‘How to reduce Nigeria’s $500m yearly palm oil import bill’
Despite Nigeria’s potential in oil palm production, over $500m is spent yearly on the importation of the produce, to close the gap in the huge domestic demand.
It may no longer be news that the country has drifted from its enviable position as a top export commodity income earner it was in the 1960s, to the fifth position globally, despite the production of palm oil in 25 states.
In 2019, the Federal Government declared that it was investing N180b to increase its palm oil production from 600,000 tons a year to five million tons, to meet the country’s domestic palm oil demand by 2027. It was also targeted at doubling the palm oil estate to six million hectares and to provide 225,000 direct and 450,000 indirect jobs.
Concerned stakeholders in the industry have identified insufficient national and state budgetary allocation; weak and poorly articulated sub-sectoral governance structure; and weak implementation of inclusive policies that enhance the oil palm social-ecology, which respects national agricultural resilience framework and other relevant international protocols, as challenges bedeviling the sub-sector.
At a two-day workshop and policy dialogue organised by Solidaridad West Africa, attended by policy makers and key officials of frontline oil palm farmers organisations, the stakeholders affirmed that although the Agricultural Promotion Policy (APP) 2016-2020, and the National Adaptation Strategy and Plan of Action for Climate Change in Nigeria (NASPA-CCN) may have proposed solutions to some of the core issues at the heart of limited food production, climate change and delivery of quality standards, it was yet to address the strategy towards agriculture-driven economy.
The Senior Climate Specialist for Africa at Solidaridad, who doubles as Country Technical Lead, Sam Ogala, decried the inability of the country to meet the domestic demand of the produce.
To him, the $500m yearly import bill shows the huge gap to meet the country’s local demand. “In the early 1960s before the oil boom, Nigeria was exporting palm oil, but after the oil boom we started importing, and all forms of oil palm are finding their way to the Nigerian market.”
In addition, the stakeholders also raised concern that research has not been given adequate attention due to poor funding of the National Institute for Oil Palm Research (NIFOR), which has the mandate for oil palm research to enable the sub-sector contribute its quota to the country’s economic diversification drive, as well as job creation.
Absence of inclusive budgeting, and the delay in the release of funds is another major challenges mentioned, which according to them affects project delivery and impact with long term negative implications for the oil palm sub-sector. They also pointed at inadequate attention to smallholder oil palm farmers.
To increase productivity in a climate-resilient way, they submitted that effective investment in the oil palm sub-sector would be an investment in the right direction that would contribute to a robust, green, inclusive and resilient national economy.
The stakeholders observed that many contractual arrangements between big oil palm companies and smallholder farmers continue to be exploitative and haven’t yielded adequate and sustainable benefits to the smallholder farmers.
They, however, recommended that NIFOR should receive more capital budgetary allocation above its overhead and personnel budgetary allocation, as there is need for government and the private sector to promote Research-Farmers Linkages through increased funding to NIFOR and other research institutions.
Another resolution is the need for the government and private sector to promote climate resilient interventions that would increase an inclusive use of technology, the adoption of Best Management Practice in the sub-sector.
In addition, they advised that financial institutions and private investors should actively fund the sub-sector for increased productivity and by extension, promote policy direction towards a palm oil driven-economy.
The stakeholders also urged the government to deliberately dedicate a minimum of 60 per cent of the agric budget to capital projects to encourage diversification of the economy. Also, they stressed the need for dedicated oil palm development fund, hence, government should use 20 per cent of the 35 per cent tariff on importation of fats and oils to improve productivity in the oil palm sector.
“Government should strengthen its monitoring and evaluation systems on all allocation approved for the sub-sector to ensure effective implementation of its activities; government should ensure that financial services of single digit interest rates should be provided to smallholder oil palm farmers to motivate increased productivity in the sector..,” participants further recommended.
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