27.09.2019 (New Telegraph Newspaper) - Recently, the Central Bank of Nigeria (CBN) revealed that about 40 applications from investors willing to cultivate palm oil had  been  received nationwide, in addition to committing about N30 billion to enhance palm oil production in the country

Sundry complaints from palm oil producers have greeted the country’s palm oil industry in recent times with aggressive calls on the Federal Government to intervene in order to salvage it.

The stakeholders believe there are conspiracies from government’s angle to deliberately thwart the sector’s growth with the continued import waivers granted some importers under the ECOWAS Trade Liberalisation Scheme (ETLS).

Ironically, in the past, government had consistently issued waivers to importers under the mischievous application to import refined palm oil from China and other Asian countries because of the duties and tariffs being paid into its coffers.

However, this has become counterproductive where government on one hand encourages Nigerians to go into agriculture and on the other hand, disincentivises them through improper and haphazard implementation of enabling policies and not plugging loopholes where they exist.

In fact, the conspiracy is certainly taking its toll on the industry and it requires concerted efforts on the part of government and key industry stakeholders to address. This is certainly the time when plantation owners need all the support they can get from government.

However, the CBN has risen up to the task by showing its unflinching support to the sector.

Debate over Nigeria’s palm oil production

In the early 1960s, crude palm oil was one of Nigeria’s major sources of foreign exchange. Unfortunately, today the commodity is massively imported from Malaysia and Indonesia.

Nigeria currently occupies the fifth position on the global production ladder, with Indonesia a distant first with 33 million metric tonnes, Malaysia, 19.8 million metric tonnes, Thailand, 2 million tonnes and Colombia, 1.1 million metric tonnes.

However in the past few years, there has been an increase in the production of the commodity in the country. Moribund oil palm plantations were revamped, while smallholder plantings were established even far beyond the traditional oil palm belt to include the fringe states like Kogi, Kaduna and Nasarawa.

Yet, there is a controversy over Nigeria’s production figure. While Index Mundi puts Nigeria’s production at 970,000 tonnes annually (a figure that has stagnated for 11 years), available data from the Plantation Owners Forum of Nigeria (POFON) put domestic and industrial demand for palm oil in the country at 2.5 million tonnes annually with production at 1.8 million tonnes. This leaves a production shortfall of about one million metric tonnes – a deficit which ordinarily should be balanced off by imports.

Stakeholder’s plight

Nigeria is currently losing more than $500 million worth of palm oil annually owing to worsening situation in the industry affecting local production, the National Palm Produce Association of Nigeria (NPPAN) has reported.

NPPAN Ambassador, Dele Olanubi, in a chat with this newspaper in Lagos, explained that the over $500 million worth of palm oil annually importation had virtually taken toll on their businesses.

He noted that it was time for the Federal Government to step in to salvage local production of palm oil and finally put a stop on the importation of the product.

According to him, if this action is not taking properly by government, local investors in the oil palm industry are at the risk of losing billions invested in the sector.

Olanubi explained that the problems facing the country’s oil palm production include lack of adequate land space, inadequate storage facilities which result in low production of oil palm, inadequate finance and among others.

The NPPAN chieftain also said, currently, 80 per cent of production of oil palm comes from scattered smallholdings spread over an estimated 1.6 million hectares of land.

CBN’s game changer

In a bid to revive the country’s palm oil sector to stimulate growth and development, the apex bank has been at the fore front to ensure that Nigeria’s lost glory in palm oil returns.

At a meeting with some state governors in Abuja recently, the CBN Governor, Godwin Emefiele, disclosed that the bank had committed about N30 billion to enhance palm oil production in the country.

Emefiele explained that the fund was disbursed through deposit money banks to six oil palm companies to support their expansion programmes.

He said that the companies were PZ Wimar, Biase oil company ltd, Eyop, Okomu Oil Company Limited, Presco Oil Company Limited and SIAT Limited, adding that application for Ada Palm in Imo state was being expected.

Also, the apex bank governor disclosed that about 40 applications from investors across the country for the cultivation of 126,694 hectares were being considered.

For a layman, the importance of funding in any project goes a long way in bringing positive results, and this is exactly what the CBN has just done to an industry begging for survival. 

In fact, the intervention fund coming from the apex bank to the sector is expected to catapult real investment in the sector, which will bridge the deficit of 1.25 million metric tonnes per annum currently in the sector.

Emefiele, while reacting to the deficit, said: “The Central Bank of Nigeria oil palm initiative is aimed at closing the gap and also positioning Nigeria to incrementally export oil palm products to neighboring African countries and beyond.

“Closing the identified gap would require bringing about 312,500 hectares under modern cultivation at an estimated yield of four metric tons per hectare.

“Our target is to ensure that a minimum of 1.4 million hectares of land is put under oil palm cultivation in three years.

“As a step in this direction, the bank had met with 14 state governors who pledged to make available 100,000 hectares of land in each state.

“We currently have a total of 904,624 hectares which are available in the states for allocation and investors have been matched with the States of interest to process necessary documentation and titling requirement,” he added.

Last line

Many agric stakeholders have been commending CBN for taking the bull by the horn to support agriculture, which has been neglected for decades by past governments.

As a matter of fact, the N30 billion credit to the palm oil industry will see Nigeria’s quest to attaining sufficiency in oil palm production materialise soon.