By Punch Editorial Board
AMID dwindling public revenues, continued reliance on crude oil earnings and complacency by state governments, a commitment by the Edo State Government and the Central Bank of Nigeria to revitalise oil palm production offers a ray of light. Ramping up advocacy for oil palm production as part of efforts to diversify the economy, Governor Godwin Obaseki of Edo projected optimum earnings of $20 billion annually for the country with widespread cultivation and processing of palm kernels. Beyond rhetoric, the federal and state governments should urgently drive the resuscitation of this and other agricultural products to diversify exports, create jobs and attract investments.
Like similar efforts in rice production, rebooting oil palm production portends great benefits to the economy. As Obaseki said at a press briefing, export earnings, taxes and wealth created down the value chain could generate over $20 billion for the three tiers of government and reduce unemployment. This is higher than the $10 billion in annual export earnings projected in 2019 by the CBN Governor, Godwin Emefiele.
An ongoing revitalisation programme spearheaded by the CBN and involving some South-South and South-Eastern states that constitute the palm oil belt, gives cause both for hope and some scepticism. The apex bank’s pledge of a further N69 billion to support the sector in addition to the over N25 billion it had earlier disbursed under its Oil Palm Development and Expansion Initiative by 2019, raises hope of a rosy future. So does the commitment by participating states to jointly provide 100,000 hectares of land to grow improved palm kernel seedlings. Add to this a rise in demand for palm produce in the international market that Nigeria can benefit from.
These positives notwithstanding, stakeholders such as the organised private sector and oil palm producers fret that factors such as inconsistency in seeing policies through, mismanagement of the intervention funds, poor buy-in by the states and political interference that neutered past development initiatives might combine to squelch the oil palm enterprise. On the President, Major General Muhammadu Buhari (retd.), and the state governors in the palm belt jointly lies the responsibility to douse such scepticism and pursue the revitalisation with vigour to achieve self-sufficiency, raise export revenues, enhance job creation, and diversify productive activities. The largest producing states are Akwa Ibom, Abia, Rivers, Edo, Imo, Ondo, Bayelsa, Cross River, Delta, Enugu, Anambra, Ekiti, Oyo and Ondo. Their governors should take up the challenge.
The oil palm story reflects Nigeria’s sad economic trajectory as a former global champion in agriculture that became food insecure, enslaved to crude oil and import-dependent. Indigenous to West Africa, the palm kernel provides palm oil that is used in 50 per cent of daily consumables, say experts –cooking oil, packaged foods, cosmetics, soaps, and wax among others.
The global production of palm oil, according to statistics.com, was around 72.27 million metric tonnes in the marketing year 2020/21, increasing from approximately 73.23 million metric tonnes in 2019/2020. This is estimated at $42.8 billion in the year 2020 and is projected to reach a revised size of $57.2 billion by 2026. From colonial times up till the 1960s, Nigeria was the world’s largest producer, controlling 43 per cent market share. But poor choices enabled Malaysia and Indonesia to overtake her: both countries now jointly control over 80 per cent of the market. Indonesia alone accounts for 53.3 per cent of global output. Nigeria has dropped to the fifth top producer according to the US Department of Agriculture, with 1.28 million tonnes annual production after Indonesia 44.5 million tonnes; Malaysia 19.7 million tonnes; Thailand 3.11 million tonnes, and Colombia 1.65 million tonnes. Palm kernel and palm oil sustained the economy of the defunct Eastern Region up till the late 1960s and along with rubber, of the old Mid-West region.
With national demand at over 3.0 million tonnes and production at 1.28 million tonnes, the country spends an average of $500 million importing palm oil to make up for the shortfall annually. Just closing the domestic demand gap, therefore, offers immense growth opportunities; producing for export offers even more. In its Global Palm Oil Market Report 2021, Research and Markets, a global resource portal, forecasts global palm oil market value to rise to $57.2 billion in 2026. Apart from normal increases in demand for the cheapest form of vegetable oil as the global economy recovers, the global appetite for palm produce is being driven by its new-found health benefits and its growing application as feedstock in biofuels as the advanced economies increasingly go green and move away from fossil fuels.
Nigeria should not be left behind once more. The federal and state governments should forge ahead with speed and doggedness in revamping the sector. Other states should demonstrate the enthusiasm of Edo State that claims to have provided 57,000 hectares of land to small holders and large plantations under its oil palm programme. Others should follow suit. They should explore regional and inter-state collaboration as some states have done successfully with rice cultivation. PwC, a global consultancy, recommends a thorough value chain-wide overhaul to stimulate local manufacturing and empower the country to penetrate the African market by taking advantage of the African Continental Free Trade Agreement and the ECOWAS Trade Liberalisation Scheme. The CBN should follow through on its promise to extend the Anchor Borrowers Programme that helped to revitalise rice cultivation to palm kernel producers; it should avoid the missteps of the past.
The federal and state governments, as well as the private sector, should work effectively with research institutes and universities to produce and use improved seedlings, techniques, and storage to realise optimal output from the 3.0 million hectares of farmland said to be available for palm oil cultivation in the country. There should be better extension services; states and local government councils should invest in basic amenities, rural roads, and storage; they should encourage cooperatives.
Vigorous efforts should be made to attract private investment in large plantations alongside the smallholders and improve export funding and facilitation. Unlike in the 1960s, exports should move away from raw commodity exports to value-addition and industrialisation. Raw materials should feed local industries to produce to meet local demand for manufactured goods and for exports. States should henceforth drive such programmes and stop the delinquent reliance on federal allocations for sustenance.
Originally published at PUNCH.