Nigeria’s palm oil imports are falling due to a policy of backward integration

Ken Ibenne

Ken Ibenne

Nigeria’s imports of crude palm oil have consistently decreased over the previous three years as domestic output has increased.

Nigeria initiated the backward integration program in 2011 in an attempt to reclaim its lost position among global palm oil producers, but it wasn’t until 2018 that it gained traction.

PZ Wilmar, Dufil Prima Foods, Agric Palm Limited, Presco, and Okomu Oil Palm Company, among others, have made significant investments in establishing backward integration projects.

There are currently no credible numbers for palm oil output and imports in Nigeria.

Nigeria’s imports from Malaysia, the world’s second-largest producer, fell 76.5 percent in the first three months of the year, from 44,908 metric tonnes (MT) in 2021 to 10,536MT in the first three months of this year. According to figures from the Malaysian Palm Oil Council, it fell 15.8% from 368,313MT in 2020 to 309,911MT in 2021.

According to industry sources, the constant decline in importation volume is due to existing plantation owners’ significant expansions and the arrival of new players, which have helped enhance local production.

Although, according to the sources, production is still not keeping up with Nigeria’s rapidly growing population.

“There is no doubt that Nigeria’s palm oil production is increasing and will continue to be on the rise owing to the backward integration projects by many producers. This is reducing our importation,” said Fatai Afolabi, former executive secretary of the Plantation Owners Forum of Nigeria.

“Existing players like Okomu and Presco have doubled their plantations and increased production by 100 perecent when compared to their status five years ago,” he said.

According to him, the country may be immune to the current global price surge that has led Indonesia, the world’s top producer, to halt ongoing shipments in order to keep the price reasonable for its population.

Packaged foods, detergents, and cosmetics all include palm oil. In Africa’s most populous country, about 90% of palm oil is used in food production, with the remaining 10% going to the non-foods business.

The recent amount of investment in processing mills, according to Igwe Hilary Uche, national president of the Oil Palm Growers Association of Nigeria, is bringing a substantial breakthrough in the expansion of palm oil production in the country.

According to him, the country can increase and sustain domestic palm oil output if the government begins to pay more attention to smallholder farmers, who account for 80% of the country’s palm oil needs.

“There is serious expansion by existing plantation owners and this is impacting our production,” he said. “Production will further increase when the government starts giving much attention to smallholder farmers – that produce 80 percent of the country’s production – in the way it ought to.”

Due to expansion by established firms and new entrants, as well as support from the Central Bank of Nigeria, the industry has continued to see new plantations pop up.

“Right now, we are seeing the kind of planting that we have not seen in Nigeria before and demand for palm oil has also increased as manufacturers who use it as inputs for production are now sourcing locally,” said Henry Olatujoye, former president of Palm Produce Association of Nigeria.

“New entrants of farmers are coming into the sector and the combination of all these have driven production,” he said.

Indonesia, Malaysia, China, and India supply Nigeria with crude palm oil.

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