More investments in crude palm oil production to boost Nigerian economy

In 2021, Alphonsus Inyang, the national president of National Palm Produce Association of Nigeria (NPPAN) in an interview gave his opinion on the association’s project “One Family, 20 palm Trees Initiative”. He stated that Nigeria, which was once the first and leading oil palm production nation is currently lacking behind due to investments which are not made. He said Nigeria could still emerge as the lead producer of oil palm, and could build a sustainable economy off palm oil production.

In the interview, he relatively compared Indonesia’s production of 40 million tons of palm oil per annum on 12 million hectares of plantation, and Nigeria’s1.2 million tons on 700,000 hectares of plantation. Inyang continued by saying the country could develop 250,000 hectares per year across 24 states, and he was of the opinion that, that would place Nigeria among the world producers of oil palm.

Palm oil is one of the lucrative businesses around the nation, and Africa at large currently. The seasonal business is currently a go to for a number of business starters in the country. However, it is also lucrative for the importers and exporters in Nigeria, as the nation is not just a producing country but one where the natural resources used in producing palm oil, palm kernel grows effectively.

The demand for palm oil can be linked to various components, like its health benefits, price affordability, and high production value, although it is used for industrial purposes as well, which is why it is commonly appreciated in many African countries, and the world at large.

Statista reports on palm oil production in Nigeria 2009 to 2021, shows that in 2021, the production of palm oil in Nigeria amounted to 1.4 million metric tons (MT). That grew from delivering up to 0.9 million MT per annum.
Nigeria is the fifth biggest supplier of palm oil currently, and some of the largest palm oil producing companies in the nation include Okomu Oil and Presco who have reportedly made massive growth in revenues. In 2021, Presco generated N47.4 billion in revenue as against N23.8 billion revenue made in 2020. Also, Okomu Oil, which is another crude oil palm producing company generated N37.4 billion, an increase of 59.8 percent over N23.4 billion in the previous year, 2020. The growth in revenue in both companies means that the demand for CPO is rising, and Nigeria cannot afford to miss the emerging opportunities.

In 2012, 940,000 MT of palm oil was produced, but production reduced in 2013, by 6.38 percent to 880,000 MT. In 2014, production rose to 940,000 MT of palm oil, which was the same figure generated in 2012. This must have meant there was more room for demand, more than there was in the previous year, 2013.
In 2015, production of palm oil in the nation rose by additional 15,000 MT, to 955,000 MT, an increase of 1.59 percent when compared with the metric tons of the previous year. Production further rose in 2016, by 3.66 percent to 990,000 MT.

The constant increase in the production of palm oil shows that the sales of palm oil in the country and its market size are on the rise, meaning that there will be more revenue generated from this sector of agriculture. It also means that the value of palm oil in the Nigerian market is becoming more attractive.

Read also: Opportunities beckon for Nigeria’s palm oil producers

In 2017, the amount of metric tons of palm oil produced stood at 1,025,000 MT. It was also a season for local farmers and producing companies as the domestic consumption of the palm product is more than the produced quantity in the year as reported by Statista.

In 2018, production amounted to 1,130,000 MT, which was not up to the domestic consumption in the same year. Some of these may have been as a result of leftover of the palm product from the previous years, while some could have come in as imported products. It was reported that some conglomerates will rather buy from their affiliates in other countries than purchase the services of local farmers in Nigeria.

The rise in production of palm oil in Nigeria continues through 2019, 2020 and 2021. It amounted growth to 0.88 percent, 11.8 percent, and 9.80 percent respectively. Since the numbers of production in the last ten years seem to increase 90 percent of the time, it may mean that there will be increase in production of palm oil in this year and coming years, causing an increase in revenue, and economic value for the local states where the products are manufactured.

Palm oil is known as an agricultural product that has no waste, as it will continue to be economically important. Recall that the Financial Trust reported that NPPAN president, Inyang said it would cost the nation N37.5 billion for three years to develop 250,000 hectares of oil palm plantations, which will produce over one million jobs.

However, this will not only garner more profits and rise in revenue, it will also reduce the current level of unemployment, which is at 33.3 percent according to NBS. He also said the profit to be generated will amount to N500 billion per year from the third year until the next forty years. It will be reasonable that both the federal and state governments look into the sector of palm oil too, and develop more avenues for the growth of palm oil plantation in the country, as it stands to boost the nation’s growth domestic product (GDP).

Increased production of palm oil will help the nation in reducing the growing menace of youth unemployment. Nearly half of the youths in this country is unemployed, a development that denies Nigeria of their creativity and productivity. Also, it will increase the productivity of other stakeholders involved in the oil palm value chain, from transporters to wholesalers, as well as researchers.