Achieving $10bn revenue from palm oil

Godwin Emefiele
CBN Governor, Mr. Godwin Emefiele

The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, on Monday in Abuja, revealed a grandiose plan, which has the potentiality of making Nigeria the third-largest producer of  palm oil in the world.

Emefele, who was addressing stakeholders in the palm oil industry , stated: “Our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years.”

“If we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country.

“This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale smallholder developments.”

On how this herculean task will be achieved, the CBN Governor said : “With regards to improving access to finance for smallholder farmers focused on cultivation of palm oil, the Bankers Committee has established a special sub-committee to make recommendations on sustainable financing models for oil palm and four other critical agricultural commodities that include cocoa, sesame seed, shea-butter, animal husbandry and cashew.

“As part of the Anchor Borrowers Programme (ABP) and our Commercial Agriculture Credit Scheme (CACS), the CBN will work with large corporate stakeholders and smallholder farmers to ensure availability of quality seeds for this years 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 nine per cent p.a to identified core borrowers.

“With an estimated three million hectares of land under cultivation, abundance of suitable arable land, we need the cooperation of our state Governments in the oil palm producing zones 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.”

In as much as we commend the CBN for this wonderful plan, we think that the Federal Government could have started the implementation of this plan a long time ago. But like they say, “It is better now than never.”

Few years back, Malaysia got its tenera oil palms from Nigeria. Today Malaysia is the second world’s biggest palm oil-producing country, accounting  for over 30 per cent of the world production. This was as a result of Malaysia’s research and development (R&D) program in oil palm breeding, by its Department of Agriculture’s exchange program with Nigeria in the 1960s.

We have no doubt that Nigeria can do better, if the political will is there for this plan to be accomplished. Research has proven that oil palm is the most productive oil seed in the world. And that a single hectare of oil palm can yield 5,000 kilograms of crude palm oil, or nearly 6,000 liters of crude palm oil, making the crop incomparably profitable when grown in large plantations .  According to a particular study that looked at 10,000 hectare-plantations, it suggests an internal rate of return of 26 percent annually.

In line with the diversification economic policy of the present government at the centre, the CBN plan is a step in the right direction, considering the value chain in palm-oil production. For example, the high oil yield of oil palm trees (as high as 7,250 liters/hectare/ year) has made it a common cooking ingredient in Asia, Africa, and America. While it’s increasing use in the commercial food industry in many parts of the world is buoyed by its cheaper pricing, high oxidative stability of its refined product and its high levels of natural antioxidants.

By virtue of its high yield, palm oil is a cheaper substitute than other vegetable oils and gradually providing a viable alternative to petroleum or any other fossil fuel. As we all know, Oil Palm product, according to experts, has been the world’s dietary staple for more than 5,000 years of man’s existence on mother earth.

Today, palm-oil is included in many products as a component of many processed foods, like biscuits, chocolates, cookies, sweets, cream for coffees or peanut butter, condensed milk, powdered milk, cereals, dry cake mix ,cakes and sponge cakes, sauces, fat substitutes, crackers and microwave popcorn, because of its nutritional benefits. More so, because of its stability at high temperatures, it has been found to be the most ideal for frying French fries, potato chips, pastries, doughnuts, fish/seafood and other deep-fat-fried foods. It is also found in shaving gels, acne treatments, lip balm, cosmetics and as oil as an alternative to oils that are high in trans fats.

Furthermore, palm oil is highly advantageous in the manufacturing of cosmetics, soaps and chemicals, face and body lotion, shaving gels, shampoo, conditioner and hair spray, washing powder/detergents ,toothpaste, waxes, lubricants, and ink. It is also use in the manufacturing of many other products, like paper pulp, dyes, lamp shades, particleboard, polishes, textile finishes, hammocks, cigarette papers and upholstery stuffing.

It is also used in the production of candles, lubricating greases for machinery used in the production of edible foods, grease for bread molds and bread making equipment, grease used to protect tanks, pipelines and similar instruments which remain uncovered and in the open air, drilling mud for the petroleum industry, plastification and sterilization of products in the plastics industry(in particular during the production of PVC).While it is ,also be used in the production of glue, printing inks, steel cold rolling processes, tinplate rolling, and acids to lubricate fibers in the textile industry. In other words, petroleum, plastics, printing and textile industries all commonly make use of palm oil.

Palm-oil is also used to produce preventive vitamin, electricity generation and as an alternative source of diesel.

Looking at the numerous benefits attached to palm-oil production, we urge the government at all levels to take advantage of it and create jobs for millions of Nigerians, who roam the street every now and then, aimlessly with no source of income. It will also boost our Foreign Exchange (FX) earnings, thereby, stabilizing naira.

A heavy investment in this industry, will to a large extent, also help in tackling the current security challenges confronting the country, such as kidnapping, terrorism, armed robbery and their likes.

Presently, Indonesia is the world’s largest producer of palm-oil with 3,60,00,000 metric tons, followed by Malaysia with 2,10,00,000 metric tons, Thailand, Columbia and Nigeria, with 22,00,000, 13,20,000, 9,70,000 tons, respectively.

To make the plans for the CBN transform Nigerian economy, such diversification programme of targeting $10 billion annually should not be left in the hands of government agencies and politicians . The lessons of the Rice Achor Borrower programme is a direct example of how governors always hijack good programme of the country.Several states had claimed to have acres of land and mill for production of rice but investigation clearly shows the opposite. The first thing to do by the government is to allow the private sector to drive the programme for quick returns and resul

We believe that Nigeria has the capacity to become the world’s palm-oil producer, looking at our comparative advantages. We have vast arable land in the Southeast and South-South, that is natural habitat for the growth of palm-trees. We have the human resources to make this happen. All that is required, is the political will and our country, will restore its lost glory, by taking the number 1 spot just like in the 1960s.


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