• Friday, July 19, 2024
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BusinessDay

Need to revive the oil palm industry

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There cannot be a better time to call for a resuscitation of Nigeria’s oil palm industry than now that crude oil price in the international market has declined and, consequently, the government has begun to think seriously of diversifying the economy.

It is noteworthy that beginning from the 1950s up till mid-1960s, Nigeria remained the world largest producer of crude oil palm, with a market share of 43.0 percent, supplying 645,000 metric tonnes (MT) of palm oil per annum across the globe. However, the civil war changed all of that, coupled with the total neglect of agriculture following the oil boom. The war predominantly took place in Eastern Nigeria, which was the seat of oil palm plantations. It destroyed almost all of the oil palm plantations and dispersed the small land holders of oil palm, who till date account for 80.0 percent of the oil palm produced locally. The oil palm belt includes the states of Abia, Anambra, Bayelsa, Akwa-Ibom, Cross River, Delta, Ebonyi, Ekiti, Enugu, Ondo, Ogun, Osun, Oyo, Imo and Rivers States.

The land that is ideal for oil palm plantation totals approximately 24 million hectares in the whole of Nigeria. However, little over 3.0 million hectares of land is put to use.

Consequently, from being the largest producer of oil palm, Nigeria is today a net importer of palm oil. According to IndexMundi, a data portal, the domestic palm oil produced totalled 850,000 MT in 2012, while local consumption amounts to 1.0 million MT per annum. This is in spite the high demand for the product. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics thrive on palm oil. The noodle industry alone is said to consume 72,000 MT of imported palm oil. Thwarted by unavailability of sufficient oil palm in the Nigerian market, some noodle-makers have proactively begun strategic alliances to invest in oil palm plantations.

Nigeria today produces only 1.7 percent of the world’s palm oil, which is insufficient to meet its domestic consumption, at 2.7 percent. Paradoxically, about 20.0 percent of the oil palm produced domestically is considered of high quality and clears all the 17 tests for being an exportable commodity.

In the face of this, we urge the government to invest in expansion of capacity and in technology. The traditional methods of oil palm processing function at extraction rates of between 20 percent and 50 percent, whereas with Malaysia’s new technology, extraction rate has gone up to 90.0 percent.

Furthermore, the beneficiaries of government incentives and credit facilities should be small farmers and co-operatives of farmers.

More importantly, Nigeria needs to learn some lessons from Malaysia, the second largest oil palm producer. A company in Malaysia has 1.2 million hectares of land under oil palm cultivation which produces more than 5 million tonnes of palm oil annually. Equally, the Malaysian equivalent of NIFOR is called Malaysian Palm Oil Board (MPOB). The board does not engage in exporting palm oil but provides a platform for private companies to access the latest technology discovered and invented in the industry. These efforts have facilitated mass production of palm oil in Malaysia. NIFOR needs to learn these lessons and translate the same success to the ailing Nigerian palm oil industry.

The call of the hour is to shift the focus on the potential of the oil palm industry, particularly the enterprise dynamics, and the rippling effect it could cause on the economy at large.