Diversifying the economy: Slow race to revive Nigeria’s oil palm production
The demand for diversification of the economy has reminded Nigerians of the exploits that were made in oil palm production before the advent of petrol revenues.
The discovery of crude oil in commercial quantity paved the way for the gradual neglect of agriculture by successive governments, especially in the 70s. It became the dominant source of revenue, while agricultural production was abandoned. From over 60 per cent in the late 60s, the contribution of agriculture to the GDP plummeted to 22.2 per cent in the 80s. Recent data put the contribution of agriculture to the country’s GDP at 42 per cent.
In palm oil supply, Nigeria now produces a meager 1.7 per cent, of total world production, which is inadequate for local consumption, put at about 2.7 per cent.
Malaysia, a country Nigeria supported with palm oil seedlings to kick-start its own oil palm production in the early 70s, has overtaken Nigeria as one of the largest producers and leading exporters of palm oil. Malaysia and Indonesia produce 83 per cent of total world production of palm oil.
With exception of Ondo State that has recently partnered with a Malaysian firm, Agro Bayu, to revolutionise its oil palm plantations in the state, other state governments have been lackluster in investing in palm oil plantation.
Few weeks ago, Lagos port took delivery of 12,000 metric tons of industrial palm oil, valued at N36bn or $6,744,000. Reports put the value of the commodity import between 2012 and 2014 at N218bn, from Malaysia.
To achieve the drive to diversify the economy, the present Nigerian government is now looking up to agriculture as one sure alternative, particularly palm oil, which in the past was a major driver.
The Nigerian Institute for Oil Palm Research (NIFOR), established about 76 years ago, is expected to play a major role in this regard. The institute has the mandate to conduct research into improved varieties of oil palm seedling for commercial production.
But few years ago, a management personnel of NIFOR, Dr. Dere Okiy, warned that until the private sector engages in commercial oil palm production, Nigeria would continue to remain a net importer of the produce. He attributed the shortage of edible palm oil in the country to lack of large-scale production, insisting that the institute was only engaged in research and the results passed on to commercial private producers. He, therefore, called on private investors to avail themselves of research findings of the institute and engage in commercial palm oil production.
“The emphasis of the institute is on research and not on production. In places like Malaysia and Indonesia, it is the private organisations that produce palm oil, not government research organisations. The equivalent of NIFOR in Malaysia is called MPOB; it does not export palm oil, but has provided the technologies and private companies have established trans-stations and needed activities in such a way that they mass produce palm oil,” he said.
Recently NIFOR said it was partnering with local and international agencies and organisations for improved production with backing from the Federal Government to enable Nigeria achieve global statutes in research developments. But the institute is being limited in its effort to revolutionalise the oil palm sector due to poor funding and obsolete infrastructure.
President of the National Palm Produce Association of Nigeria (NPPAN), Henry Olatujoye said he was in support of the current drive by the government aimed at restricting foreign exchange for palm oil importation, adding that the menace of importation of agricultural commodities, including palm oil, to Nigeria for which the country has comparative productive advantage portends serious danger to our local farmers.
“Nigeria’s agricultural practice is just a little above subsistence production compared to countries, where practice has been taken over with modern technology and incisive development in research and capacity infrastructure. For avoidance of doubt, the association frowns at the importation of palm oil to Nigeria. We have been advocating and supporting existing users of the product to invest in plantation development, which we believe will help in developing the sector,” he said.
Continuing, he said, “Nigeria’s acclaimed title as the world largest producer of palm produce resulted from divine intervention, as the trees were not deliberately planted for industrial use, but grew from domestic farm practices. We are naturally endowed with semi wild grove palm trees that grow mostly in southern Nigeria. We are presently occupying number five position in the world in terms of palm produce production.
This position is not really significant as we are presently a net importer of the product, he lamented.
On the reason for importation of the commodity, he said: “The incidence of import has no correlation with low yield. It is more of capacity to produce at a level that meets demand. Low yield is a function of variety or species planted. In the industry, it is the Tenera generic breed that is ideal for high yield.”
He said that Nigeria is the world largest consumer of crude palm oil, adding, “Ironically, while we produced for consumption, other countrries produce for sustainability and value addition to create wealth.”
On the impact of plantations on production levels in the country, he said, “The impact of Okomu, Presco, and the likes cannot be felt as their total capacity is still low. Total capacity of local established plantation is about 300,000ha out of over four million hectares forestry convertible to plantation. With a population of about 170 million people that consume about 0.5 liters of crude palm oil daily, I wonder what impact we expect from the present investment in the industry. Nigeria needs more investment in the value chain, at least, to the region of food and its uses, before we can have significant impact to feed our local manufacturers.”
According to him, the major challenges plaguing palm production include land tenure issue that brings about unnecessary antagonism to plantation development, infrastructural decay, high cost of processing equipment and lack of marketing information and strategy. Others, according to him include, inability to assess fund at single digit for immediate use both for short and long term.
EDO STATE: Challenge Of Land Acquisition, Community Agitations
In Edo state, there is a factor limiting mass production of palm oil by individuals and companies. Communities and politics may have been working against private concerns in the sector.
There are two major private companies; Okomu Oil plc and Presco Oil, besides smaller ones that dot the state. The state government has allocated thousands of hectares of land to the private sector in the attempt to increase production, but they are battling with community issues.
For one of the major palm oil producing companies, Okomu Oil Plc, communal interests, politics and rights activism have combined to stunt the growth and development of oil palm economy in the state. The company cannot expand its production lines as a result of commercial land ownership. The Guardian gathered that large hectares of land were allegedly sold to Okomu oil Plc, at Ovia South West and Uhunmwonde local government areas, but, this is not going down well with the communities. The communities in the areas complained that their forests, part of which also houses the Okomu National park, were being destroyed by the company for palm trees, a development they believed would be detrimental to their well-being.
Okomu rural dwellers also described as worrisome the activities of the company in the two forest reserves allegedly acquired by the multinational company, adding that it was a violation of their rights and a threat to their socio-economic existence.
Few weeks ago, the management of the company said it planned to employ 45,000 workers in its new plantation at Ovia North East Local Government Area despite the drop in price of commodities.
The Managing Director of the company, Dr. Graham Heifer told media-men in Benin City recently that a total of 600 workers had already been employed in the plantation, which covered about 11,000 hectares. Heifer said the company has spent over N2.5bn on the new plantation, stressing that the company was working hard to revitalise agribusiness in the country as directed by President Buhari.
“The state government has graciously given us a portion of land in Ovia North East. We went through the proper route to make sure we purchased the land. They have given us the title to the land. We are happy that the government has been able to do this. I don’t think the state government would have given us the land if they didn’t trust us.”
The company had since unveiled its $75b expansion plan in the next four years. Former Minister of Agriculture, Dr. Akinwumi Adesina said during the commissioning of the company’s new 30 metric tons-fresh-fruit-bunch-per-hour mill that, “We have started discussions with Monitor Delloitte to clearly articulate the way forward in providing the much needed support for the company.”
He also announced then that his Ministry would encourage NIFOR to expand its seed production facilities to meet the seed requirements of the Okomu company and other stakeholders, who desire to expand their field plantings.
While disclosing that the Federal and Edo State Governments were jointly working together to promote the production of oil palm in the state, through the initiation of elaborate policies and careful implementation of the oil palm value chains activities, the minister said the Federal Government has targeted the production of nine million improved tenera sprouted nuts into mature seedlings for distribution to smallholder farmers and estates for field planting.
According to him, four million seedlings had been raised at different private and public nurseries in the 24 oil palm producing States, adding that they are awaiting distribution under the Growth Enhancement Support Scheme.
Edo governor, Comrade Adams Oshiomhole, who announced allocation of another 20,000 hectares of land to Okomu Oil for cultivation, said his government had planned to allocate 30,000 hectares of land to Small Growers, where each Grower was expected to own a minimum of 25 hectares of oil palm plantation.
The Guardian could not ascertain the current production output of both companies. At Okomu Oil Palm Plc, attempt to obtain the relevant statistics was met with rebuff, as the Business Manager said he was not in the position to speak for the company. The move to Presco, on Sapele road, Benin City, yielded nothing better either; the seeming silence could not be explained.
But whatever gain these land acquisition steps may have had on palm production may not be appealing to a group of people, who have discredited move to increase production of the commodity in the state. Their agitation is currently threatening expansion plan by the oil palm company.
Friends of the Earth Nigeria/Environmental Rights Action recently alleged that the plantation expansion by Okomu Oil Palm Plc, in the name of development by Edo State Government, through its Public Private Partnership, has fuelled more deforestation, human rights violations and environmental degradation across 20 agrarian and forest dependent communities.
This, the group alleged, has led to cases of eviction of men, women and children, extinction of plant and animal species, cultural dislocation, spiritual contamination, hunger, livelihood loss and threat to local food security.
ONDO STATE: Strong Potentials, But Long Abandoned
AMONG the oil palm companies in the country that contributed to good output recorded to the world’s palm oil market was the Okitipupa Oil Palm Company Plc (OOPC), established in 1968. It also played a leading role in the production of palm oil and kernel, and other products like crude palm oil, technical oil, pharmaceutical stearin, palm wine, brooms, seedlings, ashes and brown soaps.
Three other major palm oil companies that produced commercial quantities in Ondo State then, included, Ore-Irele Oil Palm Company Ltd, which had a medium-sized plantation estate of 3, 103 hectares and Araromi-Ayesan Oil Palm Plc, jointly owned and controlled by OOPC with 10, 468 hectares.
Other products of the company, at the time, include vegetable oil, edible fat, serving industrial users that manufacture soaps, margarine and vegetable oils. It produced palm kernel and lower grade oil products for household markets.
Unfortunately, the intervention of the military in politics, affected the upscale activities of the company as corruption and maladministration, dealt devastating blows on the fortune of OOPC, which had 10,000 workers, working on three shifts daily.
OOPC laid comatose for an upward of 10 years before late Dr. Olusegun Agagu, former State Governor, made several attempts to revive the moribund company by privatizing it with the assets of about N750 million.
A visit to the company revealed that the once dependable farm estate had since been abandoned and security personnel stationed at the gates declined comments.
In a bid to know the real state of the company, The Guardian caught up with the Managing Director, Mr. Omoniyi Ogunwa, in Okitipupa, but he declined comment. It was the same with Femi Adeyehun, General Manager, who said he was not authorized to speak on the matter.
But a source within the company, who pleaded anonymity, said it is now moribund, contrary to the wrong impression by the state government. He said, OOPC has not produced a drop of palm oil since the new management took over the company.
According to the source, unauthorized persons now harvest and sell palm fruits to private processing individuals without remitting the proceeds to the coffers of the company or government.
A former stakeholder of the company, Mrs. Christiana Ikuejamofo told The Guardian that late Agagu’s government claimed to have procured five burners at the rate of N2.3b from China, for the companies at Araromi-Ayesan Oil Palm, Ore-Irele Oil Palm and OOPC.
She said however, investigations had since revealed that the said burners were manufactured locally.
Another source in Okitipupa, who owns a private oil mill, said the present administration made some efforts to revive the company, saying Governor Olusegun Mimiko confirmed the substandard state of the five burners procured by his predecessor.
The source alleged that the five burners that were taken away for repairs have all been missing. He disclosed that the state government, in its renovation bid, reportedly claimed it procured two palm kernel crackers for OOPC, two for Ore-Irele Oil Palm and one for Araromi-Ayesan at the rate of N250m each. Besides, the government claimed to have equipped the farms with N700m fruit press machines, for each of the farm estate, and toothpick machine at N125m for each of the farm.
It was gathered that Governor Mimiko purchased 11 multipurpose tractors at the rate of N1.65b, for the three palm oil companies in the state, while N550m palm oil seedlings were imported from Malaysia to develop the oil palm estates.
The Ondo State Commissioner for Agriculture, Pastor Segun Ayerin declined to speak on the state of the three farm estates and the plan by the government to revive them.
Meanwhile, there are over 1, 500 small-scale oil palm processing companies across the state. Ondo State University of Science and Technology (OSUSTECH), Okitipupa, is however trying to fill the production vacuum created by the moribund company with its agricultural initiative driven by the institution’s Centre for Entrepreneurship and Leadership Training (CET). With the initiative, the university is trying to produce graduates, who will be potential job creators, rather than job seekers after their academic programmes.
The institution is now developing the interest of its students in agriculture, especially in palm oil business before they graduate from the university.
The Acting Vice-Chancellor of the institution, Professor Adegoke Adegbite said during a tour of the OSUSTECH Farm recently, that there is need for skill acquisition programmes in agriculture in the country.
CROSS-RIVER: Good Commercial Drive
The Cross-River State government has a deliberate policy of privatising its agricultural estates for maximum benefits. Some of these big palm estates include Ibiae, Calaro, Kwa Falls in Akamkpa, Biase, and Akpabuyo.
The former Governor, Senator Liyel Imoke started the privatisation exercise and brought in companies like Wilmar onboard to privatise farms like the Obasanjo farms at Ekong Anaku, which was later acquired by Wilmar, before it came up with new palms to boost the plantation. Now Wilmar is developing over 26,500 hectres of land of palm estate.
Today, many people are engaged in these farms that were formerly abandoned due to old age and lack of maintenance.
Current government of Senator Ben Ayade has sustained the massive palm estate project, as large number of hectares of old palm estates are being replanted and new ones opened up by Wilmar in the state.
The Commissioner for Agriculture, Prof Anthony Eneji, said beyond playing traditional functions of supporting farmers across the state with basic inputs like fertilisers, improved seeds and agriculture extension services, the state government now has a programme for women and youth empowerment under “our commercial agriculture project.”
Beyond this, he said “we have the real commercial agricultural project, where we are welcoming foreign partnerships,” he said.
The Managing Director, Wilmar West Africa, Mr. Santosh Pillai, said, “the group has four estates that are undergoing the replanting programme, namely Calaro Estate, Kwa Falls Estate, Ibad Estates and part of the Ibiae Estate. The yields in these estates are low as the trees were planted in the 1960s. To optimise land use, the Group is using higher-yielding planting materials in its replanting programme. In these areas are old plantations awaiting replanting rather than natural forests, only Environmental Impact Assessments (EIA) have been conducted.
Continuing, he said, “We are actively developing 26,500 hectares in the state. The development is across four estates in Cross River State. Our development started in 2012 and fruits (FFB) from our first phase of planting are being harvested now. We have an existing Palm oil mill of 20 tons per hour and we have started to set up a new palm oil mill of 45tons per day, which will be commissioned by 2017.We are searching for more land. We are also engaging small holders in line with our plan right from the inception of the project.”
On government’s policy on palm estates, Pillai noted, “there are evolving policies that will encourage and support oil palm production. This is our deduction from our interaction with the Minister and the recent meeting of National Council on Agriculture and Rural Development. To this effect, we are expecting the Federal Government to announce policy to develop agric projects, especially with focus on palm.
Pillai however listed challenges facing investors in palm plantation, including inability to access forex and hostility of host communities.
“To get Forex to import machinery is a big challenge. It is very encouraging to see Central Bank of Nigeria (CBN) wanting to support the development of Palm, through Anchor Borrowers programme and we are happy to be selected as the Anchor for Palm Oil. We are working very closely with CBN and its team to develop a robust and sustainable Oil Palm Out-growers programme,” he said.
The Communities and the Civil society organisations like the Environmental Rights Action/Friends of The Earth Nigeria (ERA/FoEN) and NGO Coalition for Environment (NGOCE) said they were alarmed by the activities of Wilmar, especially their expansion into community lands with no due recourse to them.
IMO: Low Govt Activities, Unfulfilled Promises
OIL Palm production in Imo is dwindling. Apart from government’s marginal venture in the sector, individual’s effort is nothing to write home about.
The only large-scale palm estate in the state, Camela Palm Oil Company, owned by Chief Okey Ikoro, and located at Industrial Layout, Onitsha Road, Owerri, is facing a lots of challenges. It use to be source of economic mainstay and employment for some people within and outside the state.
In the 1950s and1960s up to 70s, the then Michael Opkara administration of Eastern Region, took palm oil production business seriously. Then, the government invested in Adapalm Plantation, and Oil Mills with thousands of hectares of palm estate.
Even when late Sam Mbakwe’s administration of 1979 managed to keep the palm oil mill afloat, little sustaining attention was given to it by successive military administration in the state.
Today, the oil mill is comatose, despite efforts by the present administration to revive the company with concessioning agreement with Roche group.
The State government once claimed that under the management of Roche, the oil mills generated N2b, which enabled him to fund the “free education policy and construction of two twin-storey buildings in the 305 political wards in the state.
Under the state’s agriculture policy, every family in the 367 autonomous communities in the state is expected to plant at least a palm tree, while over one million seedlings were distributed free to flag-off the policy.
Governor Okorocha promised to disburse a total of N3.6bn at N10m per community, in the attempt to diversify the economy. The governor is yet to give out the loans to be paid back at single digit interest rate.
Ambrose Amadi, a farmer, urged the governor to keep to his promises, adding that he was looking up to obtaining the loan to participate in agro business, including palm oil produce.
The State Commissioner for Agriculture, Environment and Natural Resources, Udo Ago, though new on the job, said his ministry would ensure that oil palm production is priority under the new dispensation.
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