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Olatujoye: Importation cost of palm oil will continue to rise


Henry Olatujoye

The National President, National Palm Produce Association of Nigeria (NPPAN) Henry Olatujoye, in this interview with GBENGA AKINFENWA, listed challenges facing the palm oil industry and why the country may not achieve self-sufficiency in palm oil anytime soon.

• Banning Would Promote Smuggling
• We Cannot Achieve Self-sufficiency Soon

In 1960, Nigeria controlled 43 per cent of the global palm oil market and raked in 82 per cent of her national revenue from there. Today, the country produces a miserable 1.57 per cent of the global output. How did we get here? 
We found ourselves at this level due to negligence on the part of our leaders, who think petroleum discovery is sustainable and can provide us with quick cash call. This development triggered urban migration that eroded the required manpower needed for the development of oil palm, despite our growing population. We had the opportunity to be among top palm oil producing nations, but we missed it when we all abandoned agriculture, (which is the bedrock of any serious nation) to do things that are not productive.

What are the major factors responsible for the country’s inability to achieve self-sufficiency in palm oil production?
One of the major factors is our over dependence on petroleum as a substitute to oil palm. This implies that we deliberately found a substitute for agriculture in crude oil, which has proven to be our greatest mistake. Malaysia and Indonesia decided to invest so much in oil palm development to promote and add value to their industrial capacity. That they did by adding value to agricultural produce.

Another thing is our inability to use the income from petroleum to further agricultural development. This failure to channel revenue generated from oil production to develop agriculture is our worst and greatest undoing as a nation, while our leaders were carting away revenue from oil exploration to foreign lands to buy properties.

Land fragmentation along family lines is another issue that is stalling our attainment of self-sufficiency in oil palm production. Establishing oil palm plantations requires large expanse of land, and in Nigeria today, every available land has been shared along family lines and are in fragmentation, not readily available. When available, they come at a premium, in other words, too expensive for agricultural purposes.

Another factor is the lack of effective indigenous processing equipment. Processing equipment for effective processing of palm oil are not easy to come by in Nigeria. Added to this, our processing method is still crude and ineffective. The cost of importing a high quality processing machine is huge.

The huge investment needed to set up commercial plantations remains another factor that is working against the realization of our potentials. When placed side-by-side with the interest rate on loans that are not favourable or convenient for agriculture practices, it still paints a picture that attaining self-sufficiency in oil palm production is still miles away from realisation.

What is the country’s current demand level in terms of tonnage, and what is the current production level?
The demand level has grown to about 2.1 million metric tonnes in recent times, and similarly, production has moved from 950, 000mt to about 1.3 million mt, as a result of drop in the value of crude oil, and the drive by the new government. Most of the moribund plantations are gradually coming back to life, just as new ones are being established.

In 2017, Nigeria imported 450,000 tonnes, which costs the country N1163b in scarce foreign exchange, what is the effect of this on the economy?
It has no effect on the economy because we are already a net importer of the product. Until we are ready to develop our plantations to fill the gap in our consumption level, the cost of importation would continue to rise.

The National Assembly is calling for the ban on importation of palm oil, palm kernel and allied products, do you think this would address issues affecting the production decline?
Banning will promote smuggling. It is an open business and as such it should not be banned. The current policy of 35 per cent duty should be sustained and proper monitoring should be introduced at our borders, the Trade Liberalisation Scheme (ETLS) has failed Nigerians, it should be discontinued including Common External Tariff (CET).

What immediate steps should be taken by farmers, processors, government and other stakeholders to bolster the production of palm oil?
The present effort of government should be sustained. Provision of farm settlements for youths in agriculture should be encouraged; adequate finance with low interest rate should be introduced, and agriculture inputs should be subsidised.

Do you foresee Nigeria achieving self-sufficiency in palm oil production anytime soon?
I do not see that happening soon because we need to develop close to two million hectares of land to achieve this, and with the present situation of things, we are far from the target.

In this article:
Henry OlatujoyeNPPAN

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