The scandalous palm oil importation

At least, N299.6bn of palm oil was imported by Nigeria from 2017 to 2022 despite the product being on the June 2015 list of import items not valid for allocation of foreign exchange by the Central Bank of Nigeria (CBN), an analysis of Nigeria’s Foreign Trade by Daily Trust has revealed. With the National Bureau […]

At least, N299.6bn of palm oil was imported by Nigeria from 2017 to 2022 despite the product being on the June 2015 list of import items not valid for allocation of foreign exchange by the Central Bank of Nigeria (CBN), an analysis of Nigeria’s Foreign Trade by Daily Trust has revealed.

With the National Bureau of Statistics (NBS) report indicating that the product itemed ‘Palm Crude Oil’ is often among the top five imported agricultural products into the country, analysis shows that palm oil was imported more in 2021 at N148.2bn, followed by 2022 with N70.2bn and 2018 with N32.2bn. In 2020, N22.bn of the product was imported while in 2017, N21.2bn and 2019 had the least importation with N19bn.

And Malaysia topped the list of nations where palm oil was imported from by Nigeria within the period at N151.5bn, followed by India – N65.2bn, Ivory Coast – N22.4bn, China – N20.3bn, Singapore -N20.6bn, Indonesia – N17.1bn, Columbia – N1.4bn, United States – N727m, Ghana – N130.6m and Cameroon – N4.26m.

Yet, in the 1950s and 1960s, oil palm farming was a key sector of the Nigerian economy, which generated about 43 per cent of the world’s total production. Nigeria was a leader in the world palm oil market then, as it satisfied both domestic and export needs.

Watching the watchdog: Newspapers get Ombudsman

Watching the watchdog: Newspapers get Ombudsman

Because of Nigeria’s prime position, Malaysia, struggling to uplift its palm oil production sector, established its research and development (R&D) programme which started an exchange programme with the Nigerian Institute for Oil-Palm Research (NIFOR).

Eventually, the Malaysians, through NIFOR, procured the germplasm. Now, they are only second to Indonesia as the world’s biggest palm oil-producing country. Together, they account for 85-90% of total global production.

Thailand occupies 3rd position while Colombia in South America is 4th. Nigeria occupies the 5th position with 1.5% or 1.03 million metric tons of the world’s total output, according to the United States Department of Agriculture (USDA).

But with local consumption at 2.7 million metric tons (MT) per annum, that leaves an estimated demand-supply gap of about 1.4MT, which is being augmented through imports.

This should not be as oil palm is native to West Africa and is endemic to Nigeria. The decline in its production began during the civil war when it plummeted as the largest global exporting country at the beginning of the 20th Century to 36.4% of global supply in 1969 and 13.2% in 1974. Since then, domestic consumption has increased while slow growth in palm oil production and low output have been prevalent.

This is very unfortunate because the product is in high demand across the world. And export of palm oil could compete with crude oil as a major foreign exchange earner. After all, a barrel of palm oil sells for over $600 while the current price of WTI crude oil as of April 10, 2023, is $80.74 per barrel.

And palm oil can grow the local industry as oil is extracted from both the pulp of the fruit (palm oil, edible oil) and the kernel (palm kernel oil, which is used in foods and for soap manufacture) and many processed foods like biscuits, chocolates, cookies, sweets, cream for coffee or peanut butter among others.

The leaf, fibres and empty fruit bunches are used to produce chipboard and plywood while the palm fronds and another of its byproduct, kernel meal, are used in the production of concentrated foods and supplements in animal food.

Outside its trumpeted medical use, palm oil can as well be burned in order to produce electricity at power plants. For example, the Sabah palm oil power plant in Malaysia generates about 20MW of electricity and the Bugala oil palm power station in Uganda generates about 1.5 MW. Besides, palm oil is being developed and used to make a sustainable, environmentally friendly fuel for automobiles and machines.

Daily Trust believes that it is time for Nigeria to wake up as it is scandalous that a once leading producer is importing the same product due to absolutely criminalized story of neglect. We must take back our place.

Towards this, Nigeria must go beyond mere pronouncements. On March 18, 2019, the Central Bank of Nigeria (CBN) said with the help of the state governments, Nigeria could reach self-sufficiency in palm oil production between 2022 and 2024 and ultimately overtake Thailand and Columbia, to become the third largest producer over the next few years. But the pronouncement, a pipe dream, died where it was made.

So, there is a need for massive investments by plantation owners and even small-scale owners in the country that will boost local production. For now, the palm oil sector is mostly dominated by small-scale farm holders, which account for over 80 per cent of local production. Well-established plantation-owning companies account for less than 20 per cent of the total market. This dominance of small farm holders in the palm oil market has resulted in low output compared to the country’s production potential.

Moreover, the CBN should incorporate smallholder palm oil farmers into its special intervention programme.

And this is the time for NIFOR to live up to its billing by accelerating the supply of the best high-yielding seeds and helping the industry in the provision of improvised technologies, training farmers and producers.

Governments at all levels should give the required attention to agriculture, especially palm oil production.