Palm oil imports surge as local production stagnates

Nigeria has seen imports of Crude Palm Oil (CPO) rising rapidly as domestic production remains stagnant for the past five years despite growing demand.
Data from the National Bureau of Statistics (NBS) shows that Nigeria imported a total of N14.42 billion worth of CPO in the third quarter of 2017, up from N7 billion in the second quarter, indicating a 106 percent increase on a quarter on quarter basis.

 

“Nigeria’s oil palm production has been stagnant for over five years now while our food and non-food oil palm applications have been rising very fast owing to our high population growth rate. The only way to meet the current demand is through importation and that is why we are importing so much now,” said Siona Gold, director of information, Nigerian Institute for Oil Palm Research (NIFOR) in a telephone response to questions.

 

“In the future importation of palm oil will continue to rise because the issues limiting production are yet to be addressed. Land acquisition for palm plantations is still a major problem. Investments in palm oil requires huge capital and the finance to fund such investments are still lacking with the few available at a high interest rate,” Gold said.

 

In 2016 Nigeria imported a total volume of 552,000 metric tons of CPO, according to data from Solidaridad Network that tracks CPO production across Africa.

 

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. Majority of the imports came from countries such as Indonesia, Ivory Coast and Ghana within the period.

 

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, global industry data shows.

 

Since losing its position as one of the world’s largest palm oil producers, Nigeria is yet to recover and take its 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. The increased imports is leading to lower prices for consumers.

 

“Normally prices of Palm oil are usually higher between July to December yearly because it’s off season, but this year the domestic prices have been relatively stable and this is because of the high rate of importation of CPO into the country,” said Henry Olatujoye, national president, National Palm Produce Association of Nigeria (NIPPAN) in response to questions.

 

He stated that the country needs over two million hectares of commercial palm oil plantations to meet up with the current demand.

 

According to Novus Agro, a commodity price tracker in the country, five litres of palm oil sells for N2, 400 as against N4, 000 sold in December 2016. This shows a 67 percentage decrease.

 

The oil palm belt covers 24 states in Nigeria, 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.

 

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.

 

“The country’s production has been stagnant, even though big plantations are coming up, smallholder production, which constitute 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.

 

“With a development plan, critical segments along the entire value chain would then be addressed, using sustainable private sector led approach in its implementation,” said Babajide. “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.

 

At the international market a metric ton of CPO is sold for $728 and the price has been fairly stable since September.

 

JOSEPHINE OKOJIE