By NewsBits
Despite featuring prominently on a June 2015 list of import item not valid for forex by the Central Bank of Nigeria (CBN), Nigeria imported at least N299.6bn of palm oil from 2017 to 2022, an analysis of Nigeria’s Foreign Trade by Daily Trust has revealed.
The reports, which are released quarterly by the National Bureau of Statistics (NBS) indicate that the product itemed ‘Palm Crude Oil’ is often among the top five imported agricultural products into the country. The oil palm tree produces high-quality oil used primarily for cooking in developing countries. It is also used in food products, detergents, cosmetics and, to a small extent, biofuel.
According to the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, Nigeria imported 302,000 metric tons in 2017 despite placing the product in the forex exclusion list. This, according to experts, is due to the current production not meeting local demand as the 1.4 million metric tons averagely produced is below the 3 million consumed annually.
Daily Trust reports that the total figure of the product imported may be higher as the NBS reports did not include the amount of the product imported in some quarters it did not make it to the top five imported agricultural products.
A Barrel Of Palm Oil Sells For Over $600
Speaking on potentials, a farmer and chairman of Agbedes Agric Projects, Prince Adewole Adebayo said Nigeria should be doing more because it has the knowledge, land, climate, and history to do very well.
The SDP presidential candidate at the just concluded election said: ‘Today, a barrel of oil palm sells for over $600. The day crude oil touches $150 per barrel, the whole world will shout.” Analysis showed that Malaysia is majorly where the product is sourced with N151.5bn of the product imported during the period.
This is followed by India with N65.2bn, Ivory Coast with N22.4bn of the product, China N20.3bn, Singapore N20.6bn, Indonesia N17.1bn, Columbia N1.4bn, United States N727m, Ghana N130.6m and Cameroon N4.26m.
Analysis on yearly importation disclosed that the product was imported more in 2021 as N148.2bn worth of palm oil was imported. This is followed by 2022 with N70.2bn and 2018 with N32.2bn. Also, in 2020, N22.bn of the product was imported while in 2017, N21.2bn and 2019 with the least importation with N19bn of the product imported.
How Malaysia Got Oil Palm Seeds From Nigeria In The 1960s
Historical records suggest that Nigeria had a very fine collection of gen plasm-the oil palm planting material, which the world liked. Most of the palm oil then came from the wild groves. They were not planted because we had a natural grove of oil palm.
The oil palm is native to West Africa and is endemic to Nigeria. Eventually, the Malaysians understood that they had to have a West Africa gen plasm and since the Nigerian Institute for Oil Palm Research (NIFOR) had established globally known gen plasms, they had to come and collect materials. The Malaysians started with the industry long before but exchanged gen plasm with Nigeria by 1960 and mostly 1970s.
Nigeria Trailing Behind
Findings by Daily Trust revealed that since the exchange, not much has been achieved by Nigeria and it continued to import the product. On the other hand, Malaysia is the world’s second largest producer and exporter of palm oil, after Indonesia.
In 2020, it exported around 16.2 million metric tons of palm oil and palm-based products. These exports were valued at around 73.3 billion Malaysian ringgit. In all, the palm oil industry contributed around 36.9 billion ringgit to Malaysia’s total gross domestic product.
Why Local Capacity Cannot Meet Consumption Demand
Despite efforts by the federal government to resuscitate palm oil production in the country, having owned 40 per cent of the global market share of palm oil production before gaining independence, a report by PWC stated that Nigeria’s oil industry is mostly dominated by small-scale farm holders, which account for over 80 per cent of local production with well-established companies accounting for less than 20 per cent of the total market.
It added that the two largest producers, Okomu and Presco, contribute largely to the market share but the dominance of small farm holders in the palm oil market has resulted in low output compared to the country’s production potential.
“This is because local farmers’ manual harvesting techniques are outdated, often resulting in significant wastage during harvesting. In Nigeria, lack of investment in palm oil extraction technology and technical incompetence/inadequate training have resulted in poor management of palm oil plantations over the years, causing some of them to cease operations,” the report said.
Efforts To Improve Local Production
To improve production, the federal government through the CBN incorporated smallholder palm oil farmers into its special intervention programme. But the Managing Director Okomu Oil Palm Company, Dr Graham Hefer, recently called for a review of the programme as cash crop farmers were yet to fully benefit from the programme.
According to Hefer, “It is easy for farmers engaged in annual crops to meet their targets. This doesn’t happen with cash crops because, in the first three years of oil palm production, you are unable to break even as the tree doesn’t produce one fruit.
“You only begin to break even normally between five years and seven years in oil palm production. And that is a long time. This is what we want the bank to understand so that it starts to grant long-term loans under the programme,” he said.
Similarly, the Managing Director of Foremost Development Services Limited and Advisor to Plantation Owners Forum of Nigeria (POFON), Mr Fatai Afolabi, said Nigeria’s palm oil industry is different from what is obtainable in Malaysia.
According to him, “Palm oil had been a major factor in Malaysia, reducing poverty from 50 per cent in the 1960s, down to less than five per cent. Nigeria can also achieve poverty alleviation through the industry.” He said unlike Malaysia, in Nigeria, little over 600,000 hectares are used to cultivate palm oil.
In his submission, the Chairman of POFON and CEO of Aden River Estates Limited, Emmanuel Ibru, in a previous interview with Daily Trust identified the challenges facing the industry as “Infrastructural and transportation challenges, and scarcity low-skilled labour in the rural areas. People migrate from rural areas into the cities and secondly, the advent of social media, from my point of view, is a challenge.”
He said youth in the country are interested in what is happening in cities and they want to have all the good things in life.
“However, they are not ready to work for it. For instance, in my community, I have a problem with labour on a regular basis, because most of the youth there do not want to do the work because they complain that it is too difficult. And secondly, they see their friends who move to the city to do fraud and come back regularly with cars, gold chains and they entice them away. So, it’s a big problem.”
Work, Vision Needed To Return To Revamp Sector – Expert
Speaking on how palm oil import is draining Nigeria’s foreign exchange reserve, a financial expert, Paul Alaje, said the more we import products that can be produced locally; the more we are destroying our economy.
Alaje noted that different regions in the country have the capacity to make the country self-reliant in palm oil production but neglect on the part of the government and the people is the bane of the sector.
“We have inadequate support for farmers in this region and where we have output, those outputs are not properly processed. Why we continue to see that huge import is because production capacity continues to go down while consumption requirement continues to increase and something must fill the gap and, in this case, what is filling the gap is importation.”
He added that the import comes with its own negative impact, including unemployment, as it will kill local producers.
“Also, we will keep growing foreign economy and it will negatively impact the foreign reserve. N200bn importation in two years is a lot of money and to a large extent, it is almost ten per cent of some states’ budget and if we are using that to import palm oil alone.”
Also speaking on the way forward, Prince Adebayo said: “Palm oil will allow us to hire more people, grow our economy, and bring in improved technology but we need the support of the government because they manage the customs, ports and can offer incentive in the area of tractor importation and the development of an off-taker policy.”
He said NIFOR as a research institute is currently under-provisioned and cannot handle the volume of improved seeds required. There is also the issue of insecurity. “I brought in expatriates who were kidnapped. I had to source for funds to secure their release and eventual repatriation, no support from the government. These are issues that people are running away from,” he said.
Source: Daily Trust
