MARKET DEVELOPMENT
Crisis in Food Sector Worsens as Palm Oil Scarcity Persists
Crisis in Food Sector Worsens as Palm Oil Scarcity Persists
20/05/2013 (THISDAY Live) - The stakeholders in Nigeria’s consumer food sector have called on the federal government to intervene in the crisis rocking the sector, which is been fuelled by the scarcity crude palm oil (CPO) and government’s 35 per cent import duty on raw materials.
Industries in Nigeria, particularly the food sector, currently do not have access to sufficient oil palm produce, needed as key raw material for the manufacturing of their goods. Manufacturing giants such as Cadbury Nigeria Plc, PZ Cussons Nigeria Plc, Unilever Nigeria Plc, Indomie Noodles Plc, etc.; rely on CPO for survival.
This is so because Nigeria produces a meagre 750,000 metric tonnes (MT) to 800,000 MT of crude palm oil or CPO every year and has a requirement of approximate 1.9-2.1million MT per annum, which leaves industries in the food sector with no choice, than to rely heavily on imports from other countries.
THISDAY investigation revealed that the total oil palm plantation in the Niger Delta area is between1.4 million and 1.8 million hectares, while the wild grove plantation is over 1.1 million hectares, small plantations (Less than 1000 hectares size) is 260,000 hectares, and organised plantation is less than 100,000 hectares.
A thorough look at yield levels sourced from Index Mundi, Malaysian Palm Oil Council (MPOC) and Oil World study on Nigeria’s requirements showed that these plantations cumulatively provide around 800,000 MT of CPO. This clearly shows a shortage of palm oil in the country.
For example, a 2012 data from Index Mundi indicates that 70 per cent of the Palm Oil Imports into West African countries are into Benin Republic and Nigeria (470,000 MT and 450,000 MT respectively). Sources claim that maximum of the import into Benin is routed into Nigeria. 2012 consumption numbers confirms same as Benin exports close to 390,000 MT of palm oil.
Concerned industry watchers and stakeholders are however of the opinion that recent government’s stance which has seen it impose a 35 per cent import duty on palm oil and non-fulfillment of vegetable oil demand by the companies in the palm oil sector is curtailing the growth of multiple industries like biscuits, vegetable oil market, margarines, cereals, crisps, sweets and baked products, washing powder and cosmetics.
They noted that government’s decision to impose duty on palm oil was detrimental to the economy as it was creating ripple effect on multiple industries and impact self-reliance on food production and agricultural value chain thereby squeezing the overburdened Nigerian, with higher food retail prices.
A critical look at the noodles industry, for instance shows that, on an average it consumes approximately 72,000 MT of refined bleached and deodorised palm oil (RBDPO) which it does not have access to from the local palm oil companies in the country. The leading companies in the palm oil industry cannot fulfill the basic requirements for the noodles industry itself as there is an estimated shortage of palm oil amounting to 500,000 MT per. annum.
Industries in Nigeria, particularly the food sector, currently do not have access to sufficient oil palm produce, needed as key raw material for the manufacturing of their goods. Manufacturing giants such as Cadbury Nigeria Plc, PZ Cussons Nigeria Plc, Unilever Nigeria Plc, Indomie Noodles Plc, etc.; rely on CPO for survival.
This is so because Nigeria produces a meagre 750,000 metric tonnes (MT) to 800,000 MT of crude palm oil or CPO every year and has a requirement of approximate 1.9-2.1million MT per annum, which leaves industries in the food sector with no choice, than to rely heavily on imports from other countries.
THISDAY investigation revealed that the total oil palm plantation in the Niger Delta area is between1.4 million and 1.8 million hectares, while the wild grove plantation is over 1.1 million hectares, small plantations (Less than 1000 hectares size) is 260,000 hectares, and organised plantation is less than 100,000 hectares.
A thorough look at yield levels sourced from Index Mundi, Malaysian Palm Oil Council (MPOC) and Oil World study on Nigeria’s requirements showed that these plantations cumulatively provide around 800,000 MT of CPO. This clearly shows a shortage of palm oil in the country.
For example, a 2012 data from Index Mundi indicates that 70 per cent of the Palm Oil Imports into West African countries are into Benin Republic and Nigeria (470,000 MT and 450,000 MT respectively). Sources claim that maximum of the import into Benin is routed into Nigeria. 2012 consumption numbers confirms same as Benin exports close to 390,000 MT of palm oil.
Concerned industry watchers and stakeholders are however of the opinion that recent government’s stance which has seen it impose a 35 per cent import duty on palm oil and non-fulfillment of vegetable oil demand by the companies in the palm oil sector is curtailing the growth of multiple industries like biscuits, vegetable oil market, margarines, cereals, crisps, sweets and baked products, washing powder and cosmetics.
They noted that government’s decision to impose duty on palm oil was detrimental to the economy as it was creating ripple effect on multiple industries and impact self-reliance on food production and agricultural value chain thereby squeezing the overburdened Nigerian, with higher food retail prices.
A critical look at the noodles industry, for instance shows that, on an average it consumes approximately 72,000 MT of refined bleached and deodorised palm oil (RBDPO) which it does not have access to from the local palm oil companies in the country. The leading companies in the palm oil industry cannot fulfill the basic requirements for the noodles industry itself as there is an estimated shortage of palm oil amounting to 500,000 MT per. annum.