Even though Nigeria is the 5th largest producer of palm oil in the world, it is nevertheless heavily dependent on imports of the product because its local demand is unmet. Information gathered by the National Bureau of Statistics (NBS) reveals that for the first time in more than three years, palm oil was exported from Nigeria in the third quarter of 2022 due to revenue, even though that domestic production was insufficient to meet demand. Compared to N642.61 million in Q3 2018, N736.33 million in Q2 2018, as well as N1.26 billion in Q1 2017, the amount of palm kernel oil exported from the country increased to N2.48 billion in Q3 2022, according to NBS statistics.
The United States Department of Agriculture (USDA) estimates that Nigeria’s palm oil output increased by 9 percent, from 1.28 million metric tonnes (MT) in 2020/21 to 1.4 million MT in 2022. Recently, Agro Nigeria also projected that by the 2021/2022 harvest year, demand for palm oil in Nigeria would reach over 1.8 million metric tons. As local demand has increased over the years, Nigeria’s production shortage has grown, and during the last 5 years, on average, over 25 percent of the country’s annual domestic palm oil consumption has come from imports.
Nigeria heavily depends on palm oil importation due to poor farm practices.
According to Isyode Eseyin, who is a research analyst at CardinalStone Partners, the demand-supply imbalance that has resulted as a result of the country’s dependence on subsistent or uneconomical farming, instability, and poor access to financing has caused the country to become heavily dependent on the importing of palm oil. However, the propensity of the current high cost of dollars in the present moment appears to be too much for local producers to resist, he added.
Furthermore, Eseyin said that the Nigerian palm oil sector is highly unstable and occupied by several local farmers, who constitute 80% of domestic production. Furthermore, the majority of them are not familiar with contemporary agricultural procedures. Thus their productivity and output are much lesser than they might be. As a result of the fact that Nigeria exports the little amount of palm oil that it produces amidst the demand-supply imbalance in the local market, the gap is certain to increase, and palm oil importation is expected to rise.
Different initiatives have been set up to improve productivity.
In order to reduce the demand-supply imbalance and stimulate local investment, the government prohibited importers from obtaining foreign currency at the interbank market for refined palm oil. Crude palm oil (CPO) duty was raised to 35%. The Central Bank of Nigeria (CBN) has also established other intervention initiatives, including the Anchor Borrowers Programme. Farmers may borrow from deposit money banks and other cooperating financial institutions at single-digit interest rates. The financing program for palm oil has a 9% annual interest. In 2019, the Federal Government ordered the CBN to promote corporations and individuals producing 10 agricultural products, including palm oil.
Through the CBN, the government introduced a $500 million low-interest loan scheme in 2021 for oil palm producers, which includes both smallholders and large farms. By 2027, the domestic output is expected to expand by 700%. New oil palm farms are being developed by private firms using early as well as high-yielding seedlings. In order to speed up the extraction and crushing operations, these businesses are also making technological investments. Production will also increase as a result of other projects, such as the Edo State Oil Palm Programme. Additionally, Nigeria’s Institute for Oil Palm Research has enhanced the nation’s output of oil palm seeds with greater yields.
The palm oil deficit gap poses an opportunity for investment.
More so, the concluding United States Department of Agriculture (USDA) report affirmed that domestic supply meets around 78% of demand, while Nigeria consumed 2 million MT in 2021, leaving a gap of 0.6 million MT in 2012 and 2021. Because of this, Nigeria is heavily dependent on imports of palm oil, with estimated yearly imports of roughly 400,000 tonnes in the last five years, according to CSL Stockbrokers Limited. Therefore, this provides a chance for investments in the manufacturing and processing phases.
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FG set to enhance Palm Oil productivity – As local demand for palm oil increases, the country returns to importation. – Express your point of view.
There are some major challenges bedeviling oil palm production in Nigeria though government is trying to make fund available for production. These challenges are
-Government policies is ampering productivity
-The insecurity factors. It should be addressed by the federal government.
– Availability of farm input for production
-social economic factors which includes profit making
Federal Government should please invest and make more fund available to maximize production in oil palm production. We can move from 5th producer to 1st in the world if all effect is intensified. If government policies are favourable and we have enough production I don’t think there will be shortage of oil palm locally.
A large scale farming on palm oil will be instrumental to Nigeria’s economical sector. The sector will mostly thrive on cash crops which we can export. It will also deter us from always importing agricultural products.
It is very sad and shameful that Nigeria that was before the top 2 of the countries in production of palm oil is going down fast and can’t even produce enough of palm oil again for her citizens rather palm oil is been imported again to the country to satisfy domestic need of her citizens.
We have been into palm.oil production from inception so govery should do all they can to support us been the 5th largest producer we just be able to derive more from Palm oil production in terms of export globally.
As local demand for palm oil increases, the country returns to importation. Nigeria is very rich in Palm oil production. It will be really go along way if government can fund and encourage the palm oil production
In spite of the fact that Nigeria is the fifth largest producer of palm oil in the world, the country is extremely reliant on imports of the product due to the fact that its domestic demand is unable to be satisfied.
Although Nigeria’s local production of palm oil fell short of meeting demand, the country began exporting the commodity for the first time in more than three years thanks to revenue.
the market imbalance that has emerged as a direct consequence of the nation’s reliance on farming practices that are either insufficient to meet needs or not economically viable.
We should put more effort in production of palm oil to increase our productivity so we can sustain the local demand and stop from importation of palm oil is better we start to own production well it will really help our country
It would appear that the pressure brought on by the current high cost of dollars is too much for local manufacturers to bear at this time.
If government policies are favourable and we have enough production I don’t think there will be shortage of oil palm locally.
It’s great that the federal government gave the Central Bank of Nigeria (CBN) the order to promote companies and individuals who produce 10 different agricultural goods, one of which is palm oil.
It’s absurd that Nigeria has to rely so heavily on palm oil imports, with an average of almost 400,000 tonnes imported year over the past five years.
Palm oil producing on a wide scale would be beneficial to Nigeria’s economic sector. The industry will flourish mostly on cash crops that can be exported. It will also discourage us from importing agricultural items indefinitely.
The country once again imports palm oil to meet rising domestic demand. In terms of palm oil output, Nigeria is quite prosperous. If the government can help finance and promote palm oil production, it will go a very long way.
Nigeria’s economy will benefit greatly the widespread production of palm oil. Profitable export crops are the main driver of growth in this sector.
Despite the fact that Nigeria’s domestic palm oil production was insufficient to fulfill demand, the government resumed exports of the commodity after a hiatus of more than three years.
Growing palm oil crops on a vast scale in Nigeria would prove to be very beneficial to the country’s economy. Cash crops that we are able to export will be the primary drivers of the industry’s growth.
The government forbade importers from getting foreign currency at the interbank market for refined palm oil in order to lessen the demand-supply imbalance and encourage domestic investment.
These companies are also investing in technology to speed up the extraction and crushing processes. Other initiatives, like the Edo State Oil Palm Programme, will also have a positive impact on production.