Business

Despite forex ban on oil palm, Nigeria spends $500m on its import

COVID-19 and Economic Diversification

Nigeria still spends close to $500 million annually on the importation of oil palm, in spite of the product being on the Central Bank of Nigeria (CBN) import exclusion list.

The CBN governor, Mr. Godwin Emefiele made this known on Monday in his remarks at a Stakeholders Meeting on the Palm Oil Value Chain, where he, however, said that the ultimate vision of Nigeria is to overtake Thailand and Columbia to become the 3rd largest producer of oil palm over the next few years.

Emefiele disclosed that the country has become a net importer of palm oil, importing between 400,000 – 600,000 MT of palm oil in order to meet local demand for this commodity. This, he said, is in spite of the availability of over 3m hectares of farmland for palm oil cultivation.

“As some of you may recall, in the late 50’s and 60’s, Nigeria was not only the world’s leading producer of palm oil, it was also the largest exporter of palm oil, with close to 40% of the global market share. Today we are a distant 5th among leading producers of palm oil; we barely produce up to 3% of the global supply of palm oil, with estimated production of 800,000 MT of palm oil, while countries like Malaysia and Indonesia produce 25 million and 41 million tonnes of palm oil respectively.

“We have also become a net importer of palm oil, importing between 400,000 – 600,000 MT of palm oil in order to meet local demand for this commodity. Despite the availability of over 3m hectares of farmland for palm oil cultivation, production remains low at close to 2 tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare.

“This is as a result of the maturation of existing palm trees, as some of these trees were planted in the 50’s, as well as low investment in replanting high yielding palm oil seeds. As some of you may know, the usual life cycle for optimum palm production is 25 years.

“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,” Emefiele said.

The governor assured that the CBN was determined to change the narrative by supporting improved production of palm oil to meet, not only the domestic needs of the market, but to also increase the country’s exports in order to improve forex earnings.

He disclosed that the CBN will work with large corporate stakeholders and small holder 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. Some of the targeted large scale farmers are in our midst today and we shall use the opportunity of this engagement to achieve concrete results.

“Indeed 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 zone 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.

“I am happy to announce that all the states in the South-South and South- East regions have agreed to provide at least 100,000 hectares for the initiative. This program is also expected to accommodate the small holder farmers,” he said.

The governors of Abia, Akwa Ibom and Edo States attended the stakeholders meeting which held in Abuja.

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