Nigeria – Politicians set their sights on palm oil

Nigeria

Until independence in the 1960’s, Nigeria accounted for 43% of the global production of palm oil. Sadly today it is a net importer of the oil. The government has promised to revive the struggling industry, though its greatest challenge is the disappearance of small holder farmers ready to produce palm.

With a population of nearly 180 million people, Nigeria’s palm oil demand totals 2.86 million tons (Mt). Around 1.56 Mt of this is used for personal consumption and 1.3 Mt goes to the local industry, according to the Nigerian Bureau of Statistics in its November 2017 publication. However, Nigeria’s national production is only 970,000 t according to the USDA report.

Nigeria was the leading global producer and exporter in the 1960s, controlling more than 43% of the international market and generating 82% of its foreign revenue. Today, the former King of Africa ranks 5th in the global table of production, representing less than 2% of world supply. In 1965, Nigeria produced 156 000 t, Malaysia 138 000 t and Indonesia 123 000 t. Then came the oil boom, and with that a shift of attention to the black gold. Palm oil production began to decline as the population grew, and by the 1990s, Nigeria’s contribution to world production went from 43% to 7%. Currently, the country accounts for only 1.57% of global production and continues to import an impressive quantity.

Today Nigeria fills its palm oil deficit through importing from Malaysia and Indonesia. Recently, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, brought this to the government’s attention. In 2017, the country spent 116.3 billion naira (€262.8 million) importing Palm Oil. «With a constantly growing population, strong demand for palm oil and its derivatives coupled with the country’s declining production, Nigeria will spend even more this year purchasing palm oil,» the minister said.

A situation that the Nigerian economist Bismark Ridwan considers to be shameful, a true economic tragedy. Africa’s second largest economy has all the assets to be self-sufficient, it was not long ago it was the market leader in Palm Oil.

Parliament to the rescue

Faced with this ongoing issue, the Nigerian Senate took hold of the situation in February 2018 calling for Nigeria to regain its former position as the market leader in production of Palm Oil. He set up a project called «Urgent Need to Curb the Importation of Palm Oil and Its Derivatives to Protect the Palm Oil Industry in Nigeria». The author of the bill, Senator Francis Alimikhena from the Progressive Congress, estimates that 70% of the Nigerian population consumes palm oil. Such large imports is contrary to the government’s efforts to diversify the economy away from oil and petroleum products and instead focus on increasing agricultural production. At the same time, Senator Theodore Orji of the opposition Democratic People’s Party advocates the establishment of a special fund to encourage production, while the Deputy Speaker of the Upper House of Parliament Ike Ekweremadu, promised that the Senate will pass laws this year to resurrect the palm oil industry.

Scattered Production Areas

As the sector builds towards recovery, the Nigerian Institute for Palm Oil Research (NIFOR) estimates that one of the biggest challenges facing them is the issue over the dispersion of palm plantations. More than 80% of national production is spread over 1.6 million hectares managed by small holder farmers. These farmers have limited financing and no access to good seeds or technologically advanced treatment methods. The managed palm plantations, meanwhile, make up around 300 000 ha.

However, according to NIFOR, the government is making significant plans to increase planting areas and yields. Their aim is to increase production to meet domestic demand and reduce imports in the short to medium term. The authorities are developing strategies to become a major supplier of palm oil in sub-Saharan Africa and regain its position as the world leader in the palm oil market.

To do this, the federal government has collaborated with the Ministry of Agriculture and Rural Development. Together they have partnered with with the two main companies in the industry, Okomu Oil Palm and Presco. Okomu Oil began in 1976 as a pilot project of the federal government with the aim of reviving production. In 1990, Okomu Oil was privatised and on September 19, 1997, became a public limited company. Since then, the company has grown significantly, with 8,800 hectares of palm trees and an oil mill with a capacity of 30 mt per hour. Presco has plantations covering 11,760 hectares with 8,347 mature trees, they have an oil mill capable of processing 60 mt of grain per hour and a refinery capable of processing 100 t per day.

The Government wants 24 of their 36 states to produce palm oil, with each state producing 500,000 t of palm oil per year. A huge challenge no doubt.

Daouda Aliyou