Indonesia fills gap as Nigeria’s palm oil production lags

Despite growing concerns over food security and Nigeria’s high food import bill, Africa’s most populous nation has failed to make appreciable efforts to tap into the production of crude palm oil (CPO) even as it suffers from an over 1.7 million metric tons deficit.
Nigeria currently produces about 970,000 metric tons of CPO, while local consumption is estimated at 2.7 million tons per annum, indicating an estimated demand-supply gap of over 1.7 million MT.
Generally, the country has seen its palm oil production stagnated in recent years.
In terms of production volume, Nigeria is the fifth largest palm oil producer, behind Indonesia with 36 million MT, Malaysia with 21 million MT, Thailand with 2.2 million MT and Colombia with 1.3 million MT, data in the global oil palm industry shows.
Data from the National Bureau of Statistics (NBS) shows that Nigeria imported a total of N7 billion worth of CPO in the second quarter of 2017, with Indonesia accounting for 76 percent of the total import within the period.
“The country’s production has been stagnant, even though big plantations are coming up, smallholder production, which constitutes over 80 percent of the total palm oil production in Nigeria, has continued to drop due to aging trees and poor management,” said Steven Babajide, country representative, Solidaridad’s Network, in an email response to questions.
“The problem is further compounded by the inefficient processing technologies leading to 25-50 percent loss of crude palm oil,” said Babajide.
Nigeria imported about 552,000 metric tons of crude palm oil in 2016, according to data from Solidaridad Network.
Due to this huge market potential in Nigeria, the Indonesian government is now proposing a crude palm oil swap deal in exchange for crude oil, to the Nigerian government, Reuters reported.
“The production of smallholder farmers which produce the bulk of what the country consumes, has been stagnated over the last five years,” said Igwe Uche, national president, Oil Palm Growers Association of Nigeria (OPGAN) in a response to BusinessDay questions.
“Demand for crude palm oil is increasing because our population is fast rising and industrial need for it is also on the increase,” Uche said.
While Uche affirmed that there has been an increase in the planting of new palm oil trees in recent years, he noted that most of the trees are yet to commence fruiting, as it takes a minimum of three years for them to mature.
Since losing its position as one of the world’s largest palm oil producers, Nigeria is yet to recover and take its proper place in the comity of crude palm oil producing nations. This has been attributed to the discovery of crude oil, which changed the country’s palm oil narrative of the 60’s.
As a result, Indonesia and Malaysia have now surpassed Nigeria’s production, becoming the global leaders in oil palm output.
With a well-developed palm oil industry, Nigeria has the potential to earn huge foreign exchange from oil palm production, experts say.
According to experts, oil palm has the capacity to produce more oil than any other oilseed crop. About 90 percent of palm oil is used in the production of foods, while the remaining 10 percent is used by the non-foods industry.
Food products like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics are made from palm oil.
Henry Olatujoye, national president, National Palm Produce Association of Nigeria (NIPPAN) said that the country needs over two million hectares of commercial palm oil plantations to meet up with the current demand.
The oil palm belt covers 24 states, including all nine states of the Niger Delta and the South-East states of the country, with 80 percent of production coming from dispersed smallholders who harvest semi-wild plants and use manual processing techniques.
Despite crude palm oil being amongst the 41 items restricted from forex, Nigeria has seen importation of the produce increasing.
Experts say that Nigeria can regain its status as a net exporter of crude palm oil when there is a well articulated development plan for the subsector, with clear targets, strategies and timelines.
“With a development plan, critical segments along the entire value chain would then be addressed, using sustainable private sector led approach in its implementation. Furthermore, re-organisation of smallholder farmer associations to cluster them around big mills for sectoral growth,” said Babajide who was earlier quoted.
“We need to also organise new plantings for smallholders, especially youths and women and facilitate the development of improved seedlings, farm management services, agro chemicals, and fertilisers to increase productivity,” he added.