From Magnus Eze, Abuja
Executive Director/Chief Executive of National Institute for Oil Palm Research (NIFOR), Dr. Omorefe Asemota, is of the view that oil palm could drive the economy of about 25 states of the country if a well-planned development strategy to upscale production is religiously pursued.
In this interview, he outlines what should be done to close the deficit of 600,000 metric tonnes of the produce from the nation’s yearly requirement of about 1.2 million metric tonnes which could save well over $300 million for the nation.
Recent development in oil palm
All along, we were number one at some point but we were harvesting from the wild. Some attempts were made to plant but those were government-led attempts and they were not sustained overtime. What has changed in recent times is that many more private people are beginning to invest but the great majority of these private investors happen to be small holders. We will like a much larger effort; upscaling in terms of number of people and actual holdings.
Elsewhere, investors have much larger holdings and it is normal to find an investor in Malaysia or Indonesia that has 100,000 hectares. In this country, the biggest we have so far is about 25,000 hectares but there are plans to upscale to 40,000. That is changing but we need to change it quickly.
For that to happen, access to land should be simplified and also access to funds too because agriculture generally needs capital. But talking about tree crop agriculture; it needs fund at lower single digit interest rate because the crops will take years to begin production and attain stability. We need cheap funds so people can invest properly. We also need some measure of security so people can be sure of their safety at their farms and do what they want to do in peace.
Having said this, the major plank is the research plank. To be fair, NIFOR has been working really hard; what has not happened before was for the result to be translated into investment but it is important that the institute should begin to position itself for the work ahead. Therefore, we need to build a new generation of scientists, improve the synergy between the industry and the science so that the science will not be reacting to the industry but be proactive to the industry and also have solutions even before the industries come calling.
To be honest, development worldwide is a partnership between state and private sector, it is never one sided. Policy must be driven by government. Agriculture is on the concurrent list, so there is room for the three tiers of government to be actively involved in this matter.
Beyond policy, which is the big frame, the state also has other roles to play. For instance, state can simplify the access to funds, the banking sector has some regulations and you can actually target sectors, in this particular case, agriculture and bring down interest rates.
There is something that is happening now, which can be replicated. The Federal Government has set some funds aside as agricultural fund; some of it would be at the Central Bank of Nigeria (CBN), some commercial banks or agricultural bank. Again, access to these funds should be simplified to reduce bureaucracy. Of course, monitoring should be strengthened to make sure people use the money for what it was intended, but it should be easy to access so that investors can benefit rapidly.
There are other areas that require not direct state involvement but control and supervision; access to inputs, and the inputs range from big things like tractors to agro-chemicals, to eventually implements. The regulatory framework for that can be simplified but the goal is to make productivity improve and to do that at the shortest possible time. But we have seen that whereas we have told the state to intervene to create the framework, those who will do the actual production would be the private people.
Importation of oil palm
Before now, you will notice that most of the major programmes like Operation Feed the Nation, Green Revolution, the most recent was Agricultural Transformation Agenda (ATA) and others were all Federal Government initiatives. There was a major drawback in that there was no buy-in from the states. The states must be involved.
We suggest that even with the big framework of the Federal Government, the states must have definite programmes for oil palm; we also suggest in that programme that the states should have land banks of at least 50,000 hectares. 50,000 hectares might sound big to us in Nigeria but it is actually small for a state government when you compare what we do and what people do in Indonesia, for instance, which is now the number one in the world and Malaysia, which is number two.
The state should have land bank, which should guarantee some security or access to investors. The state is at liberty to decide which fraction to give to large investors and which to give to small investors. We say this because the large fraction of farmers we have today in Nigeria are small holders and I think some room should be created for them in whatever programmes.
However, we must begin to do some social engineering for upscaling to bring youths directly into agriculture because they learn faster and are able to adapt to new technologies and, of course, unemployment majorly is a youth problem.
State governments’ interest in oil palm production
What we preach and pray for is that all the states in the oil palm belt; the coastal states all the way to Niger, Kaduna, Taraba, Adamawa and in between, should be involved in oil palm development programmes. We have seen some sparks like in Abia and Delta states but we would like it to become a proper light and indeed proper flame. If each state is involved, the deficit we talk about will be bridged in just a few years.
The involvement, as I said, is, have land banks and have groups of people we can identify as the farmers and empower them. Empowering them requires that their states should have active extension agents that can reach the farmers and assist them in technology application so that the farmers will do the right thing.
There is also development in the value chain. Of course, in agriculture, you begin with primary production, then processing, then the next stage which is marketing. The actual events in any of these stages will be done by private individuals but there is always a framework the government put in place by way of policy that makes it easy for the players to do what they need to do.
We would always see this synergy between government as a regulatory factor and individuals who come in to get the job done. The outcome of all these is a society that is no more in deficit, but what’s even more important is that the individuals have their living standards improved.
Before now, we were exporters because we were self-sufficient but at some point we did not have enough so there was importation of palm oil which, of course, is banned but we still see some smuggling.
But, however, the level of deficit is actually about 600,000 tonnes a year. Tentatively we can say the requirements of the country is about 1,200 to 1,300 tonnes, the way it used to be and we have a deficit of about 500,000 tonnes, but that deficit is actually changing because there are people who are doing vegetable oil refining; a lot of other uses are coming up so the demand is growing. Luckily, production also has been growing but the production has to grow much faster so that we don’t just eliminate the deficit but we can eventually begin to export.
Processing is still going on, some of it is not as efficient as it should be, some rudimentary processing in terms of technology misapplication is still going on, and that translates to loss of revenue as well as loss of man power.
We have two levels of processing equipment, the small scale, which NIFOR actually manufactures some, and big scale; big mills from six tonnes processing upwards.
MoU between NIFOR and PZ Wilmar
Palm oil is on the list of food items banned by the Federal Government but people still devise means of smuggling it into the country apparently to close the gap. However, with this Memorandum of Understanding (MoU), it’s going to translate to reduction and eventual elimination of the national palm oil deficit. We are actually anticipating that this kind of thing, going forward, Nigeria can regain lost momentum so that our position can begin to be reaffirmed again in the industry on the world map.
Financial worth of the MoU
It is really difficult to place precise monetary value on the MoU reason being that a great fraction of what we have done today will translate into human capital development. You don’t quantify that in naira or dollars, but what you are going to find is scientific output, first in terms of quality, which will be far better than what it used to be; you’re going to have scientists who will not only feel the pulse of the industry but will be able to respond to the needs of the industry appropriately and also strongly; you are going to have a new crop of scientists that will be much more confident in handling problems; all that because of the synergy that is evolving.
NIFOR tasked on production of activated carbon
Activated carbon is an industrial usage product. The best form of activated carbon is obtained from palm kernel shell and coconut shell, but the point is, when industries spring up, raw material availability becomes an issue; even at our level of production now, what we must do is improve and grow.
We have been working on science and research, but like every other thing, research in itself, as good as it is, must translate to actual activity. For instance, someone was to set up a plant to convert palm kernel shell. Suddenly, the requirement in terms of demand for the shell will rise and if it is not able to meet that demand, then you will have idle capacity; that is why we keep emphasising this aspect of production.