By 2021, the global palm oil market worth is expected to hit 92.84 billion US dollars (N33 trillion), amounting to four times the nation’s budget size of N8 trillion.
According to a Zion Market Research’s new report titled, “Palm Oil Market Analysis by Derivative (palm oil, palm kernel oil, palm kernel cake, and others), and for edible oil, cosmetics, bio-diesel, lubricants, surfactants and other applications – global industry perspective, comprehensive analysis, and forecast, 2015 – 2021,” the market will grow annually by 7.2per cent from $65.75 billion to $92.84 in 2021.
Nigeria ranked fifth with an annual production capacity of 904,000 metric tonnes behind Indonesia (33.4m tonnes), Malaysia (19.9m tones), Thailand (1.8m tones) and Colombia (1.2m tones).
This means that Indonesia and Malaysia produce about 85per cent of the world’s palm oil. But one of the top producers, Malaysia, was said to have been behind Nigeria in the late 1960s. Malaysia’s success continues to ignite a debate over Nigeria’s neglect of the subsector and the need to revamp the red liquid gold industry.
Nigeria’s current domestic demand for palm oil is estimated at 2.5 metric tonnes, of which the country produces about 1metric tonne, leaving a gap of 1.5 metric tonnes.
Recently, the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, said the apex bank would sink N30billion into the industry to revamp it. He added, “Our target is to ensure that a minimum of 1.4 million hectares of land is put under oil palm cultivation in three years. As a step in this direction, the bank had met with 14 state governors who pledged to make available, 100,000 hectares of land in each state.”
Until the recent boarder closure, about $500 million was spent yearly on the importation of palm oil, for which we have the potential to export.
Deliberate government policy needed
Key players in the palm oil industry said government must look critically into areas where its wealth lies. According to them, the recent border closure was a good omen as many consumers, processors and other value chain actors are looking inwards.
Henry Olatujoye, an engineer, is the chairman, Board of Trustees of the National Palm Produce Association of Nigeria, a conglomeration of farmers, processors, researchers, institutes and other value chain actors.
He said although during the administrations of Obasanjo and Jonathan, efforts were made to revitalise the agric sector, especially in the area of tree crops where the oil palm falls, recent intervention by the CBN and how the bank was trying to promote and propagate further interest in sustainability may be the game changer if properly managed.
According to him, the oil palm, compared to any other plant, has great and many value chain derivatives. He mentioned two main derivatives – the crude red oil, and the crude palm kernel oil. These two further have other derivatives that can be up to 30.
“It is a great employer of labour. With 1,000 hectares you will employ a minimum of 200 direct workers,” he said, adding that oil palm cultivation can be a great security provider if government could institute a policy that would allow millions of youths to go into the business; and there will be no room for criminality.
Olatujoye said that in countries that are top producers, development of oil palm “was a deliberate developmental project by the government of those countries, who made land and seedlings available for interested farmers and families under a guided policy and control. For instance, you cannot own 10,000 hectares of land in Malaysia and say you have a refinery, it is not possible; they will not give you the license to build a refinery. You are just a raw material supplier to a processor who has been given a license to process alone, and must not have a plantation. And when you are a processor, you are not licensed to sell the produce; there is a market board that does that.
Olatujoye, who is the chief executive officer of Palmfield Development and Processing Limited, said if the government put more money into the sector instead of giving it as social intervention, which does not have multiplier effects and farmers do not pay interest, it would create a huge effect in the sector.
He, however, suggested ways and the action government must take to resuscitate the industry, which include policy stand to make land available for plantation development across producing states for interested farmers and families under a guided policy. And government must be ready to supply available seedlings to be planted into those lands to ensure that the land is not diverted for different purposes, he added.
“In addition, there must be adequate supervision from the extension workers to ensure that every seedling released by the government are planted, and the government must ensure that input supply required for clearing, such as tractors and other tools needed are available,’’ he said.
Anchor Borrower Programme, a game changer
Chief Igwe Hiliary Uche, the national president of Oil Palm Growers Association of Nigeria, told Daily Trust on Sunday that the CBN has selected them as beneficiaries to produce special palm oil and talk is ongoing to work out the modalities. Chief Uche said the country’s technology had improved significantly in the area of locally fabricated technology to produce special oil.
He believes it is a programme that would lift Nigeria up because, according to him, the apex bank is now dealing with local farmers who produce almost 80per cent of palm oil in the country, adding that it has been challenging coordinating the rural farmers.
The national president said that so far, the association had organised farmers into clusters for easy administration and coordination.
“We have 24 states that produce palm oil. In some states we have 18 clusters, some have three, others have seven. Regarding the seedlings, in the programme, the bank will pay to the National Institute for Oil Palm Research directly to supply seedlings to the farmers under the policy,’’ he said.
If the programme is sustained, it would address the issue of quality, which has been a major issue in accessing the international market.
Speaking further on boarder closure, he said whoever imported palm oil into Nigeria needs to be dealt with as an enemy of the Nigerian economy because the shutdown allows the country to concentrate on the development of its local wealth.
Other oil palm farmers like Paul Anza said there was so much the country could get from the industry if a deliberate effort is geared towards it.
To this end, he advised government to step up the development of early maturing seedlings through the research institute, adding that government must also place serious restriction on importation, even after the borders are opened, as a protection to allow the local industry grow.
An agricultural economist, Dr Tunde Abayomi, said the county must take a critical look at the potentials of oil palm because that is what is sustaining some economies in the world. He said the derivatives in oil palm alone can generate huge income for many Nigerians.