Wednesday, December 16, 2015

Palm oil production as a money spinner


Long before the discovery of crude oil in Oloibiri in present Bayelsa State in 1956 or thereabout, palm oil had been discovered, cultivated and used for diverse purposes. During the trans-Atlantic trade and colonial era, palm oil was very much sought after by the Europeans as raw materials for some of their factories.  According to WebMD.com, industrially, palm oil is used for manufacturing cosmetics, soaps, toothpaste, waxes, lubricants, and ink.  

In a drama piece entitled “All Because of Oil” written by renowned playwright, Professor John Pepper Clark-Bekederemo which I was privileged to watch the stage play at the University of Ibadan Arts Theatre many years back, he featured how palm-oil brought so much pains and troubles in the colonial days leading to the deposition of King Jaja of Opobo in order to pave way for the control of the palm-oil trade by the Royal Niger Company. With every opposition exiled or gagged, the white colonialist was able to have a field day exploiting the local producers in order to make super-profit.

Palm oil production is a money spinner, honey pot and gold mine rolled into one. Nigeria used to be a net exporter even though we then relied on oil palm wild grooves and not on the hybrid one which now produce high yield.  Malaysia and Indonesia which in the 1960s came to collect oil palm seedlings from Nigeria have perfected the art and science of palm oil production so much so that while Nigeria has become net importer of palm oil, they have become net exporter. Indonesia is the world largest producer with 20.9 million tonnes followed by Malaysia with 18.79 million tonnes of crude palm oil on roughly 5,000,000 hectares. Nigeria is said to, at present, have about 400,000 hectare of cultivated palm oil plantation.

On Tuesday, December 8, 2015, Nigerian Television Authority on its flagship magazine programme called ‘Good Morning Nigeria’ anchored by the duo of Kingsley Osadolo and Blessing Abu brought together experts in the palm oil industry to discuss how we can reclaim our lost glory in palm oil production. Guests on the programme were Dr. Omorefe Asemota who is the Executive Director of Nigerian Institute of Oil Palm Research in Benin City, Dr. Dickson Okolo, former Team Leader of Oil Palm Value Chain, Mr. Henry Oladunjoye who is the President of National Palm Produce Association of Nigeria and Mrs. Yomi Ifaturoti who is the Director of Corporate Affairs of P.Z Wilmar in Nigeria.

The experts identified the challenges facing the industry and the way out. Among the highlighted concerns raised include that of low technology application in the sector, largely subsistence nature of oil palm cultivation, long gestation period before harvest which is put at an average of five years, lack of social infrastructure in the rural areas where palm tree cultivation is supposed to take place, policy inconsistencies from government, huge capital outlay required for oil palm cultivation and high interest rate on agriculture loan, inadequate extension services to enlighten farmers in the sector, getting vast contiguous land with title-deeds, uncontrolled importation of vegetable oil into the country, and indiscriminate granting of waivers by government to crude palm oil and refined vegetable oil importers.

These challenges have constituted major constraints on oil palm production. Nigerians allegedly needs about 1.4 Metric Tonnes of palm oil per annum but at present experience a shortfall of 600,000 MT. In order to bridge this gap, all the aforementioned challenges need to be dealt with. The good thing is that government and private sector initiatives are gradually being felt in the sector. For instance, federal government established NIFOR to take care of research and development in the oil palm sector. The institute have been able to produce about 9 million disease resistance and hybrid seedlings which have a gestation period of about two-and- a half years. The Institute has also been able to craft small scale processing equipment which is available to farmers at affordable price.

Private sector Companies such as PZ Wilmar and DUFIL Prima Foods have already commenced the process of backward integration which includes cultivating palm tree plantations. PZ Wimar at present has 26,500 hectares of oil palm plantation in Cross River State and also has a refinery for processing of its yields.  In addition, the company has constructed several kilometers of roads across its oil palm plantations. Today, aside the Cross River State government, the company is next highest employer of labour in the South-South state.

A lot more needs to be done. Experts say 24 out of Nigeria’s 36 states have cultivable land for oil palm production. Good enough, agriculture is on the concurrent legislative list hence all the three tiers of government can invest in it. The oil palm industry just like its petroleum counterpart has the upstream and downstream sector where both government and organised private sector can invest. The interesting thing is that if well harnessed, the return on investment is as good as that of the oil and gas sector of the petroleum industry. It is noteworthy that a country like Australia is said to have been able to come up with high yield breed that is capable of producing 45 metric tonnes per hectare. Some private companies that have invested in the oil palm sector are also said to be quoted on their countries stock exchanges.

Kunle Aderinokun, an associate editor with Thisday newspaper in a November 7, 2015 features he wrote in the news medium said “The oil palm tree is one of the greatest economic assets a state or nation has, provided its importance is realised and potential fully harnessed. Oil palm products include palm oil, palm kernel oil and palm kernel cake. These can further be processed into RBD OLEIN (cooking oil), vegetable ghee, shortenings, margarine, ice cream, dough, creaming, coating, and other specialty fats.” He went further to say that: “It is pertinent to note that 90 per cent of palm oil is consumed by food industry and the remaining 10 per cent is used by the non-food industry. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics thrive on palm oil.” According to WebMD.com, palm oil is used for preventing vitamin A deficiency, cancer, brain disease, aging; and treating malaria, high blood pressure, high cholesterol, and cyanide poisoning. It is also used for weight loss and increasing the body’s metabolism.

Now that Nigeria is looking at boosting her non-oil (petroleum) sector revenue, it is high time we gave prime attention to palm oil cultivation, processing, marketing and consumption. It is a high income earner no serious government should ignore. It is heartwarming that the Bankers Committee said it had set a target of N300 billion to boost lending to Small and Medium Scale Enterprises and the agriculture sector in 2016. The Governor of Central Bank of Nigeria, Mr. Godwin Emefiele who made this known after the 7th Annual Bankers Committee Retreat held in Lagos from Dec. 10 – 11, 2015 said that the bankers agreed that de-risking those value chains in the agriculture would encourage large scale farming and boost productivity in the sector. Good thinking! I hope this facility will be at a single digit interest rate to the farmers.

Follow me on twitter @jideojong