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Uproar in Cameroon Halts Palm-Oil Deal

May 22, 2013
Wall Street Journal

By Drew Hinshaw in Accra, Ghana and Emmanuel Tumanjong in Talangaye, Cameroon

A New York company halted its palm-oil operations in Cameroon amid an uproar from local villagers and environmental activists, a scenario that highlights the opposition to big land acquisitions that farm investors often face on the continent.

Herakles Farms said Tuesday that it suspended work on land the size of New York's five boroughs and laid off 690 workers while the Cameroon government reviews the 2009 deal. Herakles said it was working with the government to resolve the dispute and that it "always has and will comply fully and transparently with government regulations."

Herakles's problems underline the fraught legal and political issues that surround Africa's abundant farmland. Investors have acquired African land equal in size to New Mexico since 2001, according to Oxfam International, a nongovernmental organization that works on poverty-related issues.

For investors, the land is fertile and cheap. For governments, the deals attract foreign capital and technology needed to industrialize farmland and to boost food exports.

Cameroon's government agreed to lease as much as 200,000 acres for the next 99 years at $1 per 2.5 acres each year, according to company records. In return, Herakles offered to give the government the timber it cleared, which could be sold for more than $75 million, according to an open 2012 letter from Herakles CEO Bruce Wrobel to local press.

But the company faced opposition from villagers who alleged the deal stripped them of their land; from environmentalists who said the plantation cuts through two baboon-populated nature reserves; and from officials with Cameroon's forest ministry, who in memos seen by The Wall Street Journal, allege the company began clearing the forest without obtaining Cameroon President Paul Biya's final permission to lease the land.

The company believed it had all of the needed permits to carry out the work.

Cameroon is a patchwork of often conflicting laws on property rights—a legacy of having been colonized by Germany, then ceded to France and England before independence. Even where government maintains the right to lease huge swaths of fertile land, it faces resistance from villagers who survive on subsistence farming.

Still, Cameroon has proved alluring for commodity investors, who have come to clear large plantations, especially for palm oil, a crop that will see demand double from 2010 to 2020 on rising consumption in Asia, according to the World Bank. Herakles was among the first arrivals in that wave.

Denis Koutou Koulagna, secretary-general at Cameroon's Ministry of Forestry and Wildlife, said Herakles still needed President Biya's signature to complete the land lease. It isn't clear why President Biya—now in his 31st year of power—didn't signed the document. Mr. Koulagna said the project was under review while the presidency assessed the project's social impact.

Herakles believes its agreement with Cameroon's Ministry of Economic Planning gave the company the go-ahead to begin clearing forests.

The president's Communication Minister Issa Tchiroma Bakary didn't respond to requests to comment.

Meanwhile, friction has been rising between Herakles and the government. When the company announced its intention to begin clearing the forest, the Ministry of Forestry sent a February 2012 letter warning that the project cut too close to a wildlife park. That April, the ministry said it seized company logging machines.

Mr. Koulagna said his ministry conducted a fact-finding mission on Herakles's farm. The report, published in March and seen by the Journal, accuses the company of cutting down trees beyond its concession and employing "intimidation and bribery, targeting the chiefs and some few influential decision-making members of the communities" to garner backing for the project.

In April, the ministry ordered the company to cease operations until it completed a study of the project's "public usefulness."

In an open letter last year, Herakles's Mr. Wrobel said the company had obeyed Cameroonian law, and said the company had all of the approvals it needed to proceed.