Nigeria
was the world largest producer of palm oil between 1950s and 1960s. It
had a market share of 43 per cent, supplying 645,000 metric tonnes of
palm oil, on annual basis consumers across the globe.
Sadly the country fell from being the largest producer of oil palm to
net importer of the product. It is not surprising therefore that shortly
after the commodity was included among the 41 items banned by the
Federal Government from accessing official foreign exchange markets in
June 2015, the cost of local palm has risen beyond the reach of many.
The ban has increased the demand for the product in the market, while
production has not increased.
Nigeria produced 930,000 tonnes of palm oil in 2013 and the forecast
for the 2016-2017 season is 970,000 tonnes, making it Africa’s largest
producer and the world’s fifth, behind Indonesia, Malaysia, Thailand and
Colombia, according to data from the US Department of Agriculture
(USDA).
The restriction placed on the commodity to benefit from foreign
exchange forced the manufacturers who used to import palm oil to source
for the commodity locally, which is part of the reasons the price of
palm oil increased significantly and the product becoming scarce across
major markets in the country between 2016 and 2017.
Manufacturers, who use the product in the manufacture of ice cream,
margarine, cosmetics and confectionaries, among others, are now
competing with households for palm oil as they could no longer import
palm oil listed among the 41 items restricted from accessing foreign
exchange in the local market by the Central Bank of Nigeria (CBN).
Daily Sun learnt that a 25-litre can of palm oil, which sold for N6,500
in January 2016, now sells for between N22,000 and N25,000, an increase
of 284 per cent while a bottle of palm oil, which sold for N220 in
January 2016, sells for N720, an increase of 227 per cent. The five
litre keg of palm oil sold for N1,300 in 2016 now goes for N5,000, an
increase of 284 per cent at major markets and supermarkets in the
country.
A palm oil trader at the popular Daleko market, Madam Foluke Agboola,
who spoke to Daily Sun, said that some months back, the price of the
commodity was very high.
She said 25 litres was selling between N22,000 and N25,000 but last
week, the price came down a bit to at least N16,000, saying by April,
the price will come down to normal but between June and July, which is
rainy season, the price will also rise by a certain percentage.
Nigeria produces one million metric tonnes of palm oil per year, with
local consumption estimated at 2.7 million metric tonnes which put the
demand supply gap at 1.7 metric tonnes per year.
USDA and Vetiva Research stated that Nigeria currently exports 900,000
metric tonnes of palm oil and earning $594.9 million at today’s price of
$661 per tonne and this represents 1.5 per cent of the global 58.8
million metric tonnes output.
Ironically, despite being among 41 items banned from accessing official
foreign exchange markets in June 2015, Nigeria imported palm oil worth
1000 metric tonnes with the growth rate of 33.33 per cent in 2016,
according to IndexMundi, a data portal that gathers facts and statistics
from multiple sources and turns commercial use.
Since Nigeria could still import 1000 metric tonnes of palm oil in
2016, being among the 41 items banned from forex market, it is obvious
there is loophole in the Federal Government policy.
Speaking to Daily Sun, National President of Palm Produce Association
of Nigeria, Olatujoye Henry, said, “the price of palm oil has started
going down and there is a lot of demand and supply. The government
policy that removed palm oil from the list of commodities that will
benefit from foreign exchange has really helped because there is no
importation and there is now dependence on domestic production.”
He advised government to encourage investment in palm plantation
development, saying there was urgent need for government to provide
enabling environment in terms of soft loans, guarantee for equipment for
processing to come into the country with less duty on them.
According to him, government should also encourage backward integration of palm plantation in the country.
On the challenges facing the association, he said: “The challenges
facing the association are the normal challenges. Everybody is begging
the government for assistance, which is not supposed to be. One of the
challenges facing our association is funding. We don’t have the capacity
to move the association forward in terms of funds. To meet domestic and
international demand in palm oil, government must play its role by
assisting us and providing other incentives.”
Meanwhile, the Deputy Managing Director of Peniel Gera International
Limited, a seed company, Ojiefoh Enahoro Martins, who is also a palm oil
farmer in Delta State, said the major problem with palm oil in Nigeria
is lack of improved varieties.
Now that government’s policy has prevented the commodity from accessing
foreign exchange, he said if drastic actions and steps are not taken,
by 2020 Nigeria would start importation of palm oil.
He lamented that the Nigerian Institute for Oil Palm Research (NIFOR)
that was supposed to serve as a reference centre has been politicised,
stressing that the yield of palm oil in Nigeria is low compared to other
producing countries like Malaysia and Indonesia.
He added: “We remember vividly that the Malaysian government took
seedlings from us and improved it and today they are a major exporter of
palm oil in the world. For us to be among the major palm producing
countries, our local seeds need to be improved. Government, over the
years, has not shown concern for oil seed products; not only palm but
majorly oil seeds products.
“The local fabricating machine for extracting oil has less capacity and
imported foreign machines are always expensive for local farmers. We
purchase local machines from Agbor, Delta State, to substitute for
imported machines. Oil seeds products are crucial to over 98 per cent of
Nigerians and it is too important to ignore.”
Before now, he said Nigeria played a vital role in palm oil production
and its quality was the best. But since early 90s the reverse has been
the case and the country is facing dwindling production.
To revive the sector, he stated that improved seedlings and palm estate
projects for communities by government have to be introduced across the
major palm oil producing states, including Cross River, Edo, Delta,
Ondo, Oyo, Ogun, Osun, Ebonyi, Imo, Abia and Kogi states.
