Prompted by the need to boost local production and halt the huge import bill for palm oil, valued at N116.3 billion in 2017, the National Assembly has renewed the push to ban the importation of palm oil and its allied products. It is envisaged that this will conserve foreign exchange, create jobs and boost the economic diversification push. However, with palm oil refineries operating at 30 per cent installed capacity, there are fears that without first addressing the product’s demand/supply gap, the proposed ban will amount to putting the cart before the horse, Assistant Editor CHIKODI OKEREOCHA reports.
The Senate, has renewed the call to ban the importation of palm oil and its allied products. It came at an auspicious time, which was, perhaps, why it enjoyed an overwhelming support of members of the Upper Chamber of the National Assembly and, indeed, operators and stakeholders in the palm oil value chain.
Although the fresh push to ban the importation of the product came at a time the Federal Government’s diversification agenda, anchored on increased agricultural production and export, was gathering momentum, the move has come under scrutiny by some experts and critical stakeholders.
Some of them, who spoke with The Nation, described the proposed ban as a welcome development. They were, however, quick to point out that at the 30 per cent installed capacity of the crude palm oil refineries, banning the importation of the product without first addressing its demand/supply gap would be tantamount to putting the cart before the horse
For instance, the General Manager, External Affairs, PZ Cussons Nigeria Plc, Mr. Muhammed Tahir, said he supports the move to ban the importation of palm oil into the country as this would boost local production. He, however, told The Nation that at present, the crude palm oil refineries operate at about 30 per cent installed capacity.
The implication of this, he said, was that there was the need to ramp up local production by addressing the issues around the supply of crude palm oil to the refineries. According to him, at 30 per cent installed capacity, the refineries cannot meet demand by individual and industrial users. To him, addressing the demand and supply gap for palm oil is important before banning its import.
The upper chamber of the National Assembly, recently started fresh move to ban the import of palm oil and its allied products. Waxing patriotic, Senator Francis Alimikhena of the All Progressives Congress (APC), Edo State, said the importation of the product was a threat to the government’s campaign on diversification.
The lawmaker, who sponsored the motion, titled: “Urgent need to halt the importation of palm oil and its allied products to protect palm oil industry in Nigeria” and also led the debate, recalled with nostalgia that Nigeria, before the 1970s, was a global powerhouse in palm oil production and export.
Alimikhena, however, lamented that the country lost her leadership position in the global palm oil trade, forcing her to import about 450, 000 tons of palm oil to the tune of N116.3 billion in 2017 alone. He, therefore, insisted that the government must reverse this trend.
The lawmaker was right. Nigeria was the world leading producer of palm oil in the 1950s and mid-1960s. She was reportedly supplying about 645,000 Metric Tons (MT) of palm oil yearly to markets across the world and boasting an enviable global market share of about 43 per cent.
Palm oil alone accounted for 80 per cent of Nigeria’s export earnings. It also created millions of direct and indirect employment opportunities for Nigerians. Malaysia, one of the Asian emerging markets, was even said to have obtained the oil palm seedling with which she built her thriving oil palm business from Nigeria.
Although the Asian Tiger has since refuted this claim, it, nonetheless, underscored Nigeria’s towering status and visibility in the global palm oil industry. Curiously, from controlling over 40 per cent market share, Nigeria has since lost her grip on the business. She accounts for a paltry seven per cent of total output.
Malaysia and Indonesia have since surpassed Nigeria as world’s leading palm oil producers and exporters, retaining the second and first position, respectively. Sadly, Nigeria, as at 2016, fell to an unenviable fifth position.
While Indonesia produces 32 million tons of palm oil, Malaysia boasts 17.7 million tons. And they have been exporting palm oil products to Nigeria. The country, which was once the bride of the international palm oil business, is now a net importer of palm oil to meet her growing domestic demand.
Africa’s largest economy has between 450, 000 and 500, 000 tons annual palm oil supply shortage, made up of about 300, 000 tons of Technical Palm Oil (TPO) for the production of soap and about 200, 000 tons of Special Palm Oil (SPO) used in the food industry.
The fact that much of these are being met through imports, with the attendant humongous loss to Nigeria in foreign exchange is something Alimikhena and, indeed, other concerned stakeholders cannot comprehend hence the current wave of campaign to reverse the trend.
Private operators support ban
This time, the public sector (Senate) is in the vanguard of the renewed push to return Nigeria to its glory in palm oil production and export. However, the imperative of repositioning the sector to contribute to diversification is not lost on the private sector, which includes farmers, refinery operators and companies that utilise palm oil as raw material for production.
To them, the proposed ban bode well with the private sector’s age-long agitation to embrace the Backward Integration Policy (BIP) to encourage local production and ultimately, create jobs and conserve foreign exchange. This was why, for instance, the Plantation Owners Forum of Nigeria (POFN) has thrown its weight behind the move.
The Forum through its Executive Secretary, Mr. Fatai Afolabi, said the Senate’s move deserved the commendation and support of all Nigerians. According to him, the importation of palm oil and allied palm products were threats to Federal Government’s campaign on diversification of the economy through increased agricultural production and exports.
Afolabi was particularly peeved that Nigeria, which once held sway in palm oil production and export, imported about 450,000 tons of the product valued at N116.3 billion last year. He, therefore, urged the Federal Government to halt the importation in order to boost local production.
As far as POFN and indeed, other private sector operators are concerned, Nigeria has no reason spending scarce resources importing the product when Mother Nature has strategically positioned her to call the shot in global palm oil production and export.
For one, Nigeria and indeed, most parts of Africa, especially West Africa, lie in the world’s oil palm belt – a region which produces the best results for oil palm plantations. Also, she was, and is still, endowed with enormous human resources and fertile arable land to support large scale cultivation of palm oil.
According to experts, Nigeria’s all-year-round hot weather, a lot of sunshine, abundant rain, rich, deep, flat and permeable soil, among others, are some of the features that make Nigeria most suitable for cultivation of oil palm plantations.
While hot temperatures allow the oil palm to grow many leaves and, as a result, produce more fruit, oil palms need a lot of sunshine to grow well. It also needs access to water and mineral salts deep in the soil to do well hence the need for a permeable soil like Nigeria’s.
But, sadly, the country has evidently failed to translate these huge advantages into maintaining a strong position in palm oil production and export.
Where Nigeria got it wrong
According to experts, Nigeria put the wrong foot forward and lost its economic bearing when she turned her back on agriculture following the discovery of crude oil in commercial quantity in the 70s. Before independence, agriculture was Nigeria’s economic mainstay, with more than 70 per cent of the population engaged in the sector.
Alimikhena observed, for instance, that apart from various food crops produced in the country, Nigeria was a major producer of palm oil/kernel, cocoa, groundnut and rubber. But following the discovery of crude oil in commercial quantity, agriculture was neglected, while attention was shifted to oil.
While acknowledging that Nigeria is endowed with the land and manpower to boost palm oil production, the lawmaker noted that the focus should be directed towards returning to pre-independence status in palm oil production. “We have no business importing palm kernel or any oil palm product from any country,” he pointed out.
Alimikhena said the focus should be directed towards returning Nigeria to pre-independence status in palm oil production, noting that importation was hurting the local palm industry and depleting the nation’s foreign reserve.
He also said it was threatening the industry’s viability into which many Nigerians have sunk huge sums of money in support of government’s export promotion drive. He expressed hope that if the palm oil industry is fully developed, it will guarantee mass employment and boost the nation’s foreign exchange earnings.
Some of his colleagues in the Senate could not agree less, with Senator Theodore Orji (Abia-PDP), saying, for instance, that there was need to establish a special fund to encourage local production of palm oil.
Orji expressed concern that many oil production plants were moribund. While pointing out that palm oil used to be a major income ear ner for the country, he said unfortunately many plants are dead.
For Deputy Senate President Ike Ekweremadu, the importance of reviving the palm oil industry cannot be over-emphasised. He, therefore, said there was need to properly position the sector to play its role as one of the major income earners for the country. He added that reviving the sector will boost employment.
However, those critical of the fresh move to ban the importation doubt if the Federal Government has the political will to do so let alone follow up with the introduction of policies targeted at encouraging local production.
