PALM oil is of strategic importance as it is used in the production of more than half of the products sold in Nigeria. It is also one of the major items used by many households globally. However, oil palm and other bye products do not just have the capacity to reset the unbalanced economic situations that have made jobs non- existent but could also help turn in more revenue for Nigeria.
Experts and some organized stakeholders have argued that if the right interventions are put in place, things will go back to the glorious days of oil palm boom in Nigeria.
Some believe that why efforts invested in the oil palm sector have not produced the expected results is because there is a disconnect in the channel of funding which focuses rather more on the big holders in the sector than the smallholders who are the prime focus of the sector.
The Nigerian palm oil industry is fragmented and dominated by numerous small-scale farm holders, which account for over 80 percent of local production, while established plantations account for less than 20 percent of the total market.
However, the two largest producers – Okomu and Presco – individually hold a sizeable market share in terms of value due to their combined capacity, compared to small-scale farmers. Local farmers produce roughly 80 percent of the total production while using approximately 1.6 million hectares of land. The dominance of small farm holders in the palm oil market has resulted in low output compared to the country’s production potential. This is because local farmers’ manual harvesting techniques are outdated, which often results in significant wastages during the harvesting process.
In Nigeria, lack of investment in palm oil extraction technology and technical incompetence/inadequate training have resulted in poor management of palm oil plantations over the years, causing some of them to cease operations. Despite this, there has been renewed interest in Nigeria’s palm oil market with the entrance of major food manufacturers via backward integration strategies into the upstream and midstream segments. For instance, in 2018, PZ Wilmar, a joint venture between PZ Cussons International UK and Wilmar International Ltd Singapore invested over $650 million in palm oil plantations and processing facilities. The company also planted almost 26,500 hectares of palm oil in Cross River State and installed a 65-ton per hour palm oil mill, which translates to an estimated annual capacity of 40,000 tons.
Also, in 2019, Dufil Prima, manufacturers of Indomie noodles and Power oil, finalized the acquisition of 17,954 hectares of land in Edo State and a 1,040-hectare palm oil farm in Abia State.
According to the United States Department of Agriculture (USDA), “From 1975 to 2009, Nigeria remained the second-largest recipient of funding from the World Bank for palm oil investments with six projects.” However, only one project survived while the rest went bankrupt. Today, Nigeria is the fifth-largest palm oil-producing country with 1.5 percent or 1.03 million metric tonnes of the world’s total output.
However, with a population of over 197 million people, Nigeria consumes roughly three million MT of fats and oils annually with palm oil accounting for approximately 45 percent of total consumption in 2018. Nigeria is the largest consumer of palm oil in Africa with 1.34 million metric tonnes in 2018.
According to Nigerian Tribune’s investigations, the smallholders in the oil palm sector who amount to 80 percent of the stakeholders in the sector play a significant role in boosting the yield and production of oil palm compared to 20 percent of others big players who get most of the attention in terms of funds and other supports from the government.