‘Nigeria needs to establish an Oil Palm Council to manage the industry’
FATAI AFOLABI is an oil palm expert, the managing consultant of Foremost Development Services Limited, and a Steering Committee member of the Agriculture and Food Security Policy Commission of the Nigerian Economic Summit Group (NESG). He is also a technical committee member of the British American Tobacco Foundation. In this interview with JOSEPHINE OKOJIE, he spoke about the country’s oil palm industry and what Nigeria can do to regain its status in the frontline of oil palm-producing nations.
What is the concern of the Plantation Owners Forum (POFON) regarding the ECOWAS Trade Liberalisation Scheme (ETLS)?
The concern of POFON was about the rising wave of official smuggling of crude palm oil (CPO) in the guise of ETLS export from the Republic of Benin. We have figures that show that Benin has always been a net importer of palm oil. So, how can a country be a net importer and exporter of crude palm oil at the same time? But we knew much more than that because we knew over the time that Nigerian companies have outsmarted the Nigerian oil palm import policy by hiding under the ECOWAS protocol of ETLS to avoid the payment of the 35 percent import tariffs. In the Republic of Benin, the import tariff is 10 percent, so Nigerian companies take advantage of the lower tariff in Benin to import palm oil to Benin and bring it into Nigeria under the ETLS, so there was no level playing field because those who were importing legitimately could not compete favourably with those who were smuggling. Local producers were finding it difficult to sell and that was the crux of the matter. Due to high production costs, local palm oil producers were producing at a higher cost, making their products unable to compete with imported oil palm. When the importing companies are not taking advantage of cheap prices, they will bring up the issue of quality – saying locally produced CPO is not good for industrial processing, so that they can continue to import. I think that an end-user should give its raw material specifications and provide support to the producers to enable them to supply to the desired quality standards. Unfortunately, in our situation, end-user companies do not want to make any contribution to the development of the country’s oil palm industry. POFON is not against palm oil importation into the country but it should be brought in through the country’s seaports subject to the payment of the extant tariff.
How has the COVID-19 pandemic impacted the oil palm industry?
The COVID-19 pandemic is a global issue, it’s not peculiar to Nigeria, and we cannot isolate Nigeria. The same way it has affected us, it has affected people in Ghana and even more in the European countries. We are experiencing the second wave now and I think Nigeria has managed the pandemic well within its means and available resources. I will not want to take the COVID-19 pandemic in isolation, but we face the prospect of a food crisis when we add the effects of COVID-19 and insecurity in Nigeria. When we talk about insecurity it means that farmers are not able to go out to tend to their farms and when there is no harvest there is no food to take to the market. The prolonged short dry spell experienced in 2020 is most likely to affect food production and the combination of COVID-19, insecurity and the prolonged short dry spell of 2020 may result in a serious food crisis. It is beginning to manifest as food prices are surging already.
What is the current situation in Nigeria’s oil palm industry?
Unfortunately, we are operating in a society where data is lacking and unreliable but as an industry watcher; I will say that production output in the oil palm sector has been on the rise in the last five years. There has been a considerable increase in the number of new entrants into the oil palm industry at the corporate levels and lots of new plantations have been established.
Plantation owners are expanding their planting areas and processing facilities. Smallholder farmers have also considerably increased their levels of production as most of them are now seeking improved planting materials. Similarly, we are now having plantations in states that are outside the traditional oil palm belt in the country such as Kogi and Nasarawa states. We need NIFOR to proactively research to develop a drought-tolerant tenera that can grow well outside the traditional belt with lower rainfall to further boost our local production.
What is the oil palm supply and demand situation in the country?
It is estimated that we have a supply-demand deficit of 1.5 million metric tons. Our demand is based on the estimated per capita consumption of oils and fats which is estimated at 12.5kg. Palm oil is just one of the major sources of oil and fats like soybeans, sunflower, and groundnuts but industry players often heap the entire oils and fats requirement on palm oil as if the other oil crops do not make any contribution.
How can Nigeria regain its production status in the comity of oil palm producing countries?
We need a well thought out plan. Nigeria’s oil palm industry is smallholder driven which is different from the Malaysian model. The smallholder farmers account for about 80 percent of the production system and most of them are prospecting dura which is not the seed that can give them the desirable palm oil yield per hectare. We need to educate the existing smallholder farmers to let them know that what they planted can never give them a sustainable yield. We have to encourage them to start felling their old trees and start replanting new ones based on improved hybrid tenera planting material with very high yield potential. NIFOR must produce and supply seeds for farmers with quality assurance; this is standard practice. We need to start expanding the planting of oil palm outside the traditional belt because there is no enough land for plantation expansions in the traditional oil palm states anymore. We must focus on how to lift the smallholder farmer out of the trap of 0.5-1ton palm oil yield per hectare and bring them to the prospects of 2-2.5 tons per hectare. We have to start replanting existing low-quality stocks with high yielding hybrids. We need to develop a Nigerian model that will ensure the livelihood of the farmers before the improved new planting becomes productive. With this, the country can double its production in the shortest time possible. We also need to create a palm oil council as a one-stop-shop to manage the entire industry just like the Malaysian Palm Oil Council that promotes trade of the commodity. Also, there must be customised funding for the oil palm industry because of its peculiarities as a crop of long gestation period.
What is Nigeria’s oil palm industry outlook for 2021?
It looks promising and prospective. We are going to begin to see the results of the sustained investment of the large estates like Okomu Oil Palm Company Plc, Presco Plc, Wilmar, and Jb Farms in new plantings and milling capacity expansions. I expect that the entry of ARPNL a sister company of DUFIL and Fayus Nigeria Limited will redefine large-scale oil palm development in Nigeria. The Edo State Oil Palm Programme will also attract more serious investors and the programme will serve as a wake-up call to other states in the oil palm belt to design and implement their respective oil palm development programmes. The intervention efforts of some NGOs and international development bodies would also provide some support and leverage for smallholders. All these taken together will signal the beginning of the unprecedented intervention and support to the oil palm industry in recent times, thus making it attractive for sustained investment at different production levels, especially, to the youths.