Bor­der clo­sure trig­gered high de­mand for palm oil – MD, Okomu Oil

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The Man­ag­ing Di­rec­tor/chief Ex­ec­u­tive Of­fi­cer, Okomu Oil Palm Plc, pro­duc­ers of Banga Palm Oil and NOKO10 rub­ber brands, Dr Gra­ham He­fer, talks about the gains of the re­cent bor­der clo­sure on the palm oil sec­tor and other sundry is­sues in this in­ter­view with ANNA OKON

The borders be­tween Nige­ria and her neigh­bours have been closed for the past four months. Would you say the de­vel­op­ment has been re­fresh­ing for the lo­cal palm oil sec­tor?

Yes. I would say that the clo­sure of the borders has been a bless­ing. I am of the opin­ion that the ex­er­cise should be con­tin­ued.

how has the de­vel­op­ment im­pacted your lo­cal mar­ket share, sales and prof­its within th­ese few months?

The ef­fect it has had on our lo­cal mar­ket share is that there have been some new com­pa­nies re­quest­ing for Crude Palm Oil that we have not had on our books pre­vi­ously since the land borders were closed;

Equally to an­swer your ques­tion about the bor­der clo­sure’s ef­fect on our sales over the past few months; since the land borders were closed, sales have nor­malised again.

In terms of the ef­fect of the bor­der clo­sure on our prof­its, apart from the il­le­gal im­ports ini­tially, prices also af­fected our profit and the prices were down for most of 2019.

How­ever, the bor­der clo­sure did not dic­tate th­ese lower prices as Crude Palm Oil prices are de­ter­mined by the world mar­ket.

has there been any neg­a­tive fall­out from the bor­der clo­sure in terms of cross- bor­der trade where you have to move your palm oil to other coun­tries? Could you tell us if the gains are more than the losses?

There has not been fall­out out in terms of cross- bor­der trade. We do not ex­port any CPO. It is all con­sumed within Nige­ria, so we had no im­pact.

For a com­pany as big as Okomu oil op­er­at­ing in ru­ral com­mu­ni­ties, there must have been nu­mer­ous chal­lenges, could you tell us some of them and tell us how you cope?

Op­er­at­ing a busi­ness in ru­ral com­mu­ni­ties has its chal­lenges. For us, th­ese chal­lenges are nu­mer­ous but the main ones are; poor in­fra­struc­ture, like roads, port de­lays and lack of sta­ble elec­tric­ity.

Th­ese re­sult in higher costs due to hav­ing to use gen­er­a­tors and in­creased costs of re­pairs and main­te­nance on ve­hi­cles. Also, we have to cope with higher costs of trans­port as lor­ries are held up at the port.

We also face chal­lenge with mul­ti­ple and il­le­gal taxes and tolls; It is ei­ther you pay or your busi­ness suf­fers even more than it does now.

An­other chal­lenge as­so­ci­ated with our kind of busi­ness is in­se­cu­rity. This arises from mil­i­tancy, theft and kid­nap­pings.

It means that we have to pay for army and the po­lice to pro­tect lives of em­ploy­ees and in­fra­struc­ture. This in turn makes our prod­uct more ex­pen­sive and makes us less com­pet­i­tive.

Also we are chal­lenged with lack of semi-skilled, skilled and un­skilled peo­ple. Be­lieve it, or not, there is a lack of un­skilled man­power as no­body wants to work in the field.

Yet semi-skilled and skilled work­ers are also hav­ing to be re-skilled as they do not have the nec­es­sary tech­ni­cal qual­i­fi­ca­tions-maths, science and/or com­puter ex­pe­ri­ence nec­es­sary for po­si­tions re­quir­ing skilled peo­ple.

An­other fac­tor that poses chal­lenge to our busi­ness is il­le­gal im­por­ta­tion of banned prod­ucts and CPO through the Eco­nomic Com­mu­nity of

West African States.

The prac­tice cre­ates a sit­u­a­tion where the com­pany is un­able to com­pete with th­ese il­le­gal goods and the likes of the Na­tional Agency for

Food and Drug Ad­min­is­tra­tion and Con­trol and the Stan­dards Or­gan­i­sa­tion of Nige­ria are un­able to, or in­ca­pable of, de­ter­ring the sale of th­ese il­le­gal prod­ucts in the coun­try.

Yours is only one of two palm oil firms listed on the Nige­rian Stock ex­change, how have you been able to re­main there for this long when so many other com­pa­nies have delisted?

The rea­son why many have delisted is be­cause of the huge time and ef­fort re­quired to be on the ex­change th­ese days. Even our com­pany is un­happy with the oner­ous con­di­tions that listed com­pa­nies are obliged to com­ply with, and the costs as­so­ci­ated with them.

Also, the likes of Se­cu­ri­ties and Ex­change Com­mis­sion, Fi­nan­cial Re­port­ing Coun­cil and other paras­tatals and or­gan­i­sa­tions that do have a role to play, don’t al­ways seem to work con­struc­tively with com­pa­nies.

Does list­ing at the ex­change come with pres­sure from share­hold­ers and gov­ern­ment, if yes how do you han­dle them?

Yes, list­ing on the ex­change cer­tainly comes with pres­sures from the gov­ern­ment and share­hold­ers.

How­ever, share­hold­ers, be­ing the own­ers and risk hold­ers in the com­pany have a right to ask and to pres­surise, whilst gov­ern­ment has the right to pres­sure us into en­sur­ing that we do every­thing legally and cor­rectly in law.

What has been the ben­e­fit of be­ing listed?

Po­ten­tially, the ben­e­fit is the abil­ity to ob­tain equity from our share­hold­ers, if and when, this is re­quired.

What is Okomu oil’s share of the global mar­ket?

Our share of the global mar­ket is so small that it is in­signif­i­cant.

how do you cope with com­pe­ti­tion from Malaysia and other oil pro­duc­ing coun­tries?

If we did not have im­port du­ties on im­ported CPO from th­ese coun­tries, we would not be here as the play­ing fields are not level, what with the ex­tra costs of do­ing busi­ness.

Also, th­ese coun­tries sub­sidise and give their com­pa­nies tax in­cen­tives, which make it dif­fi­cult to com­pete with them.

Over the years what cor­po­rate so­cial re­spon­si­bil­ity ini­tia­tives has Okomu oil un­der­taken in its host com­mu­ni­ties?

There are nu­mer­ous project that we han­dle in the host com­mu­ni­ties to em­power in­di­genes. We spend more than n150m per an­num on 29 com­mu­ni­ties around our var­i­ous plan­ta­tions as­sist­ing them with road grad­ing, bore­holes, po­lice sta­tions, schools and clinic re­fur­bish­ments, cor­pers’ and teach­ers’ lodges, bur­saries and skills de­vel­op­ment cour­ses among nu­mer­ous other ac­tiv­i­ties.

Many peo­ple com­plain of in­ter­fer­ence from com­mu­nity dwellers when they op­er­ate agri­cul­tural projects, how do you han­dle re­sis­tance from the com­mu­nity dwellers while try­ing to ex­pand the busi­ness?

We be­lieve in hav­ing on­go­ing com­mu­ni­ca­tion be­tween our­selves and our com­mu­ni­ties. In this re­gard then, we have Com­mu­nity Li­ai­son Of­fi­cers who are the ones man­ag­ing is­sues be­tween the com­pany and the com­mu­ni­ties on an on­go­ing ba­sis.

We also have free, prior and in­formed con­sent agree­ments with our com­mu­ni­ties which in­clude the likes of griev­ance mech­a­nisms and de­tails of what each of the stake­hold­ers will do in or­der to en­sure an on­go­ing part­ner­ship be­tween the two par­ties go­ing for­ward.

how do you han­dle en­vi­ron­men­tal con­cerns?

We are the first com­pany in Edo State to be roundtable on Sus­tain­able Palm Oil-cer­ti­fied. We are also ISO14,001 cer­ti­fied for en­vi­ron­men­tal safety which means that we are obliged to fol­low very strict guide­lines on en­vi­ron­men­tal man­age­ment prac­tices.

We also have quar­terly en­vi­ron­men­tal im­pact as­sess­ments done by the Fed­eral Min­istry of En­vi­ron­ment that mon­i­tors our com­pany through th­ese re­ports as well.

Briefly shed light on the back­ground of Okomu Oil Palm Com­pany PLC

The Okomu Oil Palm Com­pany was es­tab­lished in 1976 as a Fed­eral Gov­ern­ment pi­lot project aimed at re­ha­bil­i­tat­ing palm oil pro­duc­tion in Nige­ria. At in­cep­tion, the pi­lot project cov­ered a sur­veyed area of 15, 580 hectares out of which 12, 500 hectares could be planted with oil palm trees.

It was in­cor­po­rated on De­cem­ber 3, 1979 as a lim­ited li­a­bil­ity com­pany.

As part of ef­forts to shore up its rev­enue base, the com­pany ac­quired and in­stalled a 1.5 tonnes per hectare of Fresh Fruit Bunches mill in 1985 to be­gin to process its FFB.

Prior to the in­stal­la­tion of the mill, the com­pany de­rived its rev­enue from the sale of FFB.

Okomu has since grown to be­come Nige­ria’s lead­ing oil palm com­pany with to­tal area of 33, 112 ha of which 18, 879 ha is cur­rently planted with oil palm trees and 7, 335 ha with rub­ber trees. an­other 4, 000 ha of oil palm trees has been planted. also, 1, 500 ha of rub­ber trees would be planted by this year, 2020.

The Okomu Oil Palm Com­pany Plc is ranked 10th among listed com­pa­nies with the largest turnovers quoted on the Nige­rian Stock Ex­change.

It is the only agro-busi­ness in the nse’s top 16 com­pa­nies with the largest turnovers. Ac­cord­ing to the Bot­tom­line mag­a­zine,

What are your plans for the year and what projects do you have in the pipe­line?

We are work­ing on do­ing a small­holder oil palm pro­gramme; we are busy erect­ing the first of two 30t/hr oil mills on our new­est plan­ta­tion to be in­au­gu­rated early 2021.

The ef­fect it has had on our lo­cal mar­ket share is that there have been some new com­pa­nies re­quest­ing for Crude Palm Oil that we have not had on our books pre­vi­ously since the land borders were closed’

•He­fer

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