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By Chinyere Anyanwu
Oil palm, a cornerstone of Nigeria’s agricultural economy and a vital raw material across multiple industries, has the potential to generate over N20 trillion in annual revenue for the country, if the government at all levels collaborates effectively with stakeholders and smallholder farmers to strengthen the value chain.
Analysing ways to realise this vision at the recent Plantation Owners Forum of Nigeria (POFON) stakeholders’ gathering in Lagos, the President of National Palm Produce Association of Nigeria (NPPAN), Alphonsus Inyang, spoke extensively on the current state of oil palm value chain in the country and across other major producers of the product globally; impact of importation on local production; poor attention of national and subnational governments, and the feasibility of converting oil palm into a major foreign exchange earner, among others.
Current state of oil palm
I would like to look at the oil palm sector, mostly as it concerns the smallholders, who produce quite a large amount of what we currently produce in the country. The general implications of recent government policy and programmes or what the government calls intervention in the agricultural sector, have resulted largely in the impoverishment of primary producers of agricultural products. And it cuts across oils, cereals, and a lot of them. Currently, we are trading at a price that is 50 per cent less than what it was just less than two months ago. And we are still in the lean season for oil palm.
Currently, at the price we are selling palm oil in this country, we are selling at less than production price. And this is not good enough for smallholder farmers who depend on this for school fees, who depend on this for medicine, who depend on this for the general economic well-being of their households and their communities.
Effect of importation
Nigeria is a major market for our neighbours because of our population, because of the size of our economy, and because of the level of our industrial development. Currently, our importation bill hovers around maybe $600 million every year. That’s a lot of money. That’s what we use to create jobs in Malaysia. We create jobs in Indonesia. We create jobs in Ghana, in Ivory Coast and in Benin Republic. These countries bring in oil at no duties or very minimal duties and now send them to Nigeria at a cheaper rate. And it suppresses local production because they arrive quite cheap.
The government needs to do more to check all these that come in. The government is losing revenue, the farmers are being suppressed through an influx of oil that comes in at very cheap prices, thereby forcing local producers to sell at prices determined by smuggled products. So, the government needs to do more to protect primary producers of palm oil in other parts of the country to remain in business. It’s affecting our business. And we cannot do much about it.
We have been talking about this for years now. But if you look at what comes into this country from the land and the sea borders, we have more than 300 entry points for palm oil from Akwa Ibom State alone. Between Mbu, Oron, and Owan local government areas, we have more than over 300 entry points for palm oil that enters through the waterways. They offload them every night and morning. And at the end of the day, we keep seeing lorries and trailers leaving Oron, heading to every other part of the country but who is taking note of this? The reason this keeps happening is that some of our land and sea borders are the major problem.
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Poor government attention
We want this government to look at the oil palm sector as a big sector. The oil palm is known in Malaysia and Indonesia as the tree of life, but we are yet to see it that way in Nigeria. The government does not see oil palm as a commodity that can be used to fight poverty, and all manner of vices and empower rural households to be able to produce both for themselves and for the general economy. So the government really needs to look at this sector as a sector that needs to be invested in. We should stop helping Malaysia and Indonesia to tell their story.
Ghana that is producing so little oil palm, in this year alone, has budgeted $100 million to be invested in oil palm development alone. And this is being managed as a programme under the Tree Crop Development Authority of Ghana to be implemented by the Ministry of Finance as a special programme. If you go to the Federal Ministry of Agriculture and ask the desk officer, “what is the budget for oil palm this year?” He will tell you, “Oga don’t ask me that kind of question because the one they approved before, they have not released it?”
The government needs to lead the way. As an association, more often than not, we can only talk, but without the partnership, collaboration and encouragement of governments there isn’t much we can do. When I talk about governments, it’s not just the national government. The subnational governments too. What is the priority of most of the subnational governments, especially in southern Nigeria. They keep talking about agriculture, but they are not doing the right thing about agriculture. Only a few states take oil palm as a premium crop. And we need them to sit down and work out strategies to revive this sector.
Developing oil palm for economic boost
Creating a N20 trillion annual economy from the small owners alone is a doable thing. We have looked at the numbers. We have looked at all that we need to do, so, the government should work with us to make it happen. In conjunction with what the big players will do, all we need is the government. Access to planting materials, fertilisers and other inputs for this sector will really help us to get things done. The rural households are important in oil palm development. They need encouragement, they need training, they need the inclusion of government, both national and subnational level, in order for us to be able to use oil palm to fight poverty.
We plant all manner of trees everywhere in the boundary of our houses. Why can’t we also say, let’s combine this with oil palm trees in our homesteads, in our small buildings of, say, one plot, two plots. If we do this for 2.5 million households in Nigeria, across 30 states that have comparative advantage in oil palm, we’ll be looking at a N20 trillion annual economy. 2.5 million households with only 150 palm trees. We have the numbers. This will mean that these households will produce palm oil at a cheaper rate because they don’t need to pull down trees. They don’t need equipment for land preparation. They don’t need many of the things that big plantations need. This will help their rural economy. In fact, it will turn these households into millionaire households. And then the economy will be developed. Prosperity will be spread to the rural areas. That is what I mean when I say we can create a N20 trillion rural annual economy. It is possible.
All we need is access to planting materials. Let the hybrid seedlings be made available to these people. They will plant. Right now, they cannot buy them. The least you get in the market today is N3,000. Most of them cannot buy them. And then the hybrid one, the one that the big players plant, sells at between N6,000, N7,000 each. They cannot afford this. So we need this intervention in order for us to silently create this rural economy.
Efforts of private sector players
I’m very happy with what we are hearing now about Ellah Lakes, Presco, and Okomu. What they are doing in the stock exchange has really helped the sector. That’s why you now have more people showing more confidence to invest in oil palm. What Presco, Okomu and other big players are doing has encouraged many people to come into the sector. Wilmer is one of the biggest players and it also has a refinery in Akwa Ibom. I don’t think Wilmer has been able to produce enough to be able to use it in that refinery in Akwa Ibom. So what that means is that even the big players have not been able to produce enough Crude Palm Oil (CPO) to use for their refining process. So they have not been able to meet their production targets. The big players are doing it. What we are now saying is this; let’s work together to encourage rural households who will plant one hectare, 150 palm trees in their small farm places, even in homesteads. We also want an institutionalised programme and intervention of the government that will see that people come into the sector and help us to develop the sector.
