By Franklin Alli
The Biblical saying “Hold fast to what you have ,” may not be appreciated until you lost the thing.
This is applicable to Nigeria, which was once a leading palm oil producer in late ’’50s and ’60s but has slumped to the fifth position among palm oil producing countries.
Available statistics showed that Nigeria then was controlling close to 40 percent of the global market share, but has crashed to 5th among leading producers of palm oil producing barely 3 percent of the global supply of palm oil, with an estimated production of 800,000 metric tonnes MT of palm oil.
This is against countries like Malaysia and Indonesia which produces 25million and 41 million tonnes of palm oil respectively.
Governor of Central Bank of Nigeria, Godwin Emefiele, recalled that
“For one reason or the other, particularly because we found crude oil that even today by any analysis is cheaper than palm oil, we decided to abandon our God-given gift – palm oil.
“By doing that we lost jobs, our farmers lost jobs because we began to import palm oil from different parts of the world.”
Nevertheless, more than five decades after, the country is on the march again to reclaim the lost position on the global oil palm industry.
” Within the next 3-5 years, the global share of the country’s oil palm production would more than double. Our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years,” said Emefiele at a stakeholders meeting on Nigeria’s Palm Oil sector Value Chain in Abuja.
He noted that despite the availability of over 3 million hectares of farmland for palm oil cultivation, production remains low at close to 2 tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare.
“This is as a result of the maturation of existing palm trees, as some of these trees were planted in the ’’50s as well as low investment in replanting high yielding palm oil seeds. As some of you may know, the usual life cycle for optimum palm production is 25 years,” he said.
He said that the country has missed the opportunity to earn about $10 billion from palm oil export if it had sustained and improved on production and also revealed that Nigeria currently spends about $500 million on palm oil import to meet local demand.
Emefiele said that apart from dropping in production capacity, Nigeria has also become a net importer of palm oil, importing between 400,000 – 600,000 MT of palm oil in order to meet local demand for this commodity.
” Our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years “
In what might be termed as “political Will”, President Muhammadu Buhari recently directed the Central Bank of Nigeria to blacklist any firm, its owner and top management caught smuggling or dumping palm oil into the country.
This meant that those caught smuggling palm oil into the country would be blacklisted from all banking businesses and would also be blocked from the foreign exchange market.
“We want to make everybody understand how serious we are and also to emphasise that what we are doing to stop the importation of oil palm into Nigeria is a presidential directive that must be adhered to.
“Doing this also means that while we are stopping the importation of palm oil, we must do all possible to ensure that palm oil production is aggressively increased in Nigeria,” said Emefiele.
Emefiele said that the presidential directive also mandated CBN to expand and provide support to firms and individuals that wanted to expand the production of 10 different commodities in Nigeria.
$500m facility / targets
Nigeria plans to increase its palm oil production 700% over the next eight years to help improve its foreign-exchange earnings that are largely dependent on crude oil exports.
The new policy will boost local production to about five million tons from 600,000 tons a year by investing as much as 180 billion naira ($500 million) beginning this year, the trade and investment ministry said in a report.
“Our policy objectives over an eight-year period (between 2019 and 2027) will see that we locally produce 100% of local crude palm oil demand by 2027, increase revenue from importation via duties and deliver 225,000 full time jobs and at least 450,000 seasonal jobs,” it said.
The new policy also seeks to remove the 75% duty rebate granted on refined palm oil imports and extend a current three-year tax holiday for all producing and processing companies to five years.
It will introduce a five-year restriction of crude and refined palm oil importation to large-scale refineries and crushing-plant owners. Farmers will be given access to loans at 9% per year through a central bank-administered lending to expand cultivation by at least three million hectares.
Private sector supports
Presco Plc, the country’s largest producer of palm oil, is driving an expansion plan that expects a 500-ton capacity refinery to begin operating in first quarter of 2020, with an additional increase of its milling capacity from 60 tons an hour to 90 tons an hour by next January, said Chief Executive Officer Felix Nwabuko .
” By 2022, the company expects to push capacity to 210 tons an hour, with an additional 60 tons per hour in milling facilities, he said.
Also , Ella Lakes Plc said that it was taking advantage of the government’s current focus on agriculture, to diversify it’s fish business to oil palm business.
The company said that as a result of the 35% tariff imposed on oil palm produce by the Muhammadu Buhari administration; besides the CBN’s concessionary lending for stakeholders in focal produce such as oil palm, cocoa, shea and cashew ; through its Telluria Farms Limited, it will over the next three years play in the entire oil palm value chain, cultivating land spanning 30,000 hectares containing 70,000 immature trees in Edo and Delta states, up from its current 2,000ha.
Wole Onasanya, the chief financial officer of the company,assured that the company hopes to build on the momentum by acquiring more land from both state governments, increasing it first to 10,000ha, while taking advantage of the Central Bank of Nigeria (CBN) financing initiatives , all of which will begin to yield results in the next few months.
With the three-year period, he said the company is also targeting 20MT/hour capacity palm oil milling/refining.
In order to increase the production of palm oil in the country a technical Committee has been set up to streamline the activities of both the palm oil farmers and producers.
This is against the backdrop of a sensitisation workshop held at NIPC in October 2018 about a purported ban on Nigeria’s Palm oil export by the European Union (EU).
The Chairman of the Committee, Dr. Celestine Ikuenobe from the Nigerian Institute for Oil Palm Research (NIFOR) while noting the importance of the sector in Nigeria said that the Committee would workout and harmonize documentations, roadmaps and policies related to Palm oil production and come up with a policy document that is encompassing and workable by stakeholders.
The members were tasked with making available documentations on land use policies by states, environmental laws pertaining to palm oil, investment and marketing strategies, policies on standardisation, provisions for small and medium scale holders, financials amongst others.
It was learned that the Committee were given a June deadline to submit its recommendations would to the Honourable Minister, Industry, Trade and Investment.