Okomu is one of Nigeria’s leading oil palm companies listed on the Nigeria Stock Exchange (NSE). It covers an area of 33, 112 hectares, of which 18, 879 hectares is currently planted with oil palm trees and 7,335 hectares with rubber trees.
Billy Ghansah, its agricultural coordinator, believes that Nigeria’s palm oil production has not declined per se. But the country’s production figures remained stagnated, which could not complement the growing population’s demand.
More so, he highlighted some of the key challenges bedevilling the sector and how opportunities therein can be harnessed effectively and efficiently.
Oil palm was a major agricultural export crop and a top foreign exchange earner in the 1950s and 1960s. Before the discovery of crude oil in large quantities, Nigeria was the first largest producer of palm oil and currently the largest consumer of palm oil in Africa. With a population of over 197 million people, Nigeria consumes roughly 3 million metric tonnes of fats and oils annually, with palm oil accounting for approximately 45 per cent of total consumption in 2018. Nigeria is the largest consumer of palm oil in Africa with 1.34 million metric tonnes in 2018, according to an analysis by PriceWaterhouseCoopers (PWC), an international auditing firm.
PT: As one of the major key players in the palm oil industry in the country, what are your views about the Nigerian oil palm sector?
Ghansah: I’ll divide it into the areas of cultivation, processing and end use. On the cultivation aspect, most of the cultivation is done in three different areas, one of them is known as the wild groves which stretches within the Niger Delta region and makes up almost 70 per cent of the oil palm in the country with very low production base. Their yields are poor because they are mostly palms which are not actually grown but were sort of found in the forests. So other competitors to it were removed, then allowed them to grow. So while moving around our plantation here, you’ll see wild groves of oil palm growing. The second aspect is where farmers individually try to grow oil palm, but unfortunately, they planted materials which are very poor and provenance (they didn’t select them to grow). The third one I’ll say is the industrial plantations and the fact that a lot of people are also going into the use of planting materials and then the industrial plantations like Okomu. We use quality materials with years of research behind it, to get the best out of it and we use a lot of modern methods of cultivation and also a better method of oil extraction with processing plants.
PT: What will you say are the major reasons for Nigeria’s decline in oil palm production over the years?
Ghansah: Oil palm production has not declined. That is a wrong assertion. If you look at the statistics, Nigeria has not been producing more than 1.2 million tonnes of oil palm per annum for a long time. The difference is that already there is a market for the oil palm which is produced locally. In addition there is little available for export. Also, the export market demands a certain quality which the Nigerian industries, especially the larger sections which are the stallholders are not capable of producing. But the production has not declined per se, it is just that it’s not going up as expected. The main area which you will call a decline is the fact that our farmers are producing from trees which are very old and therefore their productivity has dropped. In general terms, it’s not going down it’s just that the quantity of oil available for export is low.
Meanwhile, from the 60s till now the population has more than tripled and we have the same amount of oil palm being produced. It is not enough even for domestic purposes for you to even think of export. I can tell you for a fact that different sources claimed that the gap in production is anyway from 300,000 tonnes of palm oil to 500,000. At 300,000 tonnes, if you take a conservative estimate of producing at even 3 tonnes per hectare, we in our plantation do about 3.6 tonnes. But let’s say 3 tons per hectare, it will mean 300,000 tonnes divided by 3, we need about 100,000 hectares of oil palm planted now, for you to fill the gap as we have it. It is not possible and the demand is also growing. So that is the gap that has to be filled, it is not that the production has declined, maybe it’s because there were a lot of plantations which were set up, which have not been replaced. Then that could account for some of the thinking that they say decline in production.
PT: According to data mined from the United States Department of Agriculture, Nigeria is currently ranked fifth globally in terms of oil palm production as against the first position it was in the 60s. What do you think can be done for Nigeria to regain its rightful position?
Ghansah: I’ll say that the Nigerian experience is not something new. Malaysia and Indonesia had the crop as an introduced crop and found out that it was flourishing well; and don’t forget in terms of agronomy, because it was an introduced crop there was little level of pest and disease. In West Africa, oil palm originated from here, and in originating it developed alongside its own pest and diseases which are endemic in this area. So they had one jump ahead of us. The second thing is that they put a deliberate effort into improving it. Now I’ll give you an example.
NIFOR was introduced at that time as West African Institute for Oil palm Research (WIFOR) in 1939. That of Malaysia which is Palm Oil Research Institute of Malaysia (PORIM) was established in 1972. The basic cultivation strategy of oil palm was developed in Africa, but we didn’t take advantage of it, and the Asians took over and went ahead, such that people think that they came to pick the seeds from here, they didn’t. Rather they made use of what they had and improved it. And the biggest development has been the development of the seed(cultivar) for production which accounts for the biggest improvement in yields. Not that we’re not able to get there,because in our plantations some fields produced up 20–26 tons per hectare, I wish everywhere is like that. What I’m trying to say is that we have the potential to produce close to what the Asians are producing.
PT: In your own view, how has the Nigerian research institute saddled with the responsibility to develop oil palm fruits fared over the years?
Ghansah: I told you earlier that NIFOR was developed in 1939. The basic agronomic knowledge we have on oil palm worldwide came from NIFOR. But like any other government institution here, there are several reasons why they are not up to the level we want. They are doing quite well, so they support the industry very well. If I have issues with pests and diseases, I go to them. If I have issues with agronomy, I go to them. But what I’ll say is that there is room for improvement in all service delivery or what I will say of its mandate. I’ll also say that if that will happen it will also tilt to how organisations like them are run, because I don’t also think that it’s peculiar to NIFOR alone, they’re several government institutions that have the same problems.
PT: How has the COVID-19 pandemic affected oil palm production in Nigeria ?
Ghansah: Well, COVID-19 has not had negative impacts on oil palm production due to the fact that most of the intervention for the production of oil palm is basically based on the climate. The problem we had initially was that the restrictions of movement did have impact on the movement of labour from one location to the other, especially during the peak production period. So, it affected some people based on inability to harvest what is being produced. I don’t know if the restrictions of flight did have impacts on oil palm per se but the airport in other places were open, so we were able to do business. But locally, there were a lot of restrictions which had a negative impact on the movement of tankers, movement of Fresh Fruits Bunches (FFB) and people. But these are all things of the past now.
PT: How has Nigeria fared in terms of palm oil exportation in the country even when data shows that we still import about 400 million metric tonnes as at last year?
Ghansah: Don’t forget there is a big gap between domestic production and consumption. And if you don’t satisfy your local market, there is no incentive for you to export. So there’s little room for you to export when Nigeria is a net importer of oil palm, it is difficult for you to export. It is when you get to the level when you’re producing enough, then you can say you’re exporting. But there’s some amount of export mainly because of the west African diaspora in mostly western Europe. They prefer to use the red palm oil and therefore there is a market which is there. They’re very smart entrepreneurs who are taking advantage of it. But whatever impact it has is very minimal.
PT: What are the opportunities therein that smallholder farmers along the palm oil production value chains have yet to harness?
Ghansah: There are several opportunities. Like I stated earlier, the farmers have little knowledge of modern oil palm cultivation as we know it. If we want to help them in the value chain, one of the first things we need to do is to help them improve on cultivation. Obviously, in cultivation you’ll need modern methods of cultivation including fertilizers and other agro chemicals which have to be brought in by dealers in those areas. In terms of the value chains there is an opportunity there. For the farmers themselves, the best strategy for them is to be together as cooperatives where they can process their own crops in larger volumes or sell to companies like ours which we are trying to do. What we intend to do is to see if we can buy the palm fruits for them at the open market price if it’s feasible for us. By implication we would provide the market for the palm farmers and in addition we would provide support to the farmers in terms of agronomy, in terms of extension services just to see that they can provide us with the best quality that we can get, because if the farmers are producing poor qualities, I might end up not buying from them and I will prefer that they do that as best as they can. We believe that oil palm helps improve livelihoods in areas where oil palm is grown and the yield is better than other places. In the value chains farmers have a lot of areas where they can join and take advantage of. If they process in large volumes they can get the market in terms of the refineries and other places but not the methods they’re using now because the quality does not meet with the standards these big companies need.
PT: Going forward, what are the strategies and policies you think Nigeria can employ in order to boost its Oil palm production?
Ghansah: It’s a big thing. First and foremost, oil palm is largely produced by smallholders in this place and it would not change. Most of the land tenure systems we have decide that smallholders are the best options we have to expand it. But I’ll not advocate for processing because of several reasons. The investment in it is high, either they have to do a group processing together, thereby invest in processing facilities, or they get together and sell to bigger companies like ours. So I’ll say the first thing is to provide good quality planting materials. Because in oil palm, most of the materials we plant, everybody forgets that what we’re producing is oil, not the fruits. Now you can get big bunches, but they might have little oil in it. So we have to produce plants which are capable of producing more oil per unit area. That is available in this country and we can also import from west Africa and Asia. It doesn’t matter. Somebody might argue on a nationality point that why don’t we use what is available? It’s true but sometimes mixing things from other places also helps to improve it. At the end of the day the tree was here, it was growing like that, somebody developed it’s feather.
I’ll give you an example of cocoa: West Africa produces more cocoa than the original country which had cocoa —Brazil. It is the same story. We can look at the planting materials that we have and improve it. Secondly, make land tenure a bit more simple, because it is difficult for someone to invest in what I’ll call a long term crop for which he is not certain of the ownership. I’m dealing with some farmers now, I know the problems they face in terms of land tenure. Sometimes some people will come and tell them move away we are going to develop the place into housing. A place that you have invested all your life into, in planting oil palm.
And then the third one of course is government policies. And it is pertaining to farmers, pertaining to big companies like ours. Oil palm unfortunately or fortunately needs a lot of funding. Most of our farmers that we have are not capable of raising the funds to develop one hectare of oil palm. Even if it is to get a place which is relatively forested, a farmer will need more than one million naira to develop one hectare into production. Few farmers have that source of funding. Second thing is that those funds should have very low interest rates to make it easy for the farmers. But it has to be a deliberate effort to make sure people go into that crop. As a holistic gesture you know when farmers produce oil palm, oil palm is quite bulky, for them to move it from one point to the other road network should be good enough to help the farmers. But for big companies like ours, we don’t get the kind of support we expect, we tend to have too many regulatory hurdles to cover the original aims for the regulations are clear but I don’t think it’s been achieved with the ways it is being implemented. From NAFDAC, to SON etc, a lot of regulations which are good on paper but give a lot of headache in terms of implementation and how it is being used in the sector here. It’s just that if the regulations were clearer. Regulations are important, but the clearer and therefore easy to implement the better. Because different groups within the same organisation will have different interpretations to what the regulations look like.