19/06/2013 (The Guardian Nigeria) - The truism that crude palm oil, just like crude oil and rice, is a political commodity, is to a large extent believable going by the array of activities and interests in the product. The by-product of the commodity, going by its presence in every home attests to this claim, while the impact of a negative development on the sector is felt in most homes and industries.

The move by the Federal Government to wade into the activities of the real sector, especially the agricultural sector was borne out of the need to reduce the country’s dependence on imports to feed its citizens and address the issue of the sector falling far short of its potential, especially in its contribution to the Gross Domestic Product (GDP).

As lofty as government’s plans seem, there has however been very little achieved in terms of implementation of key policies to drive value addition in the key agricultural sectors of the economy, especially ones where Nigeria seems to have comparative advantage.

For instance, many of the sustainable crops have been allowed to wither due to neglect by government due to concentration on the oil and gas sector as well as inadequate protectionist policy for indigenous firms.

Like other key agricultural sectors, palm oil production in Nigeria has had the misfortune of falling from grace to grass. From being a dominant palm oil producer globally, even before attaining independence in 1960, the country is now a net importer of the product. It produces about 800,000 metric tonnes per annum, whereas local demand is between 1.8 million and 2.1million metric tonnes per annum.

Currently, 450,000 metric tonnes are imported to supplement local output, with the Federal Government introducing 35 per cent tariff regime on imported palm oil, to cater for the imbalance.

Apart from being an essential ingredient in cooking, palm oil is a major industrial material.

Specifically, margarine, cereals, biscuits, cosmetics, detergent and vegetable oil are products that are increasingly linked to palm oil, among other raw materials. Also, palm kernel oil and palm kernel cake are other products in the value chain derivable from oil palm cultivation.

Apparently, industries that depend on this raw material for production are under serious threat, given the fact that it is in high demand globally, with Indonesia and Malaysia supplanting Nigeria as the world’s largest producer and exporter of palm oil, respectively.

Indeed, total oil palm plantation in Niger Delta area is over 1.4 to 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 Organized plantation is less than 100,000 hectares.

A look at yield levels sourced from Index Mundi, MPOC, Oil World study on Nigerian 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 percent of the Palm Oil Imports into West African Countries are into Benin 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.

For instance, the growing contention on the importation of the product to cater for local demand has further increased the tension as regards the true state of the product demand and supply.

Indeed, some stakeholders within the Plantation Owners Forum of Nigeria (POFON) however accused certain local manufacturers especially in the food processing industry of conniving to strangle the local oil palm industry as their latest move to force the Federal Government to throw the nation open to free flow of cheap imported Crude Palm Oil (CPO) into the country.

According to them, the reduction of the current tariff on the importation of CPO from 35 percent to between 5 and 10 percent would make Nigeria to become vulnerable and a veritable dumping ground for cheap palm oil from Malaysia.

However, stakeholders within the food processing sector believe that government’s stance which has seen it impose a 35 percent 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.

To them, government’s decision to impose duty on palm oil is detrimental to the economy as it will create 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 look at the noodles industry, for instance showed that, on an average it consumes approximately 72,000 metric tonnes of refined bleached and deodorized palm oil (RBDPO) which it does not have access to from the local palm oil companies in the country.

Going buy the statistics available, the stakeholders noted that 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.

The stakeholders further blamed the local oil palm producing companies in the country for doing little or nothing to ensure that they meet the growing demands of the food processing sector who rely heavily on CPOs for their goods.

Already, there are reports that the product is being adulterated by some merchants eager to maximise profit, coupled with the laxity in regulations or control by institutions, through the addition of chemical substances such as Red 24 and chlorine to palm oil to enhance its colour and quantity.

An industry analyst, Tajudeen Olufade said: “looking at the sector critically, you would find that the noodles industry has provided jobs to more than 683,000 Nigerians in the entire value chain and has also created a measurable self sustenance method for many who are part of the developing economy. The industry has created many millionaires who have benefitted from sheer hard work and dedication in the noodles market.

“Stronger food security controls, reduction in food inflation and generation of jobs are the hall marks of the noodle industry in Nigeria. All this has no doubt ensured a more vibrant economy for Nigeria; industries like this should no doubt be encouraged for the good of all”.

Another analyst, Kolapo Oluwo believe that the possibility of raising the stakes and taking trade, services, job creation and economy to greater heights lies heavily on stakeholders taking strategic action to nip the bud by being proactive in investing in the oil palm producing sector.

Oluwo however appealed to government to address the issues of import duties on commodities, which will create free markets, revolutionize the Nigerian economy and aid food markets.

With about 22 states belonging to the oil palm belt of the country and having humid tropical climate, rainfall and a temperature range of 24 to 32 degrees Celsius, all favourable for the cultivation of oil palm farms, industry watchers believe that Nigeria needs a shift in paradigm to radically overhaul oil palm production in the country.