28/01/2013 (BusinessDay) - Two key ministries, Trade and Investment, and Agriculture and Rural Development, anchoring government’s transformation agenda, are now enmeshed in conflict over tariff on imported crude palm oil (CPO), BusinessDay has gathered.

Sources say lobbyists comprising companies which use palm oil in their manufacturing process, are pushing for a reduction of import tariff from the present 35 percent to 5 percent at the trade ministry, while local farmers and processors of the product are making a case for outright ban on importation, or increase of tariffs by government, thus bringing the two ministries into a face-off.

The Ministry of Trade and Investment has the mandate to draw investment into the country, while the Ministry of Agriculture and Rural Development has a mandate to grow local production of palmoil through support to farmers. The two ministries would therefore appear to be working at cross-purposes.

The Plantation Owners Forum of Nigeria (POFON) has been crying foul, in reaction to what it calls “clandestine moves” of proponents and promoters of reduction of the current tariff on the importation of Crude Palm Oil (CPO) from 35 percent to 5/10 percent.  POFON has said severally, that government ought to be protectionist towards local producers.

POFON, made of PRESCO Oil plc, Okomu Oil plc and a number of smallholder plantation owners and palm oil processors, is dismayed that while Indonesia has increased its CPO export tariff and reduced its export tax on refined products, to promote processing, and Malaysia has increased its CPO export quota by two million tons free of tax, Nigeria is being encouraged to reduce its CPO tariff from 35 per cent to 5-10 per cent.  It argues “Nigeria is thus being made to become vulnerable and a veritable dumping ground for  cheap palm oil from Malaysia”.

On the other hand, foremost food products companies in Nigeria that are major buyers of palm-oil products are saying that locally produced palm oil is not enough to meet  demand, hence the need to reduce the tariff for them to continue to operate. These companies include: De-United Industries (manufacturer of Indomie noodles), May & Baker (manufacturer of Mimi noodles), Honeywell Foods (manufacturer of O-noodles), Chikki Foods (manufacturer of Chikki noodles), and UAC Foods (general food products and user of palm olein and palm stearin. Sumal Foods (special oil blends), Nasco Foods (buyer of palm stearin), Unilever (general user of palm stearin), Consolidated Foods (general user of palm stearin), Okin Biscuit (user of palm stearin as ingredient for biscuit making), and Standard Biscuit (user of palm stearin as ingredient for biscuit making).

POFON’s position is supported by the Minister of Agriculture and Rural Development, Akinwumi Adesina, who has repeatedly rejected proposals for his ministry to import crude palm oil into the country. Adesina made the position known in Abuja, during the signing of a co-operation agreement between the ministry and 18 participating oil palm estates in the 2012 Nursery Field Plantation Activity.

Olusegun Aganga, Minister of Trade and Investment, in reaction to POFON’s protestations, told BusinessDay in Lagos, “We have held meetings with all stakeholders in the palm-oil producing sub-sector and will come out soon with a policy that will be favourable to the sector. I cannot give you the details now but I can assure you that a policy that soothes their needs will be out soon”.

Adesina had warned that the ECOWAS Trade Liberalisation Scheme’s (ETLS’) Rule of Country of Origin provision, should not be exploited to bring in crude palm oil at unauthorised and ridiculously low prices that discourage local investment.

“I want to be very clear on this, we will not allow imports of cheap CPO that will undermine our palm oil transformation agenda as a country,” he said, adding that Nigeria used to be the leading producer and exporter of oil palm produce in the 60s, a position it has lost to countries like Indonesia and Malaysia.

“Nigeria accounted for 27 per cent of the global market of palm oil in 1961. Our production declined from 167,000 metric tonnes in 1961 to 25,000 metric tons by 2008. In the same period, global production of palm oil expanded from 629,000 metric tonnes in 1961 to 33.3 million metric tonnes.

The situation changed following the discovery of crude oil in commercial quantity in the early 70s,” said the agric minister.

He further said his ministry was already engaging all stakeholders in this regard, to ensure their understanding towards supporting the establishment of local plantations, local production and processing.