Nigeria's leading finance and market intelligence news report.

Palm oil import from Malaysia rises 57% in Q1 despite increased production

Palm oil
1

Despite increase in local palm oil production, Nigeria’s import from global top producer – Malaysia – rose by 57 percent in first quarter 2019, data from Malaysian Palm oil Council (MPOC) shows.

On a year-on-year basis, Nigeria’s crude palm oil (CPO) import from Malaysia increased to 112,480 metric tons (MT) in the first three months of this year from 47,974MT in the corresponding period in 2018.

Experts say the country’s crude palm oil is less competitive to the imported ones owing to the high cost of production, infrastructural gaps, and high logistic cost among others.

According to them, this makes local manufacturers who use CPO as raw materials for production resort to importing the product rather than patronising local producers.

This is evident in the first quarter financial statement of Okomu Oil– Nigeria’s second-largest palm oil producer.

The company reported its weakest first-quarter performance since 2014. The poor performance was due to weaker palm oil prices and consumer demand as well as surge in lower priced CPO into the country.

Okomu’s first-quarter financial statement shows that revenue declined by 42.5 percent to N4.2 billion in Q1 2019 from N7.3 billion in same period in 2018.

Similarly, profit after tax declined sharply by 71 percent to N1 billion in q1 2019 from N3.5 billion in Q1 2018.

Presco, Nigeria’s largest palm oil producer is yet to release its first-quarter financial statement for the year.

“Nigeria has significantly increased its production in the last 10 years but is still importing a lot of CPO into the country and much more is smuggled through the land borders,” Fatai Afolabi, executive secretary, Plantation Owners Forum of Nigeria (POFON), said in a statement.

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 60s.

As a result, Indonesia and Malaysia have surpassed Nigeria’s production, becoming the global leaders in oil palm production.

Henry Olatujoye, National President, National Palm Produce Association of Nigeria (NPPAN), stated that the inability of government to provide a reliable data for the industry has remained a major problem for the industry, saying that some foreign investors are taking advantage of that to deceive the government in allowing the importation of the produce into the country.

Some experts attribute the increase in imports to the high population growth rate in the country that is fuelling demand.

Nigeria’s population is rising rapidly but food production is not moving in same trajectory, causing gaps in major crop production including palm oil.

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, 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.

 

Josephine Okojie

Leave A Reply

Your email address will not be published.