Nigeria needs Oil Palm Board to attract local, global investors to restore old glory

Oil palm is a prominent crop whose relevance in the agricultural sector cannot be downplayed as it has continually served as an indispensable commodity in the global market.

In 2016, the export value of palm oil and palm kernel oil (crude and refined) was worth $28.2 billion and $3.7 billion respectively. The market value of the sector that same year was worth $65 billion, certainly a significant impact to the world economy.

The International Institute for Sustainable Development (IISD) rates palm oil, one of oil palm’s major derivatives as the most consumed edible oil in the world providing ingredients for numerous edible and personal care products as well as feedstock for biofuels.

In the early 1900s until the 1960s, Nigeria ranked as the world’s largest producer of palm oil, accounting for 43 per cent of global production. Unfortunately, due to some demeaning factors, the country lost the resourcefulness to cope with the growth of global demand for the oil palm product. Balancing the need for economic growth and having a sustainable environment also become a daunting problem.

However, while the oil palm trade was dwindling in Africa’s most populous nation, it was fast becoming a success story in Asia. In 1966, Malaysia and Indonesia, two Southeastern Asian countries surpassed Nigeria as the world’s largest palm oil producers. Ever since, both countries combined have produced over 80 per cent of total global output, with Indonesia alone accounting for over half of global output.

A 2018 analysis by PriceWaterCoopers (PWC), an international auditing firm disclosed that Indonesia led the rest of the world in oil palm production with a remarkable 39.5 million tonnes of annual produce, followed by Malaysia with 19.7 million tonnes, Thailand was third with 2.7 million tonnes, Colombia occupied the fourth spot with 1.6 million tonnes, while Nigeria was fifth with a yield of what is approximately 1.03 million tonnes. That same year, Nigeria’s consumption volume was 1.3 million tonnes indicating a shortfall in supply and a production rate that is less than 2 per cent of global output.

According to a report by the Central Bank of Nigeria (CBN), if Nigeria had maintained its market dominance in the palm oil industry, the country would have been earning approximately $20 billion annually from cultivation and processing of palm oil as at today. A data forecast by the United States Department of Agriculture (USDA) projects global production to increase by 50 per cent in 2050, an indication that the consumption of the agricultural commodity is on a steady uptick.

Based on these statistics, it is quite worrisome that successive Nigerian governments have failed to fully capitalise on the oil palm industry despite its economic impact, especially at a time when crude oil, the country’s major export is on the downside.

In this interview with Business A.M’s Onome Amuge, IYARE HARRISON, general secretary, National Palm Produce Association of Nigeria (NPPAN), Edo State, spoke about the challenges militating oil palm production in the country, impact of the NPPAN in bolstering production and what the future promises. Excerpts:

What is the National Palm Produce Association of Nigeria about and its role in the oil palm value chain?

NPPAN WAS REGISTERED as an association in 1995. It is basically concerned with the total operation of palm production in Nigeria, starting from the planting of seed, nursery, plantation farming, harvesting, pruning, oil milling etc. The association encompasses all the value chains for palm produce (oil palm value chain). It is the national oil palm body for the oil palm value chain. It also serves as a connection between all stakeholders, players and members in the value chain and a linkage between growers and buyers, linking fabricators with millers, linking millers with lab technologists and technicians for analysis. Its role in the value chain is to ensure that there is quality production of oil and a viable connection between the entire stakeholders, including researchers, agriculture institution lecturers, scientists everywhere.

What are the derivatives that can be gotten from the oil palm and relevance in the local and international market?

The derivatives from the oil palm are many. Virtually every part of the palm tree is useful. From a historical perspective, before the invasion of the Benin Kingdom by the British, during the era of the Ogisos, the Benins were already having streetlights, the lights were generated from oil palm derivatives. The oil produced from the palm nuts is an essential ingredient used in making soaps, candles, pharmaceutical products as well as cosmetics. The oil is also used in the production of palm oil and vegetable oil used in cooking and also a popular soup delicacy. The branches are used for making brooms, baskets, shoes, bags. The palm kernel shells are used in the generation of energy and biogas. In Malaysia, the shell is what is used in making brake shoes for vehicles. The oil can also be used in making biodiesel that can be used in powering a generator. The fibres are used as fuel for cooking, the residue after the oil is extracted from the kernel can be used as animal feed. The entirety of the palm is useful and this usefulness cannot be overlooked. These derivatives are relevant to the international market. I think our challenge is the ability to harness processing goals. Basically, the decline in oil palm production was a result of negligence as the Nigerian market only sells raw products to the international market. What I think

The decline in oil palm production was a result of negligence as the Nigerian market only sells raw products to the international market... our product will sell better in the international market if we effectively process them into finished products

will make our product sell better in the international market is if we effectively process them into finished products.

What are the challenges affecting oil palm production in the country?

One of the basic challenges affecting palm produce in Nigeria is land ownership. Oil palm cultivation consumes large hectares of land and it is getting more difficult to get these lands as residential areas and industries are encroaching on these lands leaving little space for planting oil palm. Another challenge is finance. Where do you get money to run the oil palm production? A modular automated or semi-automated processing machine for palm oil costs nothing less than N10 million. Another challenge is enlightenment. Do people really know much about oil palm? If they do, to what extent do they use this knowledge? Many of the oil palm farmers that we see today actually inherited these farms from their parents and are using the crude way of production. A lack of commitment on the part of the government is also another challenge because most times, the government is not really committed but just continually granting lip service to the palm sector. So, the challenges are enormous.

What efforts has the NPPAN made towards assuaging these challenges?

The association is trying as much as possible to involve more stakeholders, donor agents, NGOs, government/private sectors, investors, researchers to come in. For example, in the area of finance, NPPAN is continually interacting with the government to raise money in that regard. In terms of knowledge, we vigorously interact with research institutes, analysts and researchers from universities and colleges of agriculture who we think have a stake in the oil palm business. If the government adheres to our agenda, oil palm production

will go a long way in the country.

From being the highest producer of oil palm in the world to its current decline, do you think the oil palm production sector has the future capacity to generate a major impact in the export sector and national economy?

Oil palm has the ability to revive our economy and bring us to limelight in the international stage. It is a known fact that the discovery of crude oil is one of the factors responsible for the decline of the oil palm sector. However, the truth is the price of red oil is more expensive than crude oil. If the government is putting in the efforts used in getting crude oil into palm oil, the international market will feel the impact. One of those things that led to the fall of oil palm is government negligence. There was no roadmap in the palm sector, everyone was just farming independently without a long term plan. During the last meeting held in Akwa Ibom State by the national body, it was agreed that a roadmap will be established for the palm sector. We have continually appealed to the government to create an oil palm board to help harness this roadmap so that for generations to come, the oil palm sector will be stabilised and surging ahead towards greater development goals. In a country such as Malaysia, there is a roadmap. We too must design one that is peculiar to the Nigerian community. For example, many of our farms are not accessible by vehicles, how do people get to farms that are not accessible by road? we must work towards sorting such an issue. Security is another challenge. What I am saying basically is that the decline in oil palm production was a result of negligence on the part of government and individuals. Many of the oil palms are also very old and unable to produce much yield. There is a need to grow new ones of hybrid varieties that will yield in the space of two years. It is through these

that we can be ascertained of bridging the gaps in the oil palm production and actualise a more tangible success in the export sector and also, generate more revenue for the country.

How do you think oil palm production can be revamped to be a major export commodity and what actions have your association done to bring this to actualisation?

The oil palm sector can be revitalised with technology. For you to export the oil the fatty acid should be lower than five per cent. Many of our farmers do not have the facilities to mill oil that will have the required free fatty acid percentage. This also boils down to the government as infrastructure and electricity must be available as well. For instance, if you have the automated machine, the generator that will be able to take it will cost a lot of money. If there is stable electricity, the farmer would have saved such expenditure for more investments in the oil palm sector. But because of the erratic power supply, most farmers dare not use automated machines because it will need to run for almost 24 hours non-stop per day and you would need about four generators that will each run for six hours. Government must create an enabling environment. Our association is encouraging farmers to create partnerships. We are teaching farmers how to become team players and create collaborations. For an automated machine that costs about N9 million, a small group of farmers can collaborate to raise the money. By so doing, they will be able to create more oil palm for export. We have had interactions with different agencies such as the Nigeria Incentivebased Risk Sharing system for Agricultural Lending (NIRSAL), Bank of Agriculture, Bank of Industry, the Shippers Council of Nigeria and others. There also has to be a strong connection between all the farmers and stakeholders in the oil palm industry and we are working at creating more awareness in this regard.

How can oil palm production and investment be made attractive to enhance more participation of Nigerians and potential investors?

One of the ways to make oil palm production attractive and bring in potential investors is to have a board. Nobody in the world wants to invest where there are too many uncertainties, where they are not sure of the state of their investments. If we have a government-established or supported board or council established to regulate, promote, enhance, intensify and educate farmers in the industry, investors will come in. So many people want to invest in oil palm in Nigeria and this council will give them that leverage and assurance that their investments won’t be a loss. That board is important. Another thing is that the government must show sincere commitment. Though the present administration is trying, but more needs to be done towards the development of the palm industry.

What is the potential of job and wealth creation in oil palm production and what has been the impact of the NPPAN towards job creation and market expansion in oil palm production?

The oil palm industry has the capacity to create as much as 10 million jobs in a year. I will give you a good example. A farm of one hectare contains about 150 oil palms capable of providing the following job opportunities; it will employ people who will clear the area, people who will make brooms and baskets, harvesters, pickers, drivers to transport produce, carriers, mill operators, kernel crackers and many more. This is just one hectare. The job creation in this sector is enormous. A farmer that owns one thousand stands of oil palm trees is wealthy by all standards. A single oil palm with good agronomic practice will produce 25 litres of oil. One thousand multiplied by 25 will give you 25 thousand litres per year. The job and wealth creation is there but a lot of people are not putting in interest due to poor attitudes by the government and various agencies. One of the roles of NPPAN is enlightening people about the wealth creation/business potentials of the oil palm. To create a lot of jobs in this sector, the government has to invest and more people need to come in.

How can you describe the relationship between the NPPAN and the government and what are the partnerships and agreements both parties have engaged towards development of oil production in the local sector?

Relationship between NNPAN and the government is cordial. The association is doing its best to harness the various opportunities the government has put in place for farmers. In Edo state for example, we have a good relationship with the governor who is interested in the development of the palm sector. We believe that no singular organisation can survive on its own without another. The interest of the commissioner for agriculture, director of the Ministry of Agriculture, has been awesome and we hope this partnership continues. Though there are occasions where we encounter bottlenecks, we hope that overtime, this will be sorted. We also appeal to the governor particularly to show more interest in the palm sector. Edo state is home to the oil palm and the governor must see it as something that is cultural and ancestral to the people by putting more efforts in its production.

NPPAN recently signed an MoU with the Nigerian Institute of Oil Palm Research, what does the agreement entail and its impact on the Nigerian oil palm market?

NIFOR is the mother research institute with the singular and holistic mandate to develop the palm sector in Nigeria. As a result, NPPAN deemed it fit to interact with them. One of the agreements is that the institute should continually impart knowledge and training to farmers. The research institute possesses knowledge capacity which is a waste if not implemented by farmers. We also agreed on a discount and price reduction for seedlings.

Do you think the Nigerian oil palm industry is prepared and capable of actualising self-sufficiency in production?

Self-sufficiency is very possible. The palm industry is prepared for that. Presently, 85 per cent of oil consumed in Nigeria are produced by small farm holders. If these farm holders can be harnessed and placed on a sustainable platform, both domestic, industrial and international requirements can be met. The present palm production can and should be able to sustain Nigeria but all stakeholders must be on deck to actualise this.