor roads, transport, storage facilities increase loss of FFB or quality drop before reaching mills.
• Access to credit is limited or comes at high cost. Certification fees, input costs, transportation cost are barriers.

3. Weak Market Access and Unequal Value Distribution

• Despite managing large portions of the production area, smallholders often get very little of the profit margin. According to the Palm Oil Barometer 2025, though smallholders do ~80% of production in Nigeria and like figures in Ghana, many receive a relatively small share of value chain profits. UkrAgroConsult+23News+2
• Middlemen, exporters, refiners often capture higher margins due to economies of scale, branding, logistics, certification.

4. Challenges with Certification & Sustainability Standards

• RSPO certification, sustainable agriculture contracts, climate-smart practices have costs—financial, labour, knowledge. Not all smallholders can afford or understand them.
• Market demands (international buyers) increasingly require traceability, proof of sustainability, environmental compliance—these are harder to meet for smallholders.

5. Environmental and Climatic Risks

• Climate change (temperature rise, variability in rainfall) can reduce yield, increase pests/diseases. (FAO review) AGRIS
• Land tenure insecurity or conflicts over land/wild groves can discourage investment.

Opportunities & What Needs to Be Done

To leverage smallholders’ strength and remove constraints, a number of strategies have emerged from recent initiatives and studies. Here’s what seems to be working or promising.

1. Adoption of Best Management Practices (BMPs)

• In Ghana, adherence to more BMPs (fertilizer use, proper pruning, good harvesting, canopy management, regular circle weeding etc.) directly correlates with significantly higher yields. The Ghana “Best management practices” study showed that smallholders using five or more BMPs achieved higher output. Taylor & Francis Online+1
• Training of smallholders in Nigeria under Solidaridad raised yields from ~2.7 to ~7.4 tons FFB/ha. Solidaridad Network

2. Certification & Sustainable Group Models

• GSOPFA in Ghana: RSPO independent smallholder certification delivered yields ~18 tons/ha and access to premium markets. RSPO
• NISCOPS-2 in Nigeria: supporting 12,000 smallholders to improve sustainability, climate-smart farming, possibly improve access to markets. MSME Africa

3. Innovation Platforms & Institutional Support

• In Ghana, innovation platforms have been used to bring together smallholders, local authorities, researchers, and extension services to improve practices and reduce free fatty acid (FFA) levels in crude palm oil. biblio1.iita.org
• Strengthening value chains with improved processing technologies (improved mills vs traditional) increases profit margins. In Nigeria, smallholder processors using improved technologies had significantly higher net revenues than those using traditional ones. African Journals Online

4. Yield Intensification to Reduce Land Pressure

• A Ghanaian study (recent) indicates that increasing smallholder yields to biophysically achievable levels (e.g., ~21 tons FFB/ha) could meet national demand for crude palm oil without expanding land area. Opie J
• That not only improves profitability but helps preserve forests and reduce environmental degradation.

5. Policy & Market Reform

• From reports like Palm Oil Barometer 2025, there is a strong call for fairer procurement practices, better access to premium markets, improving infrastructure, and public policy to support smallholders. UkrAgroConsult+1
• Governments, NGOs, and private sector collaborations (e.g. Solidaridad, IDH) are stepping in. E.g., NISCOPS-2 in Nigeria is a joint initiative to help smallholders adapt to sustainable, climate-smart methods. MSME Africa

What the Future Might Look Like if Smallholders are Fully Empowered

If the obstacles are addressed, smallholders could drive a major transformation in Africa’s palm oil landscape:

• Increased national production: With yield improvements and adoption of BMPs, many countries could reduce imports and satisfy domestic demand entirely.
• Export potential: Certified smallholder groups could tap into premium markets in EU, India, etc., for sustainably produced palm oil.
• Income growth & poverty reduction: Improved livelihoods in rural areas, greater economic stability for smallholder households.
• Environmental benefits: With yield intensification, better farm practices, agroforestry, forests and ecosystems can be preserved, carbon stored, biodiversity protected.
• Resilient value chains: Local processing, better logistics, stronger institutions will make the sector more resilient to shocks (climate, market, policy).

Actionable Steps for Stakeholders

For smallholders, governments, NGOs, and private sector actors, here are key steps to support smallholders in driving the palm oil economy.

Conclusion

Smallholder farmers are not just participants in Africa’s palm oil economy — they are foundational. Without them, national production would be drastically lower; many households would face food insecurity and loss of livelihood. The recent data and case studies are clear: when smallholders get training, access to inputs, fair markets, and sustainability tools, they can dramatically increase yields, income, and environmental outcomes.

The road ahead is challenging—yield gaps, market inequities, certification costs, infrastructure deficits, climate risk—but the opportunity is real. Empowering smallholders is not just socially just; it is economically smart. For Africa to realize its palm oil potential, smallholder farmers must be front and center.