Reversing Nigeria’s $500m yearly spend on palm oil import

Source:  The Nation
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Nigeria was at a time the leading palm oil producer globally, but the discovery of oil turned the tide, resulting in a net exporter of the produce to an importer expending well over $500million to meet local need. All that could change if local palm oil growers are supported in its local production, says the National President of Oil Palm Growers Association of Nigeria (OPGAN), Joe Onyiuke, in this interview with Group Business Editor, SIMEON EBULU.

Governments in the past were enemies of developing low business holders. Rather, they focused on other sectors that they feel were more organised by way of having access to collateral to pick up single digit interest rates on long- term loans and all that, but the critical mass that create employment and generate revenue for the government in terms of taxation and Gross Domestic Product (GDP) were neglected.

Secondly, access to quality seed materials were very low, even almost impossible. Besides, access to funding to have modern processing mills to be able to process high quality products were not available in the true sense of it. Most times, what these category of business owners produce, are below standard because they are using their bare hands and post-harvest losses are huge. Added to that is the inability of our governors to issue Certificates of Occupancy to the farmers. When you issue C of O to them, you unlock their potential to have access to funding. This is because there is no financial institution in the country that would not ask for the basics when you request for a loan.

This socio-economic impact of oil palm is so large that today, our body creams, the margarine, the butter, the mayonnaise, even the vegetable oil, they are by-products of palm oil. The pasta, noodles, biscuits, all these are palm oil. In fact, the demand for palm oil on food and industries is so huge that it has been found in other things, including cosmetics, paints, polish and even pharmaceutical industries. And these are things that will unlock the potential of this country. So, the government should refocus on three crops.

In the 1960s, we were known for cocoa, oil palm and rubber. The Chinese and foreign investors were able to come in because of the raw materials that were available in large quantity. Countries like Thailand, Indonesia and Malaysia use their crude oil resources to develop their palm oil sector, which generate economic, widespread employment opportunities and all that. They have policies that they put in place to safeguard local production. Again, there is the need to check importation of this product. Look at how much the country has lost in terms of importation. People are importing polished palm oil and vegetable oil in the name of crude palm oil into the country. Do they pay duties for all these bad items?

 I hope this new administration will focus properly on cleaning up our system because we cannot allow people to sabotage our economy. We have industries that produce a lot of things from crude palm oil and once you bring the bad oil, you are destroying their businesses. Our members are not encouraged because nobody is selling. In the past, attention was given to the big players who controlled only 20 per cent. How can you neglect the critical mass? Look at the level of youth unemployment.

The Nigerian Institute for Oil Palm Research (NIFOR) should be encouraged more. Before now, it was in a sorry state, but thank God for the new management, they have done a lot of work and our farmers have benefited so much.

The Ministry of Agriculture has given us a lot of encouragement in terms of training. In December 2020, we were given a total of 169,000 sprouted nuts. We have given the sprouted nuts to NIFOR to help us raise them to seedlings’ level because that’s the most critical part in oil palm development. These sprouted nuts are like children in the womb. They have to be nursed properly, otherwise at the end of the day, they will not give you the optimum yield. We needed to clean up the system by making sure that those sprouted nus would not go into the hands of our members who do not have any training. So, we told NIFOR to help us groom them at a very discounted rate. We are getting that before the end of this month. Those seedlings are very expensive, but they have been highly subsidised.  Again, we got nut crackers from the Minister of Agriculture, 20, that have already been distributed to 20 states. In this country we have some states that are known for oil palm, the Southeast, Southsouth, Southwest and Northcentral. So those key states have taken ownership of those nut crackers.
Nigeria spends about $500 million every year to import palm products because the local demand is so big. One ton of palm oil is about N1 million. You can imagine that if the $500 million gap that we have is taken out, we would have enough money to meet our needs in the country. The problem we have today is that our trees were planted in the 60s, apart from the wilde groves. There must be a very systemic plan to replant the whole entire plantations of these wilde groves and semi-wilde groves. And those plantations that are already very old have to be replanted.
There are two reasons. One, the supply in the country is lower than demand, so there is a big shortfall – a shortfall of over 500,000 metric tons. So, they have to look outside to remain productive. In essence, we are shipping our employment and our benefits of the economy outside. Take a look at all these disinfectants and soaps we see around. A lot of international companies have made a lot of money from Nigeria through this avenue. This is an industry that would normally have been sourcing locally and producing locally in Nigeria, but you can imagine how much money, over time that has gone out of this country. The impact can never be over emphasised because a product that can feed many industries including food, cosmetics industry, pharmaceutical industry and even biodiesel, ethanol.
Today, Japan has amassed so much palm kernel shell to build a power plants across Japan. They discovered that palm kernel shell has the same thermal value as coal without any impact on the environment. If you go to Port Harcourt, our palm kernel shells that were discarded are being shipped out by foreigners. The oil palm economy can unlock so much potential in this country, more than any other crop. You find palm oil in ice cream and the chocolate, many people do not know this. Even in local medicines that you see in the villages, people use the oil to treat people that have seizures.

It is estimated that Nigeria can generate $20 billion from oil processing. What are the things that should be done to realise this?

Fund the small, older farmers who are already organised and control 80 per cent of the industry. Give them access to cheap funding, access to improved seedlings, fertiliser and processing equipment. The government should create access for small holder farmers to have processing plants so that they can process. A World Bank report states that the reason African farmers remain poor is their inability to add value to what they produce. It can also benefit the creative industry and our local tourism industry.

There is nothing that is a waste in oil palm, from the leaves to the root. Even when a palm tree is old, it begins to generate drink, which is called palm wine. Today, we are drinking champagne from Europe. If palm oil were to be in Europe, we would be buying palm wine in bottles, these added values are lost, including ethanol that people come from other places to get. There’s so much local capacity that we need to build. And governments must fund NIFOR adequately for research. And they must satisfy a company to produce seedlings and set up an Oil Council that would be able to regulate the industry. We need a long-term loan of between five and 10 years with single digits to help people build this capacity. Once you give them C of O, it helps them access funds because as a lender, once you know that a particular plantation can be valued, you would be willing to give loan to the farmer.

Crude oil palm is a long-term investment with very little work. You just need to adopt those best management practices like pruning, clearing and applying organic manure. The government should pay attention to the three crops, cashew nuts, cocoa, palm oil, rubber. This is our future because oil palm is a product that has the capacity to generate its own power, so the oil mills can generate their own power and even to the villages around it. This is the only crop in the world that has two oils; the red oil and the palm kernel oil.

The foundation of a sustainable oil palm production is the nurseries.The government needs to help us to establish nurseries to be able to feed the plantation. The nurseries take a minimum of one year. If you don’t do that work, then we have not started. Those nurseries will feed the old plantation that we have that must be replanted. This is because the yields from the older plantations are lower. So, the government really has to come to the aid of the oil palm industry in this country. The government has to empower our members to produce massively because we cannot have surplus of the product- the demand is huge. Governments must regulate. People that are producing seedlings have to be licensed and regulated to ensure that they have the knowledge and capacity.

The gestation period of oil palm is three years; it used to be about seven. This means that if you buy a seedling that is two years old, you begin to harvest it one year after planting, and if you buy a one year-old seedling, you begin to harvest in a maximum of two years. However, the third year of the life of that sprouted nut, when you begin to harvest is like when a child is maturing, so it has a very low yield. The fourth year is the main year. So, technically speaking as a farmer, the distance between you and harvesting is two or three years. I must add that NIFOR seedlings guarantee you eight tons per hectare when it begins full yield. Then it can go up to 25 tons. If you are able to adopt the best management practice, you can do up to 30-35 tons per hectare. So, if a farmer has 100 hectares, you are a multi–billionaire. Our farmers have no business with poverty, if only we can key-into the system and do this business very well.

He needs to organise the small holder farmers, unbundle and mitigate a lot of risks. We as a country cannot blindly be selling our country to foreigners in the name of investments, because some of these investors hurt the local economy and people. Any foreign investor that comes into Nigeria to invest in any part of our agricultural value chain that is hurting the local producers, is not an investor. The Minister should go to the field and see for himself what the people are going through. He is the Minister of Agriculture not for the boardrooms.

The biggest problem with government policies in the past was insincerity. The real farmers do not get the incentives because of the roadblocks on the way, but thank God we have a new government. A government that understands how business is done.

The biggest problem before was ghost farmers, but oil palm is an industry where you cannot have ghost farmers. Other crops take an average between two months to six months to harvest, but oil palm farmers can harvest up to 30 and 35 years. So, your bio-data is attached to the geography of where your farm is. That cures that risk of ghost farming.

Again, we are on the ground, when we came into office, we realised that you cannot be doing Association of Oil Palm without a physical office structure. So, the first thing we did was to establish offices across the states. Each state has its own executives, holds regular meetings, has a database of its members, some of them have even developed cooperative societies doing business in one way or the other.

We also have our national office in Abuja. All this comes from our pockets, not government funding. The only government agency that has helped us, is the Ministry of Agriculture. And you know that the Nigeria Institute of Oil Palm Research is part of the Ministry.

Edo State must be commended, but there’s still so much to be done to attract investors.

There is still a lot of issues relating to insecurity, bandits are killing their staffs and all that. There are communities who come and hijack people’s plantations. This is unbelievable. I have gone to meet the government agency in charge of this to make an official complaint. The Edo State Governor, however, is doing his best.

Even the big players like Okomu Oil and Presco still experience these kinds of issues and the issues of multiple taxation. So, the government needs to do more.

The most important thing is that the government must pay attention to small holder farmers who have the key to unlock the potentials, because we cannot do it without them. They are well organized, they have structure. Imagine what they can produce, Nigeria would be able to overtake Malaysia and Indonesia again because of the number and the land size we have.

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