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Boosting oil palm industry amid funding, land challenges

By Femi Ibirogba, Head, Agro-Economy
02 November 2021   |   4:15 am
Oil palm entrepreneurs and researchers have called on the government to remove hurdles and create more enabling environment for investors and smallholder farmers in the subsector.

Oil palm plantation

Oil palm entrepreneurs and researchers have called on the government to remove hurdles and create more enabling environment for investors and smallholder farmers in the subsector.

These, they said, could be done with specialised funding, more access to land and support for small, medium and large-scale investors in terms of improved seedlings, processing equipment and technical know-how throughout the value chain.

They also advocate a tax holiday to encourage industrial sustainability and stability, which would trigger industrial growth in the long run.

Despite huge potential in the oil palm production and the comparative advantage in production, they lamented, Nigeria has neglected investments in the sector and descended to the fifth largest producer in the world.

Specifically, as industry stakeholders have identified, challenges that limit productivity range from shifting focus to crude oil as main source of revenue, lack of affordable financing, poor planting materials, land acquisition difficulty, high cost of land preparation, poor processing technologies to farm labour challenge and insecurity of life and property.

Also, smuggling of crude palm oil in commercial quantity through the Republic of Benin, especially before the closure of some land borders in 2019, was pinpointed as a disincentive to local investors and the backward integration policy aimed at revving up local production of crude palm oil and phasing out importation.

The Executive Director of the Nigerian Institute for Oil Palm Research (NIFOR), Dr Celestine Ikuenobe, said to increase production of oil palm, land issues should be addressed by governments in production belts so that investors could have access to land and safe production environment.

Again, old plantations should be replanted with newer and more productive varieties of oil palm, he said. Reliance on older plantations and low-yielding varieties to boost Nigeria’s oil palm production would lead to poor productivity per hectare, unsustainable production and low interest in oil palm investment and a cycle of low production and income.

Speaking with The Guardian, the NIFOR boss assured that the improved seedlings, especially Tenera, were available in the institute.
True-to-type Tenera hybrid seedlings usually start fruiting from four to five years, and the nuts are bigger, productivity is higher and profitability is sustainable.

The variety requires favourable agronomic conditions, such as an evenly distributed yearly rainfall of 2000mm, a maximum average temperature of 29-33 Celsius and a minimum average temperature of 22-24 Celsius are available. Best oil palm yields are obtainable in places where the conditions are available.

It needs 1800-2000 sunlight hours every year, more than 300 cal/cm2/per day, constant sunlight of at least five hours daily for better yield. Moist, deep, and well-drained medium-textured soil rich in micronutrients are considered ideal for propagation of these crops. Sandy soils in coastal areas are not ideal for oil palm cultivation. Heavy clay soils with poor drainage properties may pose problems of aeration during rainy seasons too.

Managing Consultant, Foremost Development Services and Executive Consultant to Plantation Owners Forum of Nigeria (POFON), Mr Fatai Afolabi, explained to The Guardian that there is inadequate data on production for development planning.

He admitted that knowing the deficit in production and how to evaluate and collate production figure in crude palm oil production were needed, ‘’but it is difficult, and so planning for development is hampered.’’

He said: “Unfortunately, we don’t seem to produce as much as we claim to produce. We still don’t seem to know or appreciate the essence of data. You will be shocked when you ask questions relating to figures, facts and how reluctant the other person is to give you.

“So, if the government will not know what you have or what the other person has, and we cannot aggregate them, then the government will not be able to know how to budget and what to deploy to every sector of the economy,” Afolabi said. More importantly, he added, the last time Nigeria had data on production was when there were marketing boards.

“To assist in production, they keep data of what was produced. Part of what was produced was bought over and exported. And because they want to export more and more, they had to stimulate more production. It’s a chain which had to function, but the moment they no longer existed, individuals became their own marketing boards and they are not giving out the data,” he added.

He too said access to quality planting materials should be made easier, and cost should be subsidised by the palm oil-producing states and the Federal Government, among other support to POFON.

Import tariffs and levies should be accounted for by the Customs Service and the Central Bank of Nigeria (CBN) and be reinvested into the oil palm sector through associations of farmers and investors.

Chairman of POFON and Chief Executive Officer (CEO) of Aden River Estates, Mr Emmanuel Ibru, said hurdles include infrastructural and transportation challenges, and scarcity of low-skilled labour in rural areas, high cost of establishing new plantations with improved varieties, and difficult/expensive financing, among other disenabling factors.

To deepen production and diversify the economy through the sector, he said: “It requires more efforts, hard work and adequate capital. To develop one hectare of oil palm, you need between $4,000 and $5000.”

He also identified lack of access to land in commercial quantity as a challenge, saying: “The second is ensuring availability of land. We have the land, but the challenge is how to take peaceful possession of the land. Even potential investors with requisite financial capital find it difficult to acquire land.”

‘’Part of the challenges,’’ he added, ‘’is encouraging the younger generation in the rural areas, especially the low-skilled population, to work on the farm, especially with the advent of social media and the glorification of the ostentatious lifestyle of internet fraudsters.’’

Ibru said in scaling up, it is necessary for both small and medium-scale farm holders to be encouraged, saying, ‘’For instance, if you have an existing 500-hectare plantation, we want to help you get it to 2,000 or 3,000 hectares. There are many people who have 300, 500 or 1,000 hectares.’’

But to do the above, the need for a palm oil council to coordinate growth, actions and financing is imperative, he added.
‘’We have to rejig the strategy to allocate or facilitate funding to small and medium-scale farmers considering the gestation period of oil palm trees. Really, policies have come up without the inputs of POFON and other oil palm associations that control the small-scale farmers,’’ he said.

Meanwhile, Edo State has allocated 57,000 hectares to large, medium and smallholder oil palm investors. Recently, Governor Godwin Obaseki disclosed that his government had allocated over 57,000 hectares in four local government areas of the state, under the Edo State Oil Palm Programme (ESOPP).

Obaseki said this while delivering a keynote address at the National Initiative for Sustainable and Climate-Smart Oil Palm Smallholders (NI-SCOPS) Roundtable in Benin City.

The governor had said: “Edo State Government has allocated over 57,000 hectares of land under the ESOPP programme in four local government areas, which are Orhionmwon, Ovia-North East, Owan-West and Uhunmwonde local government areas.

‘’This is the first phase, as we are still looking for more land in the Ovia axis and as soon as this is completed, we will commence the second phase of allocation.

“In the first phase, we allocated 25 per cent to smallholders, while large estate holders were allocated the balance 75 per cent of the total allocation.”

Obaseki continued: “Some of the allottees have taken possession of their land and concluding their community action programme. We believe that by the time all the necessary things have been done, cultivation will commence before the end of the year.

“The contributions of smallholder farmers in the oil palm sector cannot be over emphasised, as smallholder farmers account for over 60 per cent of crude oil palm produced globally.”

The governor said Nigeria is currently Africa’s largest oil palm producer and the fifth in the World, with almost 2.5 million hectares of land under cultivation, but there is still importation of over N90 billion worth of oil palm produce yearly.

“To effectively and efficiently encourage investors, the state launched the Edo State Oil Palm Programme, in partnership with other private sector stakeholders, including the Central Bank of Nigeria (CBN).”

The CBN committed about N69 billion to support investors who invested in oil palm in Edo State in line with the Federal Government’s determination to diversify the nation’s economy.