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Nigeria’s 2019 palm oil import from Malaysia rises 18.4% amid border closure

Nigeria’s Crude Palm Oil (CPO) imports from top global producer – Malaysia has risen by 18.4 percent in 2019 amid border closure, data from Malaysian Palm Oil Council (MPOC) shows.

The country’s CPO import from Malaysia increased to 286,964 metric tons (MT) in 2019 from 242, 388MT in 2018, up by 44,576MT on a year-on-year basis, the data states.

In a bid to tackle smuggling and boost local production of agricultural produce in the country, the government had since August 2019, shut the Nigerian borders with neighbouring West African countries.

Experts say that the border closure is having an impact on the oil palm industry as importers who would normally import to neighbouring countries and bring it into Nigeria through the land borders are now importing directly into the country.

They also stated that palm oil imports have continued to rise because Nigeria’s CPO has remained less competitive to the imported ones owing to high production cost among others.

According to them, this makes local manufacturers who use CPO as raw material for production result to importing rather than patronising local producers.

This is evident in Presco and Okomu’s – Nigeria’s two largest oil palm producers’ full-year 2019 financial statements.

Okomu Oil posted its biggest profit decline in over five years as profit hit a four year low while Presco saw its profit hit the lowest since 2015.

Okomu Oil posted a profit of N5.5billion for 2019, 35.3percent lower than what it raked in 2018 while Presco made 8.16 percent less as profit at 3.9billlion.

Similarly, to protect the country’s palm oil industry and spur the industry growth, the Nigerian government had imported a 35 percent tariff (10 percent duty and 25 percent levy) on palm oil imports into the country.

Crude palm oil is also listed on the Federal Government 41 items restricted from forex access.

Despite this, oil palm imports into the country are still on the rise owing to the huge demand-supply gap.

Nigeria’s palm oil output is estimated at 900,000-1.3 million MT, experts say. Import is estimated at over N500 billion annually. With national demand of 2.1 million MT, the supply gap is around 800,000MT.

“Since the inclusion of CPO in the country’s import prohibition list, Nigeria has significantly increased its production in the last 10 years,” Fatai Afolabi, executive secretary, POFON said in a statement last year.

“But Nigeria is still importing a lot of CPO into the country and many are smuggled through the land borders,” Afolabi said.

Last year, the Nigerian government also announced the provision of financial support to smallholder farmers which currently produces 80percent of the country’s total oil palm production.

Nigeria’s apex bank says it has disbursed over N30 billion to the oil palm sector.

Oil palm can 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, industry players say.

Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents, and even cosmetics are made from palm oil.

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 owing to the discovery of 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 production.

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