The Central Bank of Nigeria (CBN) has assured palm oil producers that Nigeria will emerge as the third largest producer of palm oil in the world, overtaking Thailand and Columbia.
According to the CBN Governor, Mr Godwin Emefiele, this objective will be actualised in just a few years from now. He also stated that Nigeria would have recorded great heights in capital returns and job creation if the country had supported improved cultivation of palm oil like the rest of the world.
While speaking to stakeholders in the palm oil industry in Abuja on Monday, Emefiele said plans are underway to develop sustainable financing models for oil palm and other agricultural commodities.
“Our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years.”
“If we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country. This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale small holder developments.”
Emefiele on how CBN plans to achieve its goal
The Central Bank governor said that a special sub-committee has been created by the Bankers Committee to create measures that can give smallholders farmers access to capital. Through Anchor Borrowers Program (ABP) and Commercial Agriculture Credit Scheme (CACS) CBN will also ensure availability of quality seeds for this year’s planting season.
“With regards to improving access to finance for smallholder farmers focused on cultivation of palm oil, the Bankers Committee had established a special sub-committee to make recommendations on sustainable financing models for oil palm and four other critical agricultural commodities that include cocoa, sesame seed, shear-butter, animal husbandry and cashew.”
“The CBN will work with large corporate stakeholders and smallholder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of palm oil. We will also work to encourage viable off taker agreements between farmers and large-scale palm producing companies.”
“Loans will be granted through our ABP and CACS programs at no more than 9% p.a to identified core borrowers.”
The task is bigger than CBN
Though the South-South and South-East regions have agreed to provide at least 100,000 hectares each for the initiative, Emefiele said more State Government need to be involved because CBN can’t take on this responsibility alone.
To meet the goal of becoming the third largest producer of palm oil, the State Governments are urged to support the production of palm oil by providing oil palm producing zones.
“With an estimated 3 million hectares of land under cultivation, abundance of suitable arable land, we need the cooperation of our state Governments in the oil palm producing zones to make land available to investors with proven financial and technical capabilities, who will be able to support developments of large scale palm oil plantations in the country.”
FX not doing so much for Palm Oil production
Emefiele lamented that many individuals still take part in the importation of oil into Nigeria. He said the decline in palm oil importation is not impressive, but the CBN remains committed to changing the narrative.
“Despite placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 per cent from the peak of 506,000 MTs in 2014 to 302,000 MT in 2017. This indicates that Nigeria still expends close to $500 million on oil palm importation annually and we are determined to change this narrative.”
“We intend to support improved production of palm oil to meet not only the domestic needs of the market, but to also increase our exports in order to improve our forex earnings.”
Why production is down: According to a report by The Nation, production remains low at close to 2 tonnes per hectare despite the availability of over 3m hectares of farmland for palm oil cultivation. This output is disappointing when compared to a global benchmark of 25 tonnes per hectare.
It was stated that the maturation of existing palm trees caused the production output. It was learnt some of these trees were planted in the 50s. Also low investment in replanting high yielding palm oil seeds have also contributed to the failure of the palm oil sector.
Reviving moribund oil palm research Institute
The Edo state Governor, Godwin Obaseki has called for the revival of the moribund oil palm research Institute. To achieve the objectives of CBN, Governor Obaseki also urged the development of a clear plan by the stakeholders of the oil palm initiative.
“We should understand that for meaningful investment to come into the oil palm industry, we have to think of other incentives, to encourage manufacturers to turn oil palm to other things.
“What I mean is that palm oil can be used to manufacture margarine, soap, toothpaste and other things that require oil palm.
“So we must also think about how to create incentives for those who are currently in the business to exploit all the uses of palm oil to create job opportunities for our people,” he said.
The Stakeholders meeting also included Executive Governors and other top government functionaries from the oil palm producing states. The event was organised to set a partnership model that will attract investment which will double Nigeria’s global share of oil palm production in the next 3-5 years.