23/04/2013 (THISDAY Live) - A recent announcement by PZ Cussons in a United Kingdom based commodities publication that it has started large scale sales of palm oil in Nigeria may be the confirmation of a recent outcry by the Plantation Owners Forum of Nigeria (POFON) that agents of the Federal Government are conniving with companies of foreign interests and origin to wipe out local investments in palm oil plantations in Nigeria by flooding the nation’s market with cheap imported palm oil Crusoe Osagie Reports.

The announcement by a United Kingdom based publication ‘Agra-net.com’ on the 12th of April that PZ Cussons has began the bulk sale of palm oil in Nigeria may be the confirmation of an alarm recently raised by the Plantation Owners Forum of Nigeria (POFON) that companies of foreign origin led by PZ Wilmar and De United Foods Industries Limited (DUFIL) are implementing a plan to wipe out oil palm plantations in the country.

The first two paragraphs of a news item titled ‘PZ Cussons begins bulk palm oil sales in Nigeria’     published by Agra-net.com on Friday April 13th 2013 states: “PZ Cussons, the consumer products group that is a key palm oil user, has said it is trading within management expectations and it has started bulk oil sales in Nigeria.

Construction of a palm oil refinery with Wilmar in Nigeria has now been completed on time and to budget and production commenced in the period, it said in a management update.”

POFON members who preferred not to be named had stated that De-United Foods, producers of popular noodles brand, Indomie and PZ-Wilmar are the leaders of this recent move to topple the nations’ local effort towards the establishment of a vibrant oil palm sector.

The group noted that it is believed this was ploy to replace indigenous investments in plantation agriculture with huge palm oil import inventory from Malaysia and with the report of alleged sale of palm oil by PZ Cussons, analyst say POFON’s claim might possess some merit.

Wilmar, which exists in Nigeria as PZ-Wilmar after a merger of sorts with PZ Cussons, is Asia’s leading agribusiness group. Established about 20 years ago and is currently the largest processor and merchandiser of palm oil holding about 40 per cent of the world market.

The company has more than 250 processing plants all over the world, sells to more than 50 countries and has invested in palm oil plantations and refineries in Ghana, Cote d’ Voire and Uganda. The company is the largest processor and merchandiser of palm and lauric oils.

POFON alleges that these plotters of the death of the local oil palm industry are channeling their palm oil imports from Malaysia to Nigeria in response to the stiff competition Malaysia is now facing from Indonesia in an international palm oil market that has grown increasingly fierce in the last 5 years.

THISDAY gathered that in their relentless effort to undercut the Nigerian oil palm industry, these manufacturers, which are of foreign origin with unfettered access to cheap and subsidised palm oil from their continents and countries of origin are said to be working with some compromised individuals within the Federal Ministry of Finance and the Federal Ministry of trade and investment to the end of clearing the way for the flow of CPO into Nigeria, which is now one of the biggest emerging market for vegetable oil in Africa and the world.

Although THISDAY cannot confirm in this report exactly the type and nature of oil, which the PZ Cussons is reported to be selling in large volumes, analysts say it is important for the operators of the nation’s economy especially from the Federal Ministry of Finance and the Federal Ministry of Trade and Investment to come clean about the issue of palm oil importation into Nigeria.

They insist that pertinent questions have to be answered stressing that  Nigerians need to know what the federal government’s policy is on the importation of palm oil into the country and what its plans are to ensure that billions that have been invested in oil palm plantation by Okomu Plc, Presco Plc, Dansa Agro Plantations Limited, Real Plantation, A and Hatman, Siat Nigeria Limited, IMC Limited, JB Farms Limited, Saturn Farms, and Aden River is not wasted and the job and economic growth opportunities that should result from these tangible investments are not missed.

Although THISDAY gathered that the Manufacturers Association of Nigeria (MAN) is currently trying to mediate between POFON and these alleged killers of the nation’s oil palm plantations, no tangible information has emerge of a possible truce, as the these foreign based companies are hell bent on flooding the nation’s market with cheap oil and leaving local producers stranded.

PZ-Wilmar, a company currently setting up a palm oil refining factory in Nigeria is said to argue that the local oil palm plantations in Nigeria lacks the capacity to meet its need for CPO for refining, therefore calling on government to allow it to access palm oil offshore either duty free or subsidised. But analysts have rebuffed this claim stressing that while they prepared feasibility for the success of their palm oil refining business in Nigeria, they must have followed the international standard practice of taking all the fiscal policies of their investment destination into account.

“You do not plan to succeed in a business you are taking to a foreign nation by hinging the success of the business on an intention to force the government of that country to change its policies to suit your business plan. Rather you structure your business plan to suit social and economic realities of that country,” a POFON member said.

PZ-Wilmar however states that it is investing over N100 billion in both plantation agriculture and CPO refining a claim which POFON members say is a smokescreen devised to mislead the Federal Government into granting the company exclusive concessions, which end up causing debilitating market disruptions.

According to the POFON sources, DE-United Foods and PZ-Wilmar are championing the flow of Malaysian crude palm oil into Nigeria at all cost. They say De-United Food’s claim that local oil cannot meet its demand for the production of Indomie noodles and PZ-Wilmar’s claim that the local production of palm oil cannot meet the required quantity to run its proposed refining facility are the dummies being sold to government to persuade it to grant them concessions that are detrimental to the entire palm oil industry.

The POFON members also claim that in the past couple of months these companies have strangely refused to buy CPO from local producers. “Their claim is that it is cheaper for them to buy palm oil from the international market. But analysts have computed the variables and discovered that it is impossible for these companies to get CPO at the international market at the prevailing international market price, pay for shipping of the bulky commodity and pay the full 35 percent duty on it and still get it cheaper than the local market price of CPO. The only way their claim to obtain palm oil from the international market at a cheaper price than the local market can be correct is if they are short paying government in the area of import duties and levies.”

POFON had earlier expressed concern that while Indonesia had increased its CPO export tariff and reduced its export tax on refined products to promote processing, Malaysia increased its CPO export quota by two million tonnes free of tax. Now Nigeria is being encouraged to reduce its CPO tariff from 35 per cent to 5-10 per cent, thus ensuring that it becomes vulnerable and a veritable dumping ground for the cheap palm oil from Malaysia.

“Glaringly, tariff reduction serves no useful purpose for the Nigerian economy. It is part of the grand design of Malaysia to stifle our palm oil production. Malaysia is establishing CPO refineries in Africa including Nigeria. The primary objective is to market their CPO - there is no doubt that the bulk of the extra 2 million tonnes tax free export quota is aimed to be shipped into Nigeria to unsettle the local market equilibrium,” POFON stressed.

POFON claims that it is cheap already to import Malaysian CPO into Nigeria at 35 per cent and we wonder how locally produced CPO is expected to compete at the present level talk less at tariff lower than 35 per cent; it is certain to be an over-kill - both estates and smallholder operations in over 24 states of Nigeria will be wiped out.

In an increasingly competitive global palm oil economy, Nigeria cannot afford to let down its guard and expose itself to pummeling and sabotage by competitors. The country must follow the protectionist path of Indonesia and Malaysia. It is certain that the Malaysia’s CPO tariff is set to undermine the Nigerian Oil Palm Transformation Agenda. In the circumstance, the most appropriate response by Nigeria is to reinstitute the ban on importation of CPO.

POFON views the purported move with the utmost concern warning that Nigeria’s oil palm industry is just recovering from the shock and negative effects of the ban that was lifted in 2009 with Plantation Owners now increasing their investments in new plantings:

Presco Plc is set to replant Risonpalm (16,000Ha); Okomu Oil Palm Company Plc is planning mill expansion (hitherto put on hold when the ban was lifted) to 65 Tons FFB/Hr - which would be the largest in Africa; Dansa Agro Plantation has commenced planting on its 15,000ha concession in Cross River State and is set to acquire an additional 30,000 hectares for oil palm. Other plantation owners in Ogun State and Cross River State are expanding their plantation and milling capacities. Oil palm is a perennial crop, so the claim on planting is verifiable.

The plantation owners caution that all these improvement and investments could go down the drain if the illicit concessions being pursued by these companies are granted.

With oil palm planting, especially smallholdings, now spreading beyond the traditional oil palm belt to other states in central Nigeria and parts of the north and Oil palm is grown in about 24 states of Nigeria presently, the concern of POFON is beyond the protection of parochial corporate interests. It is more about the protection of Nigeria’s rural economy.

POFON insists that if the Nigerian government should allow the surreptitious move to dump cheap and low quality palm oil in Nigeria, much more than the loss of corporate investment, the rural economy will be dealt a devastating blow. Equally, Nigeria’s natural resources and biodiversity will be adversely affected in the process.

According to POFON: “The dumping of cheap and unfortified palm oil in Nigeria also has implication for the oil palm component of the Agricultural Transformation Agenda (ATA) of the present administration.

In all, it will send a wrong signal that government is paying lip service to agriculture by relegating it to a position of subservience to industrialisation. The ideal position, given the stated policy thrust, is to enhance the position of agriculture to enable it drive industrialization.

“The importation of CPO directly creates more employment for Malaysia and corresponding loss of jobs for Nigeria especially in the current situation where unemployment has led to security crisis in our Country.

“In the light of the above, POFON - a body of corporate private investors in plantation crops - fervently urges the Federal government to call the proponents of CPO tariff review to order. Government should also assure plantation owners, smallholders and Nigerian farmers at large that the Agricultural Transformation Agenda (ATA) is on course.”