The Vice President of the Nigeria Agribusiness Group (NAGB), Mr Emmanuel Ijewere, has explained why companies like PZ Cussons Plc and Unilever Nigeria Plc continue to import oil palm into Nigeria despite the presence of leading producers such as Okomu Oil Palm Plc and Presco Plc in the country.
Mr Ijewere, who was speaking during Crenov8 Consulting’s Meet the Farmers’ Conference yesterday in Lagos, said the situation is necessitated by the inability of local oil palm producers to meet the demands of manufacturing companies.
He, however, noted that the continued reliance on Malaysian palm oil is just a temporary arrangement that will be resolved soon.
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Note that Mr Ijewere made these remarks while answering questions about what the NAGB does to facilitate the progress of farmers in Nigeria.
According to him, the above-mentioned Fast Moving Consumer Goods (FMCG) manufacturers recently requested the Federal Government to grant them permission to import palm oil from Asia. This is because according to the volume produced by Presco and Okomu is less than what is needed by the companies for production activities.
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He said that NAGB immediately intervened by summoning a meeting between the FMCGs and the two major palm oil producers, Okomu and Presco. During the meeting, PZ Cussons and Unilever explained that they need about 5,000 tonnes of oil palm as raw material. This is far more than the combined total of 800 tonnes that Okomu and Presco can make available, Mr Ijwere narrated.
He went further to explain that the FMCGs were eventually permitted to begin importing the raw material from Malaysia. But this is only a temporary arrangement that will last for only one year. The intention is to enable Presco Plc and Okomu Oil Palm to get their production capacity in order so as to enable them to meet the demands of FMCGs.
“They need to import about 5,000 tonnes, but the little available is 800 tonnes. So, we asked the local producers how long it will take them to complement their 800 tonnes. They said six months. We then said okay, we will allow the importation for one year. Just improve on the local production.” – Ijewere
Would this agreement benefit all parties involved?
It is expected that when local palm oil output increases, companies like PZ Cussons Plc and Unilever Nigeria Plc will eventually cut down on the cost they incur in the cause of raw material importation. Such money could then be invested in more productive ventures that will drive growth.
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Presco Plc and Okomu Oil will also benefit, as will their shareholders. According to a former Investment Analyst with Meristem Nigeria who preferred anonymity, “Okomu and Presco have been expanding of recent, but need assurance that there will be offtake for their products. Therefore, an agreement such as this will be good for them.
The Meet the Farmers’ Conference was organised by Crenov8 Consulting with the intention of enabling Nigerian Agric stakeholders to discuss ways of connecting farmers with buyers in the Middle East.