Categories

October 24, 2020

My News on Point

Daily News Update From Top News Blog Around The World | Your News on The Go

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

13 min read

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
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.

Much stress, less pay

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.

Dangote adbanner 728x90_2 (1)

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

No finance

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.

Untapped opportunities

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.

According to the CBN, if Nigeria had maintained its market dominance in the palm oil industry, the country would have been earning approximately $20 billion annually from cultivation and processing of palm oil as of today.

Despite Nigeria being the largest producer of palm oil in Africa, Benin was the largest exporter of the commodity from Africa in 2018. Nigeria is the sixth-highest palm oil-exporting country in Africa, according to PWC.

Data from the United States Department of Agriculture added that Nigeria imported about 350 and 400 million MT of palm oil in 2019 and 2020 respectively.

Key produce

Palm oil is an edible vegetable with wide economic values, ranging from the leaf to the body of the tree, with richness in saturated fat.

Oil palm is agreed to have generally originated in the tropical rain forest region of West Africa that runs through the southern latitudes of Cameroun, Cote d’Ivoire, Ghana, Liberia, and Nigeria Sierra Leone, down to the equatorial region of Angola.

The establishment of trade in palm oil from West Africa was mainly the result of the industrial revolution in Europe. Palm oil became the major raw material for the production of soap, and as demand for soap increased, there was a need for adequate availability of vegetable oil suitable for its production, and so the demand for palm oil increased.

Oil palm nursery at Presco plc

Its availability in the southern part of the country especially in Akwa Ibom State has a lot to do with soil type.

According to Usen Offiong, a senior lecturer in the department of soil science, University Of Uyo, oil palm trees can adapt to different soil types but grow best in moist and well-drained textured soil.

“Oil palm trees grow well in a favourable environment, though it can adapt to different soil types, it requires moist, deep, and well-drained textured soils rich in humus content. Sandy soils, particularly the coastal sands are not ideal for oil palm cultivation,” Mr Usen said.

Oil palm plantation at NIFOR

“Oil palm trees require enough air and sunlight, heavy clay soils with poor drainage properties may cause aeration problems to the plant during the rainy season,” he added.

A rosy past

Relishing how oil palm business was practised and managed in Akwa Ibom State before the Nigerian civil war in 1967, Atim Okon, a retired primary school headmistress who has also been in the palm oil business for decades, recalled what her farm used to be.

“Palm oil business is a lucrative business in this area. I inherited the business from my parents, which was the major source of income in our family at that time. We harvested the palm fruit, processed it with our local mill, then sell it to the agent who moves around the village to buy the palm oil from the local farmers,” Mrs Okon said.

“The agent came to us in the villages to buy from us, they came with something to test the oil to know the one with high quality. At that time, we sold a tin (about 20 litres) of palm oil with a high quality at 14 shillings to the agents, while the less quality ones were sold at about 12 shillings to them.

Oil palm seedlings at Presco plc

“According to the agents, the drums of oil they purchased from us locally will then move to the Cross River State depot, where ships will eventually move them out of the country to Europe and other parts of the world,” Mrs Okon added.

Narrating the story further on how the oil palm business was practiced in the early 1960s, Mrs Okon said there was much support from the government to the sector at that time, which encouraged the farmers to do more in the business and be more self-reliant in their jobs.

“In the early 1960s, there was more government support in the business; in this our area, the government built mills in the areas to help in the processing of the palm oil and also helped in planting more seedlings in the area. I remembered, from here (Mbierebe village in Ibesikpo Asutan LGA) to Afaha Offiong (a village in Nsit Ibom local government area), the government planted oil palm seedlings all over the areas,” she added.

Mrs Okon said that after the discovery of crude oil in the 1970s, the government abandoned the sector, and many processing mills that were sited by the government were vandalised due to lack of maintenance and supervision.

The business is also the mainstay of the family of Uwem Douglas, father of six, a farmer in Afaha Abia village in Nsit Ibom local government.

“I have been in the oil palm business for more than 20 years now; I own about eight hectares of palm fruit farmland; it is my family’s major source of income for years,. It is through the business that I have been able to train my two children at the tertiary institutions and four others at the secondary level and I have also used the money realised from the business to set up my pig farming business,” Mr. Douglas said.

Analysts have wondered why the Nigerian government is not considering diversification into the agricultural sector fully, considering how people can survive with the palm oil business independently without looking out for white-collar jobs.

With the rising unemployment rate in the country, the agricultural sector remains one of the best options that can create jobs for the citizens if proper attention is given to it, experts say.

“We appeal to the government to support us with the new improved seedlings, which can help us to harvest more yearly, loans to farmers and fertilizers,” Mr Douglas added.

However, the fluctuating trends in the production and marketing of palm oil in Akwa Ibom calls for adequate economic investigation and government intervention in order to increase the potentials of the business.

Another farmer, Joseph Essien, who also owns a coconut plantation in the village, said the major challenge he is facing in the business is price instability.

“There is serious price instability in the business, the dealers determine the price of the oil palm to the local farmers. A 25kg of palm oil can be ₦8,500 or ₦9,000 today, but in the next few months, it falls to ₦4,000 and ₦4,500; with this, the local farmers are discouraged. The government can help the business through price support” or price guarantee just like what is happening in other countries of the world,” Mr Essien said.

Mr Usen, who teaches at the University of Uyo, said the government can revitalise the sector by supporting the farmers in terms of land availability, as well as planting more seedlings to boost the production level of palm oil in the region.

“Oil palm sector is a lucrative business that can create many job opportunities for the people in the country if the government can revamp the sector. Government can set aside a large area for the tree plantation with improved seedlings planted all over the place. There should be policy or law that bans the falling of oil palm trees by people,” Mr Usen said.

“More oil palm processing factories should be built; there should be adequate supply of fertiliser to the farmers so as to keep the soil healthy, a healthy soil is a productive soil. If this is done, oil palm sector can help boost the economy, thereby creating more jobs as well as increasing the agricultural contribution to the country’s total GDP,” Mr Usen added.

Major Constraints —Experts

Billy Ghansah, the agriculture coordinator, Okomu Oil Palm Company, said there is little room for export when Nigeria is a net importer of oil palm, adding that the country can only be exporting when it can produce enough to serve domestic purposes.

Billy Ghansah, Agriculture coordinator at Okomu Oil company

“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,” he said.

He said for Nigeria to fill the existing gaps in its palm oil production, there is a need to plant about 100,000 hectares of oil palm now.

He said the basic cultivation strategy of oil palm was developed in Africa, but we (Nigeria) 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,” he added. He explained that rather they (Asians) made use of what they had and improved it.

He said the biggest development has been the development of the seed (cultivar) for production, which accounts for the biggest improvement in yields.

In a similar manner, the Nigerian Institute for Oil Palm Research (NIFOR)’s acting executive director, Celestine Ikuenobe said the main challenge bedevilling the oil palm sector is the low rate of planting and land acquisition in the tropical regions of the country where the plants can thrive and blossom well.

Dr Celestine Ikuenobe during interview with PREMIUM TIMES

He said they have been urging farmers to replace older plantations with improved seedlings in order to boost productivity.

More so, the managing director, Presco Plc, Felix Nwabuko, said despite the potential that the oil palm value chains has, all it has suffered is neglect, just like Nigerian agricultural sector as a whole.

As a source of food, it also has huge potential to address food security because of the huge and increasing population across the West African sub regions.

“And that is what is driving our expansion program,” he added. Noting that what Nigeria is short of is the will to effectively and efficiently follow up policies from when they are created to execution.

Way forward

Mr Nwabuko said his desire is to see the interest in actually developing the oil palm value chains sustained, and not just for the wish to make quick cash out of it.

“Oil palm is not where you can make quick cash, it deserves patience. It is a long term business. From the day you get into it, before you start to make money, it’ll take you years if you’re a new entrant.”

Mr Felix, Presco Plc MD

He said those interested, and the government itself, must realise what it takes in terms of making it work, while reiterating that even after launching the Nigerian National Oil Palm Policy, which addresses the issues, “let’s now begin the implementation mode,” he noted.

“Let’s have a platform that will drive those policies and that’s why some of us have been agitating for what we called the Nigerian Oil Palm Council, like we have in Malaysia — the Malaysian Oil palm council.

“That will be a council that is dedicated to ensure that the policies put in place are implemented, and also be checking what is going on in the industry, and making sure that the right things are done in the industry,” Mr Nwabuko said.

“When you marry these things, that’s when our dream about the oil palm industry will come to fruition,” he concluded.



Advertisement

PT Mag Campaign AD




Source link

Facebook Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Follow Us
  • Contribute to MyNewsonPoint - Register to become an author to contribute with your knowledge.
  • Send breaking news, releases, photos or videos of happenings around the world Us via
Live Updates COVID-19 CASES
  • World 42,548,025
    World
    Confirmed: 42,548,025
    Active: 9,943,543
    Recovered: 31,454,342
    Death: 1,150,140
  • USA 8,747,864
    USA
    Confirmed: 8,747,864
    Active: 2,819,607
    Recovered: 5,698,965
    Death: 229,292
  • UK 830,998
    UK
    Confirmed: 830,998
    Active: 786,427
    Recovered: ?
    Death: 44,571
  • Italy 484,869
    Italy
    Confirmed: 484,869
    Active: 186,002
    Recovered: 261,808
    Death: 37,059
  • Nigeria 61,882
    Nigeria
    Confirmed: 61,882
    Active: 3,563
    Recovered: 57,190
    Death: 1,129
  • Ghana 47,601
    Ghana
    Confirmed: 47,601
    Active: 463
    Recovered: 46,824
    Death: 314