Declining palm oil production, yet another drawback on economic diversification
• N116.3b Worth Of Produce Imported In 2017
• Production Level Hits Record Low 1.57%
• Senators Seek End To Importation
• Local Producers Accuse FG, Security Agencies Of Compromise
Nigeria’s steady decline in palm oil production has not only become a riddle yet to be unraveled by the Federal Government, processors, farmers and other stakeholders in the value-chain, it has also become a worrisome subject for the country, which currently relies on importation to fill its huge demand gaps.
As at the end of last year, the country’s domestic production stood at 970, 000 metric tonnes (mt), while the demand was 2.7million mt, leaving a deficit of 1. 73 million mt.
In 2017 alone, the country imported 450, 000 tonnes of palm oil, which cost N116.3b. According to findings, between January and April 2017, a total of 50, 010 tonnes of the commodity was shipped into the country.
For instance, according to reports from the Nigerian Ports Authority (NPA) Lagos Port, a vessel named SeaPrice discharged 15, 000 tonnes in January; another vessel, Chemtrans Havel ferried in 10, 700 tonnes in February; Star Ploeg shipped in 16,400 tonnes in March and Mid Nature brought in 8, 000 tonnes in April.
Reports still credited to the NPA showed that the Apapa Bulk Terminal Limited (ABTL), located within the Lagos Port Complex, took delivery of 4, 000 tonnes of palm oil from Lady Dahlia, early November 2017, while Hamour Endurance also discharged about 5, 000 tonne of palm oil at JosepDam Terminal, Tincan Island Port, Lagos.
Due to high demand by indigenous manufacturers, the price of the commodity, which was $663 per mt in July, jumped up to $718 per mt in November. This development, apart from negatively impacting the local oil palm industry and depleting the country’s foreign reserve, also threatens the viability of the industry into which many Nigerians have sunk huge sums of money in support of government’s export promotion drive.
Miffed by the development, the Senate barely two weeks ago, moved to compel the Federal Government to ban the importation of palm oil/kernel, and inject funds to aid its local production.
The National Assembly also urged the private sector to partner state governments to embark on the transformation of palm oil production, and creation of allied industries through “backward integration.”
The lawmakers thereafter resolved to mandate the Committee on Agriculture and Rural Development to invite the Nigerian Institute for Oil Palm Research (NIFOR), located in Edo State to explain why it has failed to deliver on its mandate.
These resolutions were reached after deliberations on a motion titled, “Urgent need to halt the importation of palm oil and its allied products to protect the palm oil/kernel industry in Nigeria,” which was sponsored by Francis Alimikhena (APC, Edo North).
Alimikhena in his submission expressed concerns at the unbridled importation of palm kernel and allied palm products into the country, describing the development as a direct threat to Federal Government’s campaign for the diversification of the economy through increased agricultural production and exports.
With these and other developments, one is bound to question how the country got from being a one-time largest producer of palm oil and exporter in the world, to where she is now.
Before the discovery of the Oloibiri oil field in Bayelsa State in 1956, and the subsequent oil boom in the 1970s, cocoa and palm oil were the major sources of revenue for the nation during the colonial and post-colonial eras, but the boom in the Niger Delta shifted the attention from agriculture to a stilted decline thereafter to about seven per cent production at the international market.
In the early 1950s, Nigeria was the largest producer of palm oil in the world, accounting for 40 per cent of the global output of the product, and at Independence in 1960, being one of its largest producers and exporters. The country controlled 43 per cent of the global market and raked in 82 per cent of its national export revenue from palm oil.
As a result of the crude oil boom, the production of palm oil began to plummet, while population and consumption increased. The production level took a dive so much that by the 1990s; Nigeria’s output had dropped to seven per cent. The proliferation of its uses also affected the quantity available for export, leading to the huge demand gap.
Currently, the country has a world share of 1. 57 per cent, with Indonesia leading by 33 million mt; Malaysia, 19.8 million mt; Thailand, two million mt; Colombia, 1.108million mt; and Nigeria, 970,000 mt.
The story of Malaysia (where Nigeria imports the bulk of its palm oil from) emerging as one of the powerhouses of palm oil is never complete without Nigeria being linked to it.
In the 1970s, some Malaysian officials came to NIFOR, and took away palm fruit seedlings, which they genetically engineered to become high yield species.
The narrative states that the product of vision and persistent pursuit of it over these high yield species plucked from Nigeria is the palm oil, which Nigeria, in total embarrassment and in plain advertisement of the nation’s visionless leadership over time, has now turned around to import billion dollars-worth of the produce from Malaysia.
In view of the turn out of events, Nigerians have continued to ask a barrage of questions, with the most querying, “what happened to palm oil-producing states? What is the Federal Government doing to address the embarrassing shortfall, among others.
Prior to the discovery of crude oil in Nigeria, Ondo State was ranked as one of the highest producers of palm oil in the country, and in the current “One state, one product” campaign of the Federal Government, palm oil is identified as the economic product for the state.
Okitipupa Oil Palm Company Plc (OOPC), established in 1968, took a leading role in the production of palm oil and kernel, with other varieties like crude palm oil, technical oil, pharmaceutical sterin, palm wine, brooms, seedlings, ashes and brown soaps.
There are three major palm oil factories that produce in commercial quantity in the state. They are Ore-Irele Oil Palm Company Ltd, (a medium estate plantation of 3, 103 hectares) and Araromi-Ayesan Oil Palm Plc, jointly owned and controlled by OOPC that has the largest plantation of 10, 468 hectares.
The company, which was established in the South Senatorial District, and its headquarters located in Okitipupa, Okitipupa Local Council, also offered products related to nursery practices, vegetable oil and oil fat; serving industrial users that manufacture soaps, margarine and vegetable oil. It produced palm kernel and lower grade oil products too for household markets.
The major operation mode of OOPC during its heydays began with harvesting of fresh fruit bunches from the plantation, reception at the loading ram, sterilisation, stripping, digestion, pressing, boiling and skimming, clarification and purification, and storage with over 10, 000 staff strength that did shift duties thrice in a day.
Unfortunately, the intervention of the military in the country’s governance affected the upscale activities of the company, as corruption and maladministration, which were the trademarks of military rule in the country, dealt devastating blows on the fortunes of the OOPC, and the people by extension.
OOPC was in comatose for upwards of 10 years until a former governor, the late Dr. Olusegun Agagu, who was an indigene of Okitipupa made several attempts to revive the moribund outfit. He privatised it with assets worth about N750m. But to date, OOPC is still being constrained by corruption nearly a decade after Agagu’s tenure ended. The company is presently in shambles.
Currently, there are over 1, 500 small scale oil palm processing outfits scattered across the state, but with a large portion of the business concentrated in the South Senatorial District because of its nearness to OOPC and the oil palm estates.
Edo State is noted for the cultivation of cash crops like palm fruits and rubber, among others. But its interest in palm fruits appeared to have dropped, as reflected in the decline that palm oil production has suffered, despite the fact that NIFOR is situated in the state.
However, Governor Godwin Obaseki, recently hinted of plans to grow between 100, 000 to 150, 000 hectares of oil palm plantation in the state within the next three years.
Obaseki, who recently said he has visited some countries in Asia, precisely Indonesia and Malaysia in a bid to re-define the oil palm industry in the state added, “We are endowed as a state and we pride ourselves as one of the leading oil palm production states in Nigeria, where investors are showing significant interest. You would recall that one of the workshops we had on agriculture emphasised the need for an Oil Palm Road Map, which we have been working on.”
With the state being prolific in oil palm especially in Ovia, Orhionmwon and Uhunmwode local councils, the governor added that a a labour intensive crop, oil palm remains a major employer of labour, and the aspiration of the state is to use that to boost its employment base for the industrial growth of the state, and to enhance wealth creation and increase government revenue.
Still as part of efforts to boost the production of oil palm in the state, Obaseki said his administration would soon sign a multilateral Memorandum of Understanding (MoU) with NIFOR, and private investors to add oil palm in the basket of export earning products.
During a tour of the institute located in Ovia North-East Local Council, Obaseki expressed hope that it was still possible for the country to bounce back to its prime position in palm oil production and exportation, stressing that his administration was ready to champion the paradigm shift through collaborations.
He lamented that the country has over the years undermined a natural resource such as oil palm, which has the potential to grow her economy, adding that the state was ready to learn anew in order to correct the wrongs of the past.
“The country is yet to maximise the potential of this institute (NIFOR), we should go back to the drawing board and retrace our steps and fix that which we missed years ago. We will be travelling to Indonesia in a few weeks to see how the country used oil palm to develop its economy; there are areas we have comparative and competitive advantage as a country, but there are certain things that we need to improve upon.”
Two frontline outfits in the state, Okomu Oil and Presco Plc, have continued to increase their plantation areas and are on course to meet their 2018 and 2020 targets of growing their respective land area to 12, 000 hectares (ha) and 20, 000ha.
The Guardian gathered that in 2015, matured land constituted about 95 per cent of the total land area for both producers combined, growing by 10.8 per cent for Okomu and 46.2 per cent for Presco.
At the peak of the country’s oil palm production, the erstwhile Cross River State (which included Akwa Ibom State) was one of the states with a lot of oil palm. Both states as well as Rivers State are located five degrees north and five degrees south of the equator, which is where oil palm grows very well.
This is also one of the major reasons that PZ Wilmar, a joint venture between PZ Cussons International, UK, and Wilmar International Ltd, Singapore, elected to pitch tent in Cross River State after its due diligence. The firm, which says its intention includes restoring the country to its former position as world leader in oil palm production, apart from putting up a refinery, which has a capacity of 1,000 tonnes per day, is also growing oil palm. It is also setting up 50, 000 hectares of oil palm plantation in the state and has already acquired 26, 500 hectares of land and growing oil palm at Calaro Oil Palm Estate; Ibiae Oil Palm Estate and an another estate in Biase. It also acquired a 12, 800-hectare oil palm plantation from Obasanjo Farms.
According to a member of Institute of Human and Natural Resources (IHNR), Joseph Ashibekong, “Cross River State is very endowed when it comes to the production of oil palm because apart from the land being fertile, every local council produces palm oil, and you don’t need to apply fertiliser for your palm trees to grow well; be they planted on a hill or beside the river.”
Ashibekong, who is also a farmer said in different parts of the state, “We have improved palm varieties like the Malaysian species that I planted. If you use the different varieties from Malaysia, in two to three years, you will love what you see.”
He added that the country’s fortunes as far as oil palm is concerned nosedived because of limited interest in farming, as well as the lack of right programmes and policies to restart the oil palm revolution.
Umuahia, the Abia State capital is host to the largest palm oil market in the southern Nigeria- Good Shed- located at Umuopara in Umuahia South Local Council, and about five kilometers away from the state capital. The market was relocated from Umuahia metropolis by the state government where space constraint issues arose.
Between 1999 and 2007, former Governor Orji Uzor Kalu, distributed about one million palm seedlings free to communities, civil servants and schools for planting.
But years after, the seedlings failed to produce the expected results, as the beneficiaries failed to nurse them adeqately, the Chairman, National Palm Produce Association of Nigeria (NPPAN), Abia State Chapter, Deacon Okechukwu Ndumele, told The Guardian.
However, it was gathered that the state Smallholder Oil Palm Management Unit has been mandated to raise Tenera improved species for distribution to smallholder farmers at subsidised prices.
Accordingly, seven million pieces of these species have been scheduled for procurement and distribution in phases between 2017 and 2019 under the “Ikpeazu’s Oil Palm Revolution,” which will advance the state from small to large-scale palm oil producer.
Under the programme, two million seedlings were procured from the NIFOR in 2016 and planted at Ayaba Umueze, in Osisioma Local Council. Three million and 2.5 million seedlings procurement will follow in the second and third phases.
By introducing Tenera, which is hybrid specie that begins to fruit after three years, the state government is replacing the old Wild Grove species that yield less after harvest.
The state government has also mandated the 17 council areas to procure not less than 40, 000 seedlings in the first instance and re-sell to their farmers.
A top palm fruit farmer in the state, who elected to remain anonymous predicted that a bumper harvest and more revenue from palm produce would result if government sustains the Tenera specie distribution, make more plots of land available, and use the private sector to manage the procurement, distribution and processing of the harvests mechanically.
One of the factors responsible for the country’s catastrophic drop in oil palm production, experts say, is government’s many unfavourable policies in the sector.
According to the Ondo State Chapter chairman of NPPAN, Chief Bolarin Adetula, unrestricted legal and illegal importations of crude palm oil from neighbouring African countries is also another factor endangering palm oil production in the country.
Aside the massive unemployment that this would cause the nation, Adetula revealed that substandard products identified as “Taco,” that is unhealthy and injurious to human health is being brought into the country on a large scale, stressing that the illegal entry of the product was sabotaging Federal Government’s efforts towards developing the nation’s palm oil industry.
“No doubt, the product is massively imported into the country officially, and is also illegally smuggled into the country. This would pave way for the return to the country of past problems, which made many local producers to abandon their palm oil plantations. New generation farmers got loans to key into Federal Government’s initiatives aimed at reviving the sector.
“This new trend of allowing cheap palm oil into the country will definitely send all oil plantation owners out of the field once again and that will increase non-performing loans in the financial sector,” he warned.
A Board of Trustees member of NPPAN and Managing Director of Abia Farm, Chief Abiodun Adejo, noted that the unfortunate trend was threatening government’s drive to solve unemployment crisis at all levels in the country.
He said: “One hectare of palm plantation will employ five permanent employees. It may interest you to know that a ship load of palm oil imported into the country is killing not less than 4, 000 jobs and sustaining not less than 4, 000 jobs in the country where it is imported from.”
Adejo, who is also the Odole of Akure Kingdom, said “it will be a great oversight if the Federal Government fails to stem this trend of importing cheap palm oil into the country thereby killing a sector of the economy that can create thousands of employment for our unemployed youths.”
He alleged that some cabals and industrialists were behind the illegal activities, faulting the statistics they put forward that the nation produces 970, 000 metric tonnes of palm oil per annum.
“They have often failed to tell us how many stands of oil palm the country boasts of, and how many hectares these numbers occupy. They go about with these figures to justify importing cheap palm oil thus killing the palm oil industry in Nigeria.”
The association, as a matter of urgency, urged the Federal Government to task its border monitoring agencies to aggressively beef up security at the borders to stem the uninhibited importation of all manner of vegetable oils.
“The National Assembly should invite the leadership of Nigeria Custom Service, and similar organisations for questioning because this is an act of sabotage.”
NPPAN also demanded that the government should, as a matter of policy, set up farm tanks in strategic locations in all palm oil producing states so that appropriate government agencies can monitor the quality and quantity produced.