CO-CREATED CONTENT Revolutionizing Palm Oil Production to Boost Sufficiency
As the federal government continues its diversification effort to the non-oil sector of the economy, the Central Bank of Nigeria has also intensified efforts to improve non-oil export and boost economic growth.
According to the fourth quarter 2021 trade statistics by the National Bureau of Statistics (NBS), crude palm oil imports from China totaled N20.28 billion and N16.49 billion from Malaysia as well as palm oil worth N31.43 billion imported from Malaysia.
The ABP was launched in 2015 to curtail excessive imports particularly palm oil and other food products that could be competitively grown in the country.
The CBN governor, Godwin Emefiele had stressed that agriculture remained a strong pillar for Nigerian economy, and expressed satisfaction over the level of interest shown in agriculture and the tremendous impacts that the sector had recorded in the last six years.
Emefiele, like several other Nigerians, had particularly wondered how the country would have coped with the rising prices of food and commodity items across the world – without the foresight to revamp agriculture.
He said the core objectives of the intervention in the Palm Oil sector is to meet local demand for palm oil and improve local processing quality and standards; conserve foreign exchange; create jobs and enhance the skills of Nigerian people along the oil palm value chain.
Other objectives of the funding support to the sector is to facilitate easier access to funding for oil majors, SMEs and smallholder farmers as well as improve and grow the economy.
In the oil palm sector, the CBN governor for instance lamented that despite the availability of over 3 million hectares of farmland for palm oil cultivation, production in the country still remains low, adding that the country has also become a net importer of palm oil.
CBN governor, Godwin Emefiele stated that Nigeria imports between 400,000 – 600, 000 MT of palm oil in order to meet local demand for this commodity, where as losing $10bn worth of foreign exchange that it is capable of generating from oil palm exportation.
“If we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country,” he lamented.
To match words with action, the CBN said it has made substantive investments to boost palm oil production under the CBN’s ABP.
Palm fruit are used for winemaking and the leaves provide shelter for houses in rural communities. It is also used industrially as a component in manufacturing a wide variety of goods.
Not only does oil palm have commercial value, it has a number of health benefits, thereby making it one of the highly demanded crops in the world. There has been an observed spike in the demand of oil palm and its derivatives commensurate to the growing global population and improvement in standards of living.
Typically found in rainy tropical lowlands, oil palm is cultivated in the South East zone and the Niger Delta areas of Nigeria. The Nigerian oil palm belt consists of 24 states with nine states of the Niger Delta area producing 57 per cent of the total output. There are three varieties of the oil palm commonly found in Nigeria.
The estimate for oil palm plantations in Nigeria ranges from 169,000 hectares to 360,000 hectares; (72,000 hectares of estate plantations and 97,000 hectares of smallholder plantations). Estimated oil palm yield per hectare in Nigeria is at eight tons per year maximum and profit per hectare is 3.4 tonnes. Between the 1950s and 1960s, Nigeria was the leader in the world oil palm market. From that enviable height of controlling about 40% of the world market, Nigeria slipped to the fifth position, barely producing three percent of the global supply of oil palm.
Oil palm production per annum is at 1.250.000 MT and the current demand is 2,500,OOO MT per annum.
To meet domestic demand for technical palm oil (TPO) used in industry and special paim oil (SPO) used by households, the value of imports accounts for about N60 billion per annum to achieve 50 per cent import substitution through production upgrade within the next 10 years, there is a need to bridge demand deficits for domestic production of fresh fruit bunches from 85 million MT recorded in 2010 to about 10 million MT in 2020.
The additional 125 million MT of fresh fruit bunches estimated to produce 150,000 MT of oil palm using an average of 12% extraction rate.
According to analysts, the narrative is changing with the intervention of the CBN in the sector. In CBN-facilitated meetings with stakeholders, including state governors and other top government functionaries from the oil palm producing states, Emefiele sougnt their buy-in and set up partnership models that would stimulate investments in oil palm plantations plantations.
Subsequently, thirteen governors of oil palm producing states pledged to make available a total of 904,624 hectares for development under the ABP. In addition, the bank, working with the fiscal authorities, has matched investor with proven capabilities with states to process necessary documentation and titling requirements.
These investors were to follow due process and apply for loans to participate in the oil palm development initiatives of the Bank.
The CBN governor had said the ultimate goal was to overtake Thailand and Columbia to become the third largest producer of oil palm over the next few years through increased production from 125,000 MT to 2500,000 MT by 2028 through the cultivation of approximately 350,000 hectares (cultivation by 2025).
Core objectives of the intervention include; to meet local demand of palm oil and to improve local processing quality and standards; conserve foreign exchange reserves; create jobs and enhance the skills of Nigerian people along the oil palm value chain; faciltate easier access to funding for oil majors, SMEs and smallholders, improve and grow the economy.
Palm oil, which is used heavily in processed food such as instant noodles and baked goods, is also present in other consumer products, such as personal care items, pharmaceuticals and cosmetics.
Lately, the prices of palm oil, soybean, European rapeseed and even its Canadian GMO counterpart, canola oil, have reached historic highs following Indonesia’s announcement.
Palm oil is the most consumed vegetable oil in the world, and Indonesia accounts for 35 percent of global exports, according to James Fry, chairman of LMC consulting firm.
However, analysts are worried about ravaging insecurity and its devastating impact on agriculture in Nigeria.
To address the trend, the CBN Governor has repeatedly called on security agencies to help tackle the challenge that is stalling genuine food production efforts.
Emefiele in a recent forum appreciated the tremendous impact of agriculture and the huge role it has played in revamping the country’s economy in the last six years.
Emefiele recently wondered what would have happened to Nigeria if the agriculture sector had not been revamped, owing to the rising cost of food items across the globe.
The CBN Governor expressed delight that the bank has assumed a pivotal role since 2015 upon the pronouncement by President Muhammadu Buhari that “we produce what we eat and eat what we produce” by coming up with several initiatives aimed repositioning the sector with a view to creating employment opportunities as well as growing the the gross domestic product (GDP) of the country.
The CBN Central had already noted that Nigeria needed about N60 billion annually for the importation of palm oil to meet domestic consumption.
In the light of that, the CBN said a total sum of over N45.03 billion had been disbursed to stakeholders in the oil palm industry to aid the cultivation of about 31, 442 hectares to further grow the commodity.
Mr. Emefiele, affirmed that the apex bank’s intervention would help unleash the potential of the oil palm value chain with accompanying support for the economic diversification plan as well as the industrialisation aspiration of the country.
The importation demand was expected to cover both the Technical Palm Oil (TPO) used in industry and Special Palm Oil (SPO) used by households.
According to the apex bank, the country’s palm oil production per annum is currently estimated at 1,250,000 million metric tons (MT) with demand valued at 2,500,00 MT per annum.
The CBN governor had said the ultimate goal was to overtake Thailand and Columbia to become the third largest producer of oil palm over the next few years through increased production from 125,000 MT to 2500,000 MT by 2028 through the cultivation of approximately 350,000 hectares