MARKET DEVELOPMENT
Nigeria: Palm Oil - Dufil and the Quest for Backward Integration
Nigeria: Palm Oil - Dufil and the Quest for Backward Integration
13/01/2015 (AllAfrica.com) - Recently, the Honourable Minister of State for Industry, Trade and Investment, Dr. Samuel Ortom, said that Nigeria ranks 26th in the world production of palm oil, falling from its leading position in the 60s and hardly satisfies the domestic demand.
Speaking at a stakeholders' meeting organized to chart ways for successful hosting of the 1st International Palm Produce Conference (IPPC), Dr. Otorm, represented by the Permanent Secretary in the ministry, Mr. Dauda Kigbu, said that the inability of the country to meet the local demand in palm oil production was a clear indication that the fortune of the palm oil sector has declined significantly.
A quick look at the palm oil sector in Nigeria reveals that palm oil is the main vegetable oil produced in Nigeria and Nigeria was the world's leading producer and exporter of palm oil in the 60's. However, Nigeria lost its dominant position in the international trade after 1980s and is currently the fifth largest producer, far behind Indonesia and Malaysia (51 percent and 34 percent of the world production in 2013/14) (USDA, 2014). Its output indeed represented only 1.57 percent of the world production in 2013/14 (USDA, 2014). As regards palm oil production in Africa, however, Nigeria's production is estimated at 55 percent of African output, making it the largest producer of palm oil in Africa.
While Malaysia and Indonesia productions have drastically increased over the 1990-2010 period, it has barely been the case for Nigeria, mainly because of its reliance on traditional production methods coupled with major infrastructural challenges being faced in the country, as well as out-dated technology and out-dated production knowledge.
The food grade industrial output of palm oil does not match local consumption. Indeed, the national demand for palm oil has grown faster than the domestic supply. Production deficit as at 2014 is well over 900,000 tonnes per annum. Consequently, Nigeria imports palm oil to satisfy the local demand. However, Nigeria has a potential to increase its production through the application of improved processing methods, creation of incentives for manufacturers in the food industry sector to embark on backward integration by investing in palm plantation and thereby satisfying the demand of palm oil locally, while also exporting to other countries.
Due to the constant shortage of palm oil for both domestic consumption and industrial usage, major companies like Dufil and PZ Wilmar are investing heavily in the cultivation of palm tree plantations that will revolutionize the palm oil industry in Nigeria. A combination of these and the efforts being made by Dufil will help the Federal Government's transformation agenda to achieve its 300,000 hectares for Agribusiness in palm oil sector.
These grave concerns of snail paced development has aggressively made DUFIL Prima Foods Plc, a major player in the Nigeria Culinary landscape, to propel its strategic initiatives to enter into the vegetable oil segment with the objective to provide healthy and best quality palm oil and make it available at every retail point in Nigeria
This, the company believes, will eventually benefit the economy and bring relief to millions of Nigerians who deserve the best quality of palm oil at affordable prices.
The company has therefore embarked on strategic backward integration to ensure 100 percent local content in most of the products and this has led to investments worth billions of Naira in the Nigerian economy in the last 10 years. These include the establishment of a seasoning plant, the establishment of flourmills, the establishment of oil refinery and the establishment of a palm tree plantation under the Edo State Government Agribusiness revolution scheme.
In its effort to boost the local production of Palm Oil, Dufil has acquired and signed a memorandum of understanding with the Edo State government for 60,000hectares of land for cultivation of palm trees which will help in boosting the local production of palm oil, thereby increasing the supply of palm oil within the country. Dufil is at the fulcrum of revolutionary transformation of the palm oil industry in Nigeria.
Dufil's initiative has provided thousands of Nigerians employment, moving the vegetable oil towards forces determining free markets, which is a symbol of globalization, revolutionizing the Nigerian economy, rationalizing food markets and strengthening the Naira against foreign exchanges, thereby providing enormous economic benefits to millions of Nigerians.
The primary objective of Dufil's entering into the vegetable oil market is to reduce the supply shortage in the country with world-class quality at affordable prices for millions of Nigerians to benefit. Dufil has invested billions of Naira with a world-class facility and committed itself to the development of the palm oil industry and lifts the base of the pyramid by directly aiding the lifestyle improvement of Nigerians.
Efficiencies achieved by Dufil have been directly passed on to the ultimate consumer, which is evident in the consumer markets for vegetable oil in every part of Nigeria. The company's entry into the vegetable oil market has radically created a reduction in consumer prices by more than 10 percent over the last 12 months coupled with unmatched quality with international standards, thereby providing direct benefit to millions of Nigerians. This reduction in price came at a time when Nigerians are reeling in high inflationary pressure with a devalued Naira.
No one has ever thought that processed healthy vegetable oil would be sold in sachets to meet the common man's purchasing power, but that is happening right now. Healthy oil is no longer an exclusive reserve for the rich due to Dufil's efforts in establishing a free market for vegetable oil.
Speaking at a stakeholders' meeting organized to chart ways for successful hosting of the 1st International Palm Produce Conference (IPPC), Dr. Otorm, represented by the Permanent Secretary in the ministry, Mr. Dauda Kigbu, said that the inability of the country to meet the local demand in palm oil production was a clear indication that the fortune of the palm oil sector has declined significantly.
A quick look at the palm oil sector in Nigeria reveals that palm oil is the main vegetable oil produced in Nigeria and Nigeria was the world's leading producer and exporter of palm oil in the 60's. However, Nigeria lost its dominant position in the international trade after 1980s and is currently the fifth largest producer, far behind Indonesia and Malaysia (51 percent and 34 percent of the world production in 2013/14) (USDA, 2014). Its output indeed represented only 1.57 percent of the world production in 2013/14 (USDA, 2014). As regards palm oil production in Africa, however, Nigeria's production is estimated at 55 percent of African output, making it the largest producer of palm oil in Africa.
While Malaysia and Indonesia productions have drastically increased over the 1990-2010 period, it has barely been the case for Nigeria, mainly because of its reliance on traditional production methods coupled with major infrastructural challenges being faced in the country, as well as out-dated technology and out-dated production knowledge.
The food grade industrial output of palm oil does not match local consumption. Indeed, the national demand for palm oil has grown faster than the domestic supply. Production deficit as at 2014 is well over 900,000 tonnes per annum. Consequently, Nigeria imports palm oil to satisfy the local demand. However, Nigeria has a potential to increase its production through the application of improved processing methods, creation of incentives for manufacturers in the food industry sector to embark on backward integration by investing in palm plantation and thereby satisfying the demand of palm oil locally, while also exporting to other countries.
Due to the constant shortage of palm oil for both domestic consumption and industrial usage, major companies like Dufil and PZ Wilmar are investing heavily in the cultivation of palm tree plantations that will revolutionize the palm oil industry in Nigeria. A combination of these and the efforts being made by Dufil will help the Federal Government's transformation agenda to achieve its 300,000 hectares for Agribusiness in palm oil sector.
These grave concerns of snail paced development has aggressively made DUFIL Prima Foods Plc, a major player in the Nigeria Culinary landscape, to propel its strategic initiatives to enter into the vegetable oil segment with the objective to provide healthy and best quality palm oil and make it available at every retail point in Nigeria
This, the company believes, will eventually benefit the economy and bring relief to millions of Nigerians who deserve the best quality of palm oil at affordable prices.
The company has therefore embarked on strategic backward integration to ensure 100 percent local content in most of the products and this has led to investments worth billions of Naira in the Nigerian economy in the last 10 years. These include the establishment of a seasoning plant, the establishment of flourmills, the establishment of oil refinery and the establishment of a palm tree plantation under the Edo State Government Agribusiness revolution scheme.
In its effort to boost the local production of Palm Oil, Dufil has acquired and signed a memorandum of understanding with the Edo State government for 60,000hectares of land for cultivation of palm trees which will help in boosting the local production of palm oil, thereby increasing the supply of palm oil within the country. Dufil is at the fulcrum of revolutionary transformation of the palm oil industry in Nigeria.
Dufil's initiative has provided thousands of Nigerians employment, moving the vegetable oil towards forces determining free markets, which is a symbol of globalization, revolutionizing the Nigerian economy, rationalizing food markets and strengthening the Naira against foreign exchanges, thereby providing enormous economic benefits to millions of Nigerians.
The primary objective of Dufil's entering into the vegetable oil market is to reduce the supply shortage in the country with world-class quality at affordable prices for millions of Nigerians to benefit. Dufil has invested billions of Naira with a world-class facility and committed itself to the development of the palm oil industry and lifts the base of the pyramid by directly aiding the lifestyle improvement of Nigerians.
Efficiencies achieved by Dufil have been directly passed on to the ultimate consumer, which is evident in the consumer markets for vegetable oil in every part of Nigeria. The company's entry into the vegetable oil market has radically created a reduction in consumer prices by more than 10 percent over the last 12 months coupled with unmatched quality with international standards, thereby providing direct benefit to millions of Nigerians. This reduction in price came at a time when Nigerians are reeling in high inflationary pressure with a devalued Naira.
No one has ever thought that processed healthy vegetable oil would be sold in sachets to meet the common man's purchasing power, but that is happening right now. Healthy oil is no longer an exclusive reserve for the rich due to Dufil's efforts in establishing a free market for vegetable oil.