The President of National Palm Produce Association of Nigeria (NPPAN) Henry Olatujoye has revealed some of the challenges facing the palm oil industry in the country and why the country may not attain self-sufficiency anytime soon.
Olatujoye noted that one of the major factors is the country’s continued reliance on petroleum as a substitute for oil palm.
“This implies that we deliberately found a substitute for agriculture in crude oil, which has proven to be our greatest mistake.”
He recalled that in the 1960s, Nigeria controlled 43 percent of the global palm oil market and raked in 82 percent of her national revenue from Crude Palm Oil and over the years, Malaysia and Indonesia decided to invest so much in oil palm development to promote and add value to their industrial capacity. That they did by adding value to agricultural produce. Sadly, today the country produces a meagre 1.57 percent of the global output.
He also pointed out that land fragmentation along family lines is another hindrance to our attainment of self-sufficiency in oil palm production.
Oil palm plantations require a large expanse of land, and in Nigeria today, every available land has been shared along family lines and are in fragmentation, not readily available and when available, they come at a premium, in other words, too expensive for agricultural purposes.
Government Protective Policy
There is no gainsaying the fact that the current tariff regime of 35% (10% duty and 25% levy) on importation of palm oil and the inclusion of palm oil in the list of commodities that do not qualify for CBN FOREX allocation have been protective of the industry and at the same time the stimulant and tonic for growth.
Despite this protective policy, the local production capacity demand level has grown to about 2.1 million Metric Tonnes annually, and similarly, production has moved from 950, 000 Tonnes to about 1.3 million Tonnes. There is still a deficit supply of 800,000 Tonnes annually.
To boost local production, Olajutoye, advised the government on the provision of farm settlements for the production of oil palm estates, adequate finance with low-interest rate should be introduced, improved seedlings and other agriculture inputs should be subsidised for farmers.
He, however, advised the government against a total ban on importation of palm oil, palm kernel and allied products noting that such policy will promote smuggling.
“It is an open business and as such it should not be banned. The current policy of 35 per cent duty should be sustained and proper monitoring should be introduced at our borders.”
He also stresses the need for the government to discontinue the West African Trade Liberalisation Scheme (ETLS) noting that Importing palm oil from any West African country under the guise of ETLS is tantamount to economic sabotage.