Chinyere Anyanwu, [email protected]
Nigeria’s oil palm production sector seems to be progressively on the path of recovery and it has the Central Bank of Nigeria (CBN) and other private sector stakeholders to thank for its rebirth.
The sector, which used to be the mainstay of the country’s economy in the 1950s and 1960s as well as a foreign exchange earner became comatose for decades following its abandonment by government with the discovery of crude oil in commercial quantities. From being the largest producer and exporter of 40 per cent of the world’s total supply in the 1960s, Nigeria’s oil palm sector nosedived to the fifth position after Indonesia, Malaysia, Thailand and Colombia. Nigeria also lost its position as a net exporter of the commodity and became a net importer, with 50 per cent of its domestic demand now imported from countries it sold products to in the past.
The nation’s annual import bill of $500 million was meant to bridge the local demand gap of 325,000 metric tonnes and from being the world’s leading producer, Nigeria is currently struggling to produce 800,000 tonnes annually.
According to the December 2019 World Bank price index for crude palm oil at $769.93 per tonne, Nigeria lost N90,081,810,000 to importation of a commodity it could produce last year and might likely lose about N270,245,430,000 from 2020 to 2022.
Despite the dismal outlook for the sector, there appears to be light at the end of the tunnel with renewed zeal in some quarters, especially CBN, to revive it. Presently, palm produce is receiving priority attention through the agricultural diversification value chain. The apex bank’s policy direction in the sector includes supporting improved production of palm oil to meet not only the needs of the domestic market, but also to increase exports, thereby improving the country’s forex earnings.
In this regard, the central bank has made several moves to realise its laudable vision of repositioning the oil palm sector to bring it back to its glorious days of leading the global market. Among such moves are its funding initiatives through the Anchor Borrowers’ Programme (ABP) and others. The bank has also parleyed with some South-south and South-east governors to encourage them to make land available for increased cultivation of the commodity.
The CBN Governor, Godwin Emefiele, revealed that all the states in the South-south and South-east regions had already agreed to provide at least 100,000 hectares for the initiative, which is also designed to accommodate the smallholder farmers. In addition to seeking for improved land availability, the apex bank as well has, through its Oil Palm Development and Expansion Initiative, disbursed N30 billion to the palm oil sector, aside the N69 billion it has pledged for the development of the sector.
Stakeholders in the sector are optimistic that with concerted and faithful implementation of the various initiatives outlined by CBN, oil palm production would have been repositioned to occupy its rightful place in the economy and among the comity of palm oil producing countries.
According to the Editor-in-Chief, AgroNigeria, and an agricultural stakeholder, Mr. Richard-Mark Mbaram, there is a great future for Nigeria’s agricultural sector hence the need for government to support it.
“I see a great future ahead if the CBN governor’s intervention currently underway is mainstreamed in such a way that it can affect the lives of the smallholders. Once we can achieve that, you’ll find that we’ve increased Nigeria’s productivity and we will be able to count among the foremost nations in production of oil palm.” He said
According to him, the oil palm production sector “is a space that really needs proper policy-directed intervention and also we need to look at our support for players in that space; it is very important. “
Mbaram said, “plantation agriculture has a long gestation period so even if you’re planting today, you don’t expect to reap from those cash crops in the near term,” noting that the CBN governor “is looking at undertaking some interventions in that space and setting out, I think, N200 billion for that purpose.”
He, however, lamented the country’s approach to and mode of practising oil palm production saying, “most of our palm trees are old and tall, and you have to climb them; so it’s not really business and that has to change.”
Also speaking the National President, Oil Palm Growers Association of Nigeria, Igwe Hilary Uche, also believes that if the current initiative of CBN to the sector known as CBN Funding Intervention is adequately implemented, palm oil producers will be empowered to lift the sector to its former enviable height. He explained that the funding intervention, which is targeted directly at the farmers will enable them to not only produce global standard palm oil, but also empower them create up to 80 per cent employment, improve the livelihood of the farmers as well as impact the country’s GDP.
He warned against handling the new funding initiative in the manner the ABP was handled, which he said was disbursed through state governors and hijacked by politicians without getting the intended beneficiaries.
He said, “we have all it takes to get it right. Nigeria has all it takes to make smallholder oil palm farmers produce that standard oil. We call it Special Palm Oil (SPO). Nigeria has the land, it has the resources to support farmers to get palm oil to the highest standard.”
Stressing the need to support research institutes to produce improved varieties, Uche urged the government to make Nigerian Institute for Oil Palm Research (NIFOR) viable enough to produce the quantity and quality of seeds required to raise young palm trees to replace the ageing ones and also establish new plantations.
He informed that, “NIFOR, right now, has more than 1.5 million seeds. It’s a question of giving NIFOR money to give these seeds to farmers to start growing them.”
One of the indices that will make the CBN funding interventions most impactful, according to Mbaram and Uche, is giving it out at reduced interest rate which should not above 9 per cent.
For Uche, “CBN may talk of 9 per cent but if they can bring down to 5 or 6 per cent, that will help a lot of things. Oil palm takes a long period to start producing, that’s why the interest rate should be reduced because when the interest is high, farmers will be struggling to meet up.”
Mbaram noted that, “there’s absolutely no way you can do serious business with 9 per cent interest rate; It’s absolutely impossible. We want it down to 2 – 3 per cent. That’s when we are talking serious business. There should be moratorium even; it should have like three to five years moratorium for repayment because agriculture is about food production and food production is about national security.
“The same way we are exempting our military from tax payment and providing for their welfare, for instance, is the same way we should be catering for our farmers because they are the ones feeding this nation. So, a 9 per cent interest rate is unacceptable because agriculture is not a joke.”
Mbaram, who sees oil palm as a “promising commodity when approached from the standpoint of business,” advocates more assistance for the smallholder farmers who have the potential to “help with backward integration and contract farming.”
He is of the opinion that if the oil palm sector is to be revamped, “Nigeria needs to take a step back to appraise the sector. We are not lacking in good investors in that space but they need to be encouraged to invest more. And also, other stakeholders that have interest in investing should be crowded in. So, we will need, on our part, to device a strategic plan for the oil palm industry.”