Palm oil producers bet billions on Nigeria’s edible oil deficit
04/07/2026 (Business Day) - Nigeria’s two biggest listed palm oil producers are committing billions of naira to plantations, mills, and processing facilities despite already posting record earnings, wagering that Africa’s largest food market will remain structurally short of edible oil for years to come.
Rather than distributing the windfall from surging crude palm oil prices, Presco Plc and Okomu Oil Palm Plc, which posted a combined profit of N72.86 billion in the first quarter of 2026, compared to N69.32 billion, are recycling much of their cash into expanding production, reflecting growing confidence that domestic consumption will continue to outstrip local supply despite years of government efforts to revive the industry.
The investment drive comes as Nigeria, Africa’s most populous country, consumes an estimated 2.1 million to 2.2 million tonnes of edible oil annually but produces only about 1.9 million tonnes, leaving a supply gap that is filled largely through imports from countries such as Malaysia and Côte d’Ivoire, estimated at more than $600 million each year, which is worsening pressure on scarce foreign exchange reserves.
For investors, the latest quarterly results suggest the companies are positioning themselves not simply for another year of bumper profits but for a multi-year expansion cycle built around one of Nigeria’s most persistent agricultural deficits.
Presco generated N62.7 billion in operating cash flow during the first quarter, almost three times Okomu’s N21.5 billion, according to their latest financial statements.
Yet neither company treated the cash surge as an opportunity to reward shareholders immediately. Instead, both retained earnings to finance expansion after paying only final dividends for the 2025 financial year.
Presco spent about N6.4 billion on property, plant, and equipment during the quarter, more than double the amount invested in the same period last year, while Okomu invested close to N1 billion in capital projects and continued spending on immature plantations expected to generate future harvests.
The spending reflects an important distinction often obscured by headline earnings. Nigeria’s largest palm oil companies are no longer merely benefiting from favourable commodity prices; they are deploying those profits to increase future production capacity.
Balance sheets illustrate the scale of that commitment
Presco reported biological assets valued at almost N125 billion at the end of March, representing investments in oil palm plantations that will generate fruit over several decades.
Inventories stood at nearly N59 billion, while cash balances reached N136.5 billion despite ongoing investment. Okomu reported biological assets of N85.4 billion and inventories approaching N40 billion, alongside cash holdings of N31.8 billion.
Unlike annual crops, oil palm requires years before new trees become commercially productive. Every naira invested today, therefore, represents a bet on demand several years into the future.
That demand appears unlikely to weaken anytime soon.
Nigeria’s rapidly expanding population, estimated at more than 220 million people, continues to drive consumption of cooking oil, margarine, noodles, confectionery, and processed foods, all of which rely heavily on palm oil.
Industrial demand from soap manufacturers and other consumer goods producers has also expanded alongside urbanisation.
Long-term optimism masks growing stress across the wider industry
While Presco and Okomu are investing aggressively for future demand, smaller growers say a wave of cheaper palm oil entering Nigeria has pushed domestic prices below production costs, squeezing margins even during what is traditionally the lean production season.
Alphonsus Inyang, president of the National Palm Produce Association of Nigeria, said palm oil prices had fallen by about 50 percent in less than two months, leaving many producers unable to recover their production costs.
“Currently, at the price we are selling palm oil in this country, we are selling below production cost,” Inyang said in a recent interview. “Smallholder farmers depend on oil palm income for school fees, medicine, and their general economic well-being.”
He blamed porous land and maritime borders for allowing cheaper palm oil into Nigeria, saying illicit inflows were depressing domestic prices and undermining local producers.
“Government is losing revenue. The farmers are being suppressed through the influx of oil that comes in at very low prices,” he said.
The comments highlight one of the contradictions confronting Nigeria’s edible oil market. Although the country remains structurally dependent on imported edible oils to bridge a domestic supply gap, producers argue that smuggled imports are distorting market prices and weakening incentives for investment, particularly among smallholder farmers who account for much of Nigeria’s palm oil production.
While Nigeria remains one of the world’s largest producers of palm oil, decades of underinvestment, ageing plantations, weak rural infrastructure, and low-yield smallholder farming have prevented output from matching consumption.
The result is a structural deficit that has persisted despite repeated government programmes aimed at reviving the sector.