‘How Nigeria can meet Malaysia, Indonesia in oil palm production’
Emmanuel Ibru is the Chairman of Plantation Owners Forum of Nigeria (POFON) and Chief Executive Officer (CEO) of Aden River Estates Limited. In this interview with selected journalists, he gives some of the reasons why the country is lagging behind in oil palm production and suggests ways the country can catch up with big producers like Malaysia and Indonesia. revenue stream comes on. especially
One thing is access to finance, and the with the second is ensuring availability of land. We advent of have the land, but the challenge is how to social media take peaceful possession of the land. Even and the potential investors with requisite financial glorification capital find it difficult to acquire land, of the ostentatious lifestyle of internet though some states like Edo, through the fraudsters.
Governor Obaseki-led oil palm initiative, However, we could also benefit from are trying to ease the process. transfer of information and technology
Also, commercial banks are extremely from the likes of Malaysia and Indonesia. reluctant to accept land assets in rural areas Oil palm is a more labour-intensive as collaterals. They usually insist on assets sector. Nigeria has been involved in palm in state capitals. production for hundreds of years, and in
Do we have the manpower to scale up modern production of oil palm, for over 50 to number one again? to 60 years. We have the Nigeria Institute for
We have the labour. The problem, Oil Palm Research (NIFOR), Benin City, however, is encouraging the younger which is capable of training people. We have generation in the rural areas, especially the a pool of experienced plantation managers low-skilled population, to work on the farm, and mill engineers who have the capability of passing the knowledge unto the younger generation. So, from that point of view, we do not have too much of a problem.
What are Malaysia and Indonesia doing right?
Malaysia has an oil palm council. Every other leading producer of oil palm in the world has an oil palm council and the council basically formulates policies for the industry and ensures implementation.
Nigeria is the only major producer that does not have a council. If we have a council with members drawn from all stakeholder groups and government representatives from the customs service, research institutes and members down the value chain, including the vegetable oil producers, we will clearly have a vision and monitor what is happening in the industry with a view to ensuring productivity and best practices.
What is the attitude of the government to the idea of an oil palm council?
We have not made a formal application, but POFON is planning a national discourse in the next two to three months, and we will assemble financial institutions, research and development institutions, the customs service, other government agencies, smallholders and vegetable oil producers, as well as everybody that has an interest in oil palm. We will come up with a road map for the industry. For instance, there have been issues about smallholder financing, and what we have to understand is that financing small-scale owners in tree crops is totally different from financing smallholders for cereal crops like rice or maize. The gestation period for oil palm is four years, and you cannot apply the same kind of funding mechanism to oil palm.
We have a lot of smallholders right now, but even big players that have financial muscles find it difficult to come into oil palm because of the capital involved.
Nigeria is the fifth largest oil palm producer but contributes less than two per cent of about 75 million metric tonnes produced worldwide. Can the market share be scaled up?
Nigeria has moved from number one in the 50s and 60s to a distant fifth. You now have countries like Columbia and Thailand coming ahead of us, not to mention the mega ones like Indonesia and Malaysia.
We can scale up, but it requires more effort, hard work and adequate capital. To develop one hectare of oil palm, you need between $4,000 and $5,000. Also, such investment requires patient capital because the gestation period is four years. Full commercial production commences in year five to six. This is when a proper
Even if they have the capital and access to land, they have to go by the roundtable for sustainable palm oil initiative and that means that you must comply with standards of environmental and social impacts. That means reaching an agreement with every single community that will be on that land and you know that if you are farming 10,000 to 50,000 hectares, you are going to have many communities on it.
Again, once you have been given an allocation, there must be a way for the government to guarantee you free access without communal challenge. Everybody today realises the worth of land.
Another thing is the question of, on who the ownership of the land is vested? By the Nigeria Land Use Act, if I recall correctly, the governors are the ones that sign the Certificate of Occupancy (C of O), and they have the right to revoke them at any time.
What else do Malaysia and Indonesia do that make them world’s largest producers?
They invest in research and development guided by the councils, and allow allocation of funds to intending farmers. For instance, export taxes go to the government and a part is allocated to the oil palm industry through the councils. For instance, today we talk about finance and the problems associated with development, but there is a 35-per cent duty and levy on importation of crude palm oil into Nigeria.
At no point in time has POFON said that there should be a ban on the importation of crude palm oil, but a portion of the revenue derived from those levies should be directed to the oil palm industry, and from there, you can fund research and development, and you can give out loans to intending investors with suitable terms. Maybe the ideal loan for an oil palm investor is a 10-year loan with a three-year moratorium on principal repayment and two to three per cent interest rate. In Malaysia, that is what has been going on.