Opinions

Nigeria’s $800m palm oil deficit

The Trade Statistics for International Business Development has said that Nigeria’s palm oil deficit is now $800m. The body, in its report, stated that the legal import for palm oil in Nigeria falls within the range of $224 to $546 million. According to the data, the country at the moment has a deficit of palm oil of about 900,000 metric tonnes estimated at $800 million. However, importation of refined palm oil/vegetable oil is prohibited while 35 per cent duty is charged on the importation of crude palm oil and crude vegetable oil. The nation’s demand is said to be driven by two factors: increased household consumption of the Technical Palm Oil (TPO) because of its taste, and increased demand for the Special Palm Oil (SPO) that is processed into refined, bleached and deodourised (RBD) for industrial purposes. The food industry consumes 90 per cent whereas 10 per cent is used by the non-food industry. With an estimated population of 193 million, the country’s household consumption has dramatically gone up with the fast food industry where products like noodles, margarines, vegetable oil, biscuits, bakery, frying, fat in snack and many other items use palm oil. The cosmetics industries thrive on palm oil too as manufacturers of soaps, creams and detergents use it as raw materials.

The mandate of the Nigerian Institute for Oil Palm Research (NIFOR) is to conduct research into the production and products of oil palm and other palms of economic importance and transfer its research findings to farmers. Nigeria has imported palm oil worth over $3.2 billion in the last ten years. The greatest challenge in Nigeria is that NIFOR is disconnected from small-scale and out-grower smallholder farmers of palm oil plantation and failed in its mandate. Today, NIFOR has allowed Nigeria to fall from being the largest producer of oil palm to net importer of palm oil. There is no policy statement on how Nigeria can return as the largest producer of palm oil in the world and the institute is always waiting for its annual subvention from Abuja. There is a need to review the operations of NIFOR in the last 50 years and reposition it to deliver on its mandate. Nigeria produces only 1.7 per cent of the world’s consumption of palm oil which is insufficient to meet its domestic consumption which stands at 2.7 per cent. Thus, the question of net exports doesn’t arise; however, paradoxically, about 20.0 per cent of the oil palm produced domestically is considered of high quality and clears all the seventeen tests for being an exportable commodity.

The news that Nigeria imported more than N116 billion of palm oil in the last three quarters of 2017 is worrisome. Some newspapers reported that Nigeria imported 450,000 tons of crude palm oil valued at N116.3 billion ($323.1 million) in the first 10 months of this year. The amount imported increased by 12 percent from July because of rising demand, thus pushing up the price from $663 per metric ton in July to $718 per ton as at November 2017. Without NIFOR, palm oil was among the first commodities of international trade, after the slave trade, between Nigeria and Europe. NIFOR has however, since 1992 came under the aegis of the Federal Ministry of Agriculture. The thrust of work at NIFOR today, as in the past, derives from national goals as currently defined by the national policy on agriculture and the needs of farmers.

Religion and the nation’s progress

Findings revealed that the nation imported a cumulative 4,760,000 tonnes of palm oil from 2007 to November, 2017. Palm oil, hitherto one of the nation’s major foreign exchange earners in the early 1960s is massively imported into the country from Malaysia and Indonesia. Recall that Nigeria was the largest producer of palm oil in the world with a market share of 43 per cent in the 1960s. But currently, it has a world share of 2.9 per cent, with Indonesia leading by 33 million metric tonnes, Malaysia, 19.8 million metric tonnes; Thailand, two million; Colombia, 1.108 million metric tons and Nigeria, 970,000 metric tonnes.

The institute is presently managing only two oil palm estates namely the Federal Oil Palm Estate Obotme (525ha) and the Federal Oil Palm Project, Erei (720ha) on behalf of the Federal Government of Nigeria when many other palm oil estates have been taken over by forest. The institute also runs advisory services relating to palms management, analytical services and quality assurance and diagnostic services to the palms industry in Nigeria. In this respect, most of the fertilizer recommendations and policies of some major oil palm companies in Nigeria are based on the yearly routine soil and foliar analysis carried out for them by the Institutes consultancy service. That Nigeria, in late 2017, imported 450,000 tons of palm oil to the tune of N116.3 billion, is worrisome. With an ever increasing population, a steady decline in palm oil production, and a proliferation of the uses of various products from palm oil, it is an economic fact that there is high demand for palm oil in Nigeria. Therefore, it is a tragedy that Africa’s greatest potential is spending so much money on the importation of what it can produce.