• Saturday, May 18, 2024
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BusinessDay

As manufacturers order N241bn worth of palm oil

The recent piece of disturbing news that hike in price and scarcity have compelled manufacturers in Nigeria to place order for 455,000 tonnes of palm oil worth $409.5 million (N241 billion) is indicative of gross leadership failure over the decades.

For instance, in the early 1960s, Nigeria was ranked as the world’s largest palm oil producer with global market share of 43% but in 1966 Malaysia and Indonesia surpassed Nigeria as the world’s largest palm oil producers. Currently, Indonesia and Malaysia are by far the largest palm oil producing nations. Together they account for 85-90 percent of the total production of this vegetable oil.

According to the CBN, the country would have been earning approximately $20 billion annually from processing of palm oil, equivalent to half of the 2022 federal budget, yet over $500 million was being spent annually on the importation of palm oil.

On the other hand, in recent years the production in Nigeria has dropped from 3-5% of total global output, down to less than 2% of total global market production put at74.08 million metric tonnes. Based on a USDA estimate, local production accounts for around 78 percent of consumption, leading to importation.

In 2020, Nigeria imported $351million, making it the 23rd largest importer of palm oil in the world as imports from Malaysia was $242 million or 69 per cent; Singapore, $50.8 million or 14.5 per cent; Indonesia, $44.4 million or 12.7 per cent; Niger, $7.35 million or 2 per cent and Colombia, $3.75 million or 1.06 per cent.

Subsequently, in 2022, the country imported 227,035 MT of palm oil from Malaysia. That is the same country that got its palm oil seedlings from Nigeria in the ‘60s!

In fact, so paltry the production level has fallen that it was recently revealed that local price of the produce is 55 per cent higher than imported palm oil. According to recent media reports, findings from the consumers and market indicated that a litre of the commodity has gone up from N1,000 to N1,500, while 20 litres, sold for N19,500 has reached N30,000.

Read also: C’River to build palm oil market

Going further, it has been made public that in the Malaysian export market, a tonne goes for $900 (N675,000), $18 (N13,500) per 20 litres and $0.9 (N675) per litre. The data released by the Malaysian Palm Oil Council (MPOC) revealed that manufacturers had imported 136,300 tonnes between January and May, 2023 from the projected 420,000 tonnes. So, what do all these say about the Nigerian situation?

Certainly, the sudden switch of interest and funding of palm oil production all with the bid to focus on crude oil production has led us to where we find ourselves as at this day. Lack of political will, on the part of the policy makers and lack of deployment of modern agric practices on production, processing, preservation and exportation have been counter- productive. Yet, the situation could have been much better.

All because of decades of “stagnant output growth and growing local demand”, Nigeria’s production deficit has increased in no small measure. As revealed by experts, on the average, around 25 percent of yearly domestic palm oil consumed in the country was imported over the last five years. Can we afford to continue this way? Of course not. .

It is worthy of note that the oil palm tree has been known in Europe since the 15th century. But it was first introduced to Nigeria in the early 1900s by the Liverpool and Bristol slave traders. The tree which was initially grown in small quantities mainly for domestic use experienced large-scale, commercial production of palm oil by the 1950s.

As at 2023 Edo state is arguably the highest palm oil producing state in Nigeria. And that is enhanced by Flourmills Nigeria, Dufil and Saro Africa that are all planting thousands of hectares of oil palm plantations in the state.

With regards to the oil palm, Okomu is second largest plantations in Nigeria, boasting of being the country’s biggest crude palm oil (CPO) producer.

As we speak, a metric ton of palm oil sells between N1-1.2 million depending on your location. In spite of the government, policy in listing crude palm oil alongside other 40 items restricted from forex access, and closing the Nigerian borders, it has been discovered that oil palm imports into the country are still on the upswing. That of course is because of the huge demand-supply gap.

For those with the false belief that the situation would change soon, an expert has a different opinion. According to Henry Olatujoye, managing director, Palmtrade and Commodities Development Nigeria Ltd, “Nigeria’s oil palm imports from Malaysia will continue to increase for the time being because our investment in the industry is still very insignificant,”

“We estimated that our local/domestic consumption is averaging 2.4 million tons in a year, and our first-class developers – Okomu, Presco, and others, do not annually produce up to 800,000 tons.

“If we estimate the pocket smallholder farmers to be contributing up to a million tons, we’d still have a shortfall compared to demand.” This is well stated.

Though the United States Department of Agriculture (USDA), stated that the production of palm oil in Nigeria reached 1.4 million metric tonnes (MT) in 2022, a 9 percent uptick from 2020/21 when production stood at 1.28 million MT, there is still much more to be done.

As rightly stated by Alphonsus Inyang, president of the National Palm Produce Association of Nigeria palm oil prices in Nigeria have gone up and have remained the most expensive in any crude palm oil producing country, due to the high demand for the commodity.

According to him, a metric ton of palm oil sells between N1-1.2 million depending on your location. Echoing the position of yours truly on the matter, he also stated that: “The lack of funding and interest in oil palm production by successive governments has led to the neglect of the sector, and more farmers have lost their livelihood through lack of profit for maintenance/expansion to produce more.” But what is the way forward?

The solution to the demand-supply gap, according to Olatujoye, “is our ability to convert our forex to plantation development, under Good Agricultural Practices,” as foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents, and even cosmetics are made from palm oil.

Going forward, we need the knowledge and application of the modern processes involved. According to the Food and Agriculture Organization (FAO) the processes involve the reception of fresh fruit bunches from the plantations, sterilizing and threshing of the bunches to free the palm fruit,. Next comes mashing the fruit and pressing out the crude palm oil. The crude oil is further treated to purify and dry it for storage and export.

Nigerians should therefore, latch in on the vast opportunities available in the growing, processing, selling and exportation of palm oil to make the paradigm shift back to agriculture as our economic mainstay.