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Oil palm producers lament challenges, call for national council

By Femi Ibirogba, Head, Agro-Economy
10 February 2020   |   3:46 am
Large, medium and small-scale crude palm oil (CPO) producers and processors in Nigeria have identified high cost of credit facilities, too many frivolous levies from government agencies, low investments, planting of low-yielding varieties by smallholder farmers...

A palm oil processing facility PHOTO: FEMI IBIROGBA

Large, medium and small-scale crude palm oil (CPO) producers and processors in Nigeria have identified high cost of credit facilities, too many frivolous levies from government agencies, low investments, planting of low-yielding varieties by smallholder farmers, poor power supply and aversion for agriculture as some of the challenges retarding the sector.

These challenges have left the country with a huge production deficit of about 500,000 metric tonnes, while its contemporaries in the pre-colonial era (Malaysia and Indonesia) have maximised production and developed the value chain, making them the largest suppliers of crude palm oil.

To tackle the challenges and move forward, some members of the Plantation Owners Forum of Nigeria (POFON) and other stakeholders have also called for establishment of a national palm oil council to drive investments, industrialisation of the crop and its value chain development. Sometime in 2014, Dr Akinwumi Adesina, a former minister of agriculture, while lamenting the stagnant state of the sub-sector, said: “…. Today, Nigeria is on its way to self-sufficiency in rice production. We have to do the same with the palm oil industry. It is shameful that we are importing crude palm oil. We should be exporting.”

Similarly, the Coalition of Oil Palm Value Chain Associations, including the National Palm Produce Association of Nigeria (NPPAN), the Oil Palm Growers Association of Nigeria (OPGAN), POFON) and the Vegetable & Edible Oil Producers Association of Nigeria (VEOPAN) expressed support for the backward integration policy where palm oil users were mandated to invest in oil palm plantation to phase out importation gradually.

Ex-Executive Secretary of POFON and Managing Consultant, Foremost Development Services, Mr Fatai Afolabi, in an interview with The Guardian, said to draw up long-term plans for the sector’s growth, there should be a coordinating body of all the stakeholders with the objectives of value chain growth, closing production deficit, capturing data and stimulating the economy with the palm oil sub-sector.

Afolabi said, “As far as POFON is concerned, what we are beginning to think is that we are interested in an institutional framework to drive our palm oil economy.”
Asked to clarify, Afolabi explained that “What we are proposing today is to have a national palm oil council. We should try to replicate the model of Malaysia if we are serious with palm oil production in Nigeria. We want Nigeria to take back its place in the global palm oil economy.

“Malaysia has Malaysia Palm Oil Council. It also has a Malaysia Palm Oil Board. Here, what institutional mechanism do we have today? It is the Ministry of Agriculture. So, everything is subsumed under the ministry of agriculture and it cannot isolate oil palm and drive it because they don’t have the resources and they don’t want other crops or commodity to suffer. But if we have a palm oil council, it will just focus on palm oil.”

In a separate chat with The Guardian, another member of POFON, Mr Ajibola Bankole Adebutu, Managing Director of JB Farms, Ogun State, expressed optimism that such a council would brainstorm and facilitate growth and development of the sector. “I believe that any interaction of the private-sector stakeholders and the government towards formulating policies is always better because people that run the industry know the challenges and the solution to proffer.

“So, if something like this is brought forward and it is transparent, I think it can help a lot in driving the industry.”There was a ban on the importation of palm oil at a time, Adebutu explained, and “My understanding is that when we came to the realisation that we were not producing enough palm oil locally to meet the industrial demand, the government at that time decided to lift the prohibition but put a 25 per cent levy on imported palm oil.”

The levy was to serve two purposes. One, to check dumping, and two, to create funds to be used in developing the oil palm industry in Nigeria.When asked if the levy had been serving the purpose, he said, “I am not the government, and therefore, I don’t know what the money is used for.” However, while responding to an inquiry on the purpose of the levy on imported oil palm, Afolabi said currently, “if you look at the tariff structure for palm oil in Nigeria, it has provisions for import duty at 10 per cent and 25 per cent for levy. That levy (25 per cent) is meant to grow the palm oil sector.”

A plantation owner and palm oil refiner based in Ibadan, Mr Tunde Kuku, also called on stakeholders, small and large-scale, to partner with the government through a council, saying as long as efforts in the oil palm sector are coordinated, there would be a leap in production and value chain development. “The council will surely facilitate oil palm development. If you look at the shortfall in oil palm in Nigeria, it does not augur well. How can we be importing palm oil when we have land suitable for palm plantation?

“If palm oil is one of the backbones of the economy of Malaysia, why won’t we put more money into its production? The CNB governor said the earning potential of palm oil is higher than crude petroleum if we get it right,” Kuku explained.He argued that the oil palm sector would employ more people, and commercial motorcycle riders causing auto crashes could be employed on farms or have their farms. This, he added, would change thousands of lives economically.

He suggested that to solve farmland challenges, “The government has to acquire land and look for serious local investors to develop our people as expatriates were developed in other places.“I know that a plantation of 1000 hectares of palm trees will employ a minimum of about 200 direct workers, and this will also affect the economy of the locality where the farm is cited.”

Reasons for national palm oil council
Stakeholders argue that Indonesia has the Palm Oil Commission in addition to Ministry of Agriculture. These, combined with other factors, help the country to produce 43 million tonnes of crude palm oil yearly, according to the world production figures by the United States Department of Agriculture.

Also, Malaysia has Ministry of Primary Industries for plantation development, including oil palm, rubber and cocoa, and in addition, has the Malaysian Palm Oil Council (MPOC) and Malaysian Palm Oil Board (MPOB), helping the sector to account for 21 million metric tonnes yearly and the second largest crude palm oil producer, coming after Indonesia.

The USDA data indicates that Nigeria produces about 1.015 million metric tonnes of palm oil despite the suitable agro-forestry zones and availability of labour. Of the front runners in global palm oil production, it is only in Nigeria that oil palm development is subsumed within the Federal Ministry of Agriculture and no specific agency is focusing on oil palm.

The advocates said a palm oil council is, therefore, desirable in Nigeria with the main objective of overseeing the promotion and development of the Nigerian oil palm sector.

The council should be stakeholder-driven, they added, with membership drawn from small, medium and large-scale players in the oil palm value chain, adding that the council is desirable as a dashboard to provide the solutions to the myriad of problems, including lack of policies, strategies, structures, data, statistics, incentives and research in the oil palm sub-sector.