Nigeria’s $550m palm oil import bill sparks calls for industry support

…Growers warn adulterated palm oil now national emergency

Nigeria’s reliance on palm oil importaton is under intense scrutiny as agricultural stakeholders warn that the country’s staggering $550 million annual import bill will persist unless systemic barriers to land and capital are addressed.

Speaking at the BusinessDay’s International oil palm summit held in Abuja on Tuesday, Isona Gold, Executive Director, Institute for Oil Palm Research (NIFOR), said that several efforts to enhance the oil palm value chain had failed to yield desired result, hence the industry
has mostly retained this dominance of the small scale compared to the large scale operators.

He stressed that while the small-scale production model is highly advantageous because it drives rural development and generates extensive employment opportunities at the grassroots level, advancing the industry to meet dpmestic demand requires a balanced approach that integrates both smallholders and large-scale producers.

“We had the presentation by the representative of the ambassador of Indonesia telling us their level of cultivation and what they currently produce. Their production is in the range of 50 million tons of palm oil per year, Malaysia is doing over 20 million tons of palm oil per yearly. The best record we have of Nigerian production is about 1,500,000 tons of palm oil per year and our demand is a little less than 3 million tons.

“So, the issues of land, not being able to get land that an investor can buy within one year, is a major constraint to production. To acquire land now in Nigeria is difficult, we have to still have a very good land bank that are suitable for oil palm cultivation.

“It will take you between five and seven years to acquire land to grow the oil palm. And then, you want to have contact with issues of community facilities and all that. That probably will take you throughout the life of your plantation at these places,” he said.

Read also: Russia eyes Nigerian palm oil imports amid growing market demand

Gold also noted the issue of insecurity, stating that farmers are presently spending a lot on security of plantation, which for him is a dis-incentive for investment.

“We also have issues of insecurity. Now people are so scared of going to their plantation, investment in security now in plantations is very huge and it is going to discourage a prospective investor. So, these are some of the issues that we need to resolve if we want to move forward.

“Another issue is the level of adulteration of planting materials, because the industry is unregulated, anybody can just wake up. In fact, a volcanizer can just wake up, and then there is a seed producer advertising on Facebook. And people start buying materials from him without knowing the implication of some of these actions. People come in wanting to buy cheap planting materials and then they end up in the hands of these rogues.

He however called on farmers to leaverage the presence of the institute (NIFOR) for reliable findings. “NIFOR is there for you so that you don’t have to set up your own private research and development institution to provide you with the data backstopping in the industry. So come to NIFOR. Because it was set up for you as a Nigerian.

In his remark, Kudzai Kumunyu, divisional head, Agribusiness & non-oil, FCMB said that with Nigeria producing about 1.5 million metric tons annually, over $550 million dollar is being spent on import.

He stated that in a well-functioning market, banks should be actively competing to fund this sector. However, the reality is that financial institutions currently target all their liquidity toward large-scale corporations, leaving major players with no shortage of funding while smaller operators are sidelined.

Kumunyu emphasised that smallholders farmers require effective organisation to thrive, adding traditional cooperative models have a poor track record of success in the sector

“Smallholder farmers are the ones that produce the majority of the crude palm oil. They are doing that basically on their own, without financing. That in itself is resulting in them taking shortcuts. They are not producing optimally in terms of yields. Their processing is not optimal, and they end up having a lot of losses.

“They don’t have collateral. Their lands, banks cannot use them as collateral, which is another problem. Having identified those shortcomings, how do banks finance this specific sector? Because as I said, I don’t think the bigger players have a problem with financing.

“If you look at it, the smallholder farmers need someone to organize them. I have seen a lot of smallholder farmers being organized around cooperatives and so forth, and these have not been very successful,” he added.

Also speaking at the event, Joe Onyiuke, President, Oil Palm Growers Association of Nigeria, decried the growing circulation of adulterated palm oil in Nigerian markets, warning that the practice poses a major public health risk and threatens the livelihoods of local farmers.

According to Onyiuke, the adulteration of palm oil is largely driven by traders and middlemen who mix chemicals with the product in a bid to increase volume and profits.

He explained that the practice had become widespread and is now being carried out openly in some markets and trading hubs across the country.

“That problem is avery serious problem. There is a major disincentive to our members, and this adulteration is not done by our members or farmers,” he said.

“It is done by traders and middlemen who buy palm oil and go to their warehouses to mix chemicals to get higher quantities.”

He described the situation as a “national emergency,” warning that millions of Nigerians may unknowingly be consuming harmful substances daily through contaminated palm oil products.

“People are eating poison every day. So, the government has to step up because it is not something we can do alone,” he said.

Joe stressed that local oil palm farmers should not be blamed for the growing problem, noting that most farmers are only focused on production and selling their goods for survival.

“The farmers are innocent people looking for money to eat and looking for buyers. Usually, they hold the shorter end of the stick because they are cheated and forced to sell very cheaply,” he said.

According to him, greed among traders is fuelling the adulteration trend, as some operators seek to maximise profits by diluting palm oil with chemicals and other substances before reselling to consumers.

The Association said it had already engaged regulatory agencies including the National Agency for Food and Drug Administration and Control and the Standards Organisation of Nigeria to address the issue.

“We had a very good meeting with NAFDAC on that issue. It is a work in progress. We also had a very good meeting with SON because both agencies have the mandate to regulate standards on food and drugs.

“When you are dealing with items that are not labelled, it becomes very difficult. The market is unstructured and unregulated. People can sell anywhere in nylon bags, bottles, and different containers,” he said.

Despite the challenge, he said the Association is willing to collaborate with regulators by providing local intelligence and identifying locations where adulteration activities are taking place.

“We are ready to collaborate with them and show them the areas where these people operate. Through local intelligence, we have to ensure that all those doing this stop,” he said.

The Association called on the Federal Government to intensify monitoring and enforcement efforts to protect consumers and restore confidence in locally produced palm oil.