SPECIAL REPORT: How Nigeria’s neglect of oil palm pushed it down global pecking order

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Decades after being the leader in oil palm production in the world, Nigeria is currently an importer of the product due to negligence of the sector.

In the 1950s and 1960s, oil palm farming was a key sector of the Nigerian economy.

The sector generated about 43 per cent of the world’s total production. Nigeria was considered as the leader in the world palm oil market. The production of palm oil went beyond domestic consumption, with the excess produce exported to the world palm oil market.

However, in the past decades, the country has become an importer of palm oil due to the negligence of the sector. Today, Nigeria produces only less than two per cent of global output.

Nigeria Palm Oil Production From 1964 -2019

Data shows that the sector’s decline began amidst the oil boom of the 1970s, when less funding was given to farmers, producers, and researchers.

In Edo, Akwa Ibom and Ondo States, where oil palm farming is part of life and culture due to its availability in the area, most of the women and men engaged in the cultivation and processing of palm fruits, who spoke with this newspaper, said that their production has reduced due to lack of significant support ranging from soft loans to provision of viable planting materials and other necessary input supplies.

With a population of over 197 million people, Nigeria consumes roughly 3 million metric tonnes (MT) 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 MT in 2018, according to an analysis by PriceWaterhouseCoopers (PWC), an international auditing firm.

In 2013, when Ukamaka Peter travelled from Ebonyi State to visit one of her brothers in Ondo State, she met the man whom she eventually married. Being one of the states known for oil palm production, she thought dabbling into the oil palm business would mean unlocking a better life for her and her family, but she was wrong.

She leased some plots of land bearing oil palm, with an agreement to remit 25 liters per gallon of palm oil annually as payment for the land she is farming on.

“It has not been easy; we used to make a lot of money from this business before, but now things have changed greatly,” she told PREMIUM TIMES in late August. “Sometimes, after selling our palm oil, on doing calculations of expenditure so far, you’ll be having about N1,800 left as profit. Can that complement all the stress so far?”

“I pay labourers N60 to harvest a bunch; due to bad road network, I’ll pay bike men to transport harvested fresh fruits bunches of oil palm to the nearby processing mills. Each trip depending on the distance costs N500 and above; days later myself and my children will separate the fruits from the chaffs, then cook it in drums before milling, of which we will still pay for milling,” she narrated.

Often, what is left as profit for her is the kernel she got from the processed fruits. Mrs Peter said she and her children break the kernels so they can sell to cater for themselves.

Mrs Peter has been into palm oil production for seven years in Odo Aladura community of Ondo East local government. However, she can barely live a comfortable lifestyle with her children, even as she believes things could have been a lot better if she were given the necessary support.

Ukamaka Peter with a wheelbarrow

She said that a gallon (25 liters) of palm oil is sometimes sold for N8,000 or less depending on the market price. However, she said a gallon of oil is currently sold for N9,500.

“Still, we will use almost all the money to settle labourers. Our gain lies in the palm kernel we retrieve from the fruits,” she said.

Another farmer, Adesoro Grace, who has been into oil palm production for eight years, recounted the rigour she passes through to make palm oil. She said the crude method of palm oil extraction is too stressful for them, but she has no option.

“I do pay labourers to harvest and transport these bunches to the mill. At the mill, I’ll separate the palm fruits from the bunches; this will take weeks at times. After that, the separated fruits will then be cooked in a drum; the cooked fruits will then be milled (N200 per turnage). This is then transferred into to a dug pit (Eku), where we use our legs to massage the milled fruits alongside water collected via erosion whenever it rains. This is then transferred back into the drum for final cooking; you’ll now see the palm oil afloat,” she narrated.

Ms Grace said a larger portion of their oil is usually lost via this method but that there is not much they can do about that.

Adesoro Grace

Meanwhile, most of the palm oil mills (Odo Aldura, Bolorunduro) visited in Ondo State were empty, with no production activities ongoing. It was observed that the delayed rainfall in these regions in August affected the ripening of the oil palm fruits, as well as the sprouting of younger seedlings.

Oil palm mill

Also, all the farm settlements and mills visited in Odo Aladura, Bolorunduro and Igbo Oja communities in Ondo East lacked good potable water for production processes. They mostly bank on water collected from erosion pathways and surrounding streams formed from rainfall, according to a farmer at Igbo Oja village who identified himself simply as Joseph.

Stagnant water used in palm oil production

Checks by PREMIUM TIMES revealed that oil palm farmers in these regions do not have access to subvention or soft loans from the federal government despite palm oil being among the mandate crops of the federal government’s Anchor Borrowers’ Programme (ABP).

President Muhammadu Buhari in November 2015, launched the ABP to provide farm inputs in kind and cash to small-holder farmers to boost agricultural production and for the country to reverse its negative balance of payments on food.

Farmers captured under this programme include those cultivating cereals, cotton, roots and tubers, sugarcane, tree crops (cocoa, rubber, oil palm, etc.) legumes, tomato, and livestock.

The loans are disbursed through any of the deposit money banks, development finance institutions and microfinance banks, all of which the programme recognises as participating financial institutions.

According to the guidelines of the programme, upon harvest, benefiting farmers are expected to repay their loans with harvested produce, which must cover the loan principal and interest, to an ‘anchor’ who pays the cash equivalent to the farmer’s account.

Ododo Olotu, 69, originally from Delta State, who relocated to Ondo State in the quest for greener pastures in oil palm farming 35 years ago, said he has never received government subvention.

Mr Olotu

His farm of about 700 hectares in Benin lays fallow because he has no financial support to use it for planting.

“Government don’t listen to anybody, we are just managing ourselves to feed our children and to pay their school fees,” he said. “There is money in palm oil, cocoa and maize production. As I’m now, if the government can assist me with about N10 million in my account, and be monitoring me, it will go a long way.”

The spokesperson of Nigeria’s apex bank, (CBN), Isaac Okoroafor, said about N49.6 billion has been disbursed through Real Sector Support Facility and Commercial Agriculture Credit Scheme, for oil palm value chain activities.

“Under the Agri-Business/Small and Medium Enterprise Investment Scheme, N1.5 billion has been disbursed to 248 oil palm farmers and processors,” he said in a text.

PREMIUM TIMES’ assessment of the palm oil market shows that most farmers sell their products at available market price, as prices continue to fluctuate.

In 1965, the World Bank injected nearly $2 billion into over 45 projects in Southeast Asia, Africa, and parts of Latin America to support the growth of the palm oil industry. Indonesia received $618.8 million, the highest; Nigeria received $451.5 million, while Malaysia got $383.5 million.

Infographics showing production from figures showing trends of top five countries production since 1960s

From 1975 to 2009, Nigeria remained the second-largest recipient of funding from the World Bank for palm oil investments with six projects. However, only one project survived while the rest went bankrupt.



Source: Premium Times

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