Nigeria’s dwindling fortunes in oil palm production aptly capture the character of a country that has consistently and woefully failed the test of managing success. The same also applies, in a wider sense, to the neglect suffered by the agriculture sector, which once served as the mainstay of the country’s economy, but has been relegated to a mere sideshow, having been supplanted by oil and gas as the main revenue earner.
It is sad that a country that was once the world’s leading producer of palm oil has become a major importer of the same product. But because of the importance of palm oil in cooking and as an industrial raw material, the commodity continues to be in very high demand in Nigeria and beyond. While the current domestic production stands at 970,000 metric tonnes per annum, the demand is put at 2.7 million metric tonnes yearly. This means that, despite the scarcity of foreign exchange, the country has to get the shortfall through import.
Available reports show that the country spent a whopping N116.3 billion importing about 450,000 tonnes of crude palm oil last year. From controlling the global market share of 43 per cent in the early 60s, Nigeria is now a bit part player, shamefully boasting just a paltry 2.9 per cent of global palm oil production. This is indefensible since she has the right weather and soil conditions suited to the growth of oil palm.
Alarmed by the situation, the Senate recently called for an urgent ban on palm oil import. In a motion entitled “Urgent Need to Halt the Importation of Palm Oil and its Allied Products to Protect the Palm Oil/Kernel Industry in Nigeria,” a Senator, Francis Alimikhena, called for a ban on the import of palm produce, while canvassing government investment in its local production to meet domestic demand and for export.
Regrettably, Indonesia, which was nowhere near Nigeria, is now the world’s largest producer of oil palm produce, followed by Malaysia, both in Asia. Now stuck in the fifth position, unable to produce anything close to the needed quantity to service domestic demand, let alone for export, Nigeria’s fortunes stand in sharp contrast to those of her Asian competitors. Also ahead of Nigeria are Thailand and Colombia.
Nigeria’s case has continued to defy logic. The country has woefully failed to take full advantage of the areas in which she has comparative advantage. The neglect of palm produce in Nigeria also brings to mind the fate suffered by other cash crops, which has made it difficult for the country to achieve her set target of diversifying the economy from the current oil-reliant status. This has always left the country stranded in event of the usual fluctuation in crude oil prices in the international market.
Prior to the discovery of petroleum in commercial quantity, Nigeria was a global power in cocoa cultivation and export, next only to Ghana. Today, Ivory Coast leads the world in cocoa production, followed by Indonesia, Brazil and Ghana. Nigeria languishes somewhere in the seventh position. The famous groundnuts pyramids have literally vanished from Kano, while the cultivation of cotton has been virtually abandoned, in the absence of a thriving local textile industry. Rubber is nowhere to be found. This is the tragedy of a nation that has chosen to depend solely on oil and gas.
But this is a trajectory that has to change. It is unfortunate that the Senate has had to go to the extreme of calling for the ban of further imports. Nonetheless, that cannot be the solution. When an essential commodity is in short supply, the solution is not to ban its import, but to encourage local production to meet demand. An outright ban now will only worsen the level of smuggling, which is already a very serious problem. Experts have reported that over 400,000 metric tonnes was smuggled into the country last year, leading to massive loss of revenues in duties and tax to the government. They also complain about the negative effect of smuggling on local production.
The government has to come up with an innovative policy to encourage a return to the farms to produce oil palm. Investors should be encouraged to take advantage of research findings of the Nigeria Institute for Oil Palm Research in Benin City to access improved high yielding seedlings to be able to cultivate oil palm at plantation level rather than the old methods of the past. There are already plantations in Imo, Cross River, Rivers and many other parts of the country.
Relegating palm oil to the background as a result of crude oil finds was a big mistake that will continue to haunt Nigeria. Apart from being a money spinner, cultivation and processing of oil palm create jobs on a far larger scale than the crude oil industry. Besides, while the gains derivable from oil and gas are finite, those from oil palm cultivation and processing are almost inexhaustible. New plantations of oil palm can be developed when the old ones die off, but when the crude oil wells dry up, that is the end.
A 2017 report in GlobeAsia, an Indonesian business magazine, quoting the chairman of Indonesian Palm Oil Association, Joko Supriyono, said about 50 million Indonesians build their lives around palm oil and its derivatives, either directly or indirectly. Indonesia’s Cargill, a top palm oil firm, had $107 billion revenue in 2016. These are some of the reasons why our government should take special interest in the oil palm industry, just as it is now doing with rice. Special grants should be provided and, in a matter of less than 10 years, Nigeria could become a world leader once again.