Why price of palm oil is escalating – Farmers

Oil Palm farmers have attributed the high cost of palm oil to supply crunch, ban on export of palm oil by Indonesia as well as lack of government support leading to low production. Speaking with Daily Trust on Sunday, one of the farmers in Edo State, Peter Agwele, said lots of factors are responsible for […]

Oil Palm farmers have attributed the high cost of palm oil to supply crunch, ban on export of palm oil by Indonesia as well as lack of government support leading to low production.

Speaking with Daily Trust on Sunday, one of the farmers in Edo State, Peter Agwele, said lots of factors are responsible for the high cost of palm oil.

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“It is the demand and supply that changes the prices of items, including palm oil. So, basically, when the demand is high and the supply is not enough, the price will definitely go up.”

According to him, once you have supply crunch, there is likely going to be price increase, adding that the demand is higher than the production.

“The other factor is also the Russia-Ukraine war which has put pressure on nearly everything from edible oil to fusil oil.”

He explained that Nigeria was a net importer of palm oil and when Indonesian banned the exportation of palm oil to other parts of the world, it affected Nigeria seriously in terms of pricing.

He said Edo State is involved in a palm oil expansion programme by partnering with private investors and the Central Bank of Nigeria (CBN) to be able to increase plantation and boost production.

He noted that 60 to 70 per cent of plantations are owned by small farmers who, he said, are not able to attract fund from the government and financial institutions, adding that they rely on personal funds to grow plantation which is not always enough. 

Harrison Okpaluwa, another farmer, attributed the high cost of palm oil to the high rate of the dollar which he said affects every other commodity.

“Oil palm required huge investment to improve on the plantation and the local man power to do it is very expensive,” he said.

He said the only way government can come into it is to formulate policies and make them work, saying that policy implementation remains an issue affecting palm oil production in Nigeria.

“Lots of policies are made by the government but there is no follow up and there is little or no assistance from the government like other country to encourage the small holder farmers,” he added.

He lamented that the Edo State government is encouraging the big farmers at the detriment of the small holder farmers, noting that the Central Bank of Nigeria and the lending agents are not helping matters. He said if government can put policies in place to make lending easy so that small holder farmers can access loan for expansion, things will change.

“Once the small holder farmers can access loan, production would increase and the price would reduce.

“Nigeria is a capitalist country. The farmers are crying, ‘give us loan, we would pay back’ but they would rather give to the political farmers to enrich their pockets.

“If production improves, the price would fall but as long as demand is higher than production, price would always remain high.”

Daily Trust on Sunday learnt that depending on the market, a 20-litre jerrycan of palm oil is sold between N21,000 and N23,000 in most southern states.

The price is higher in northern states as the same 20-litre of jerrycan goes for between N27,000 and N30,000 depending on the states.

The same 20-litre was sold same time last year between N18,000 and N20,000 in the north and far less in the southern states.