In the Palm of the Hand

Palm Oil

Many know that Nigeria is the largest crude oil producer in Africa, but only a few might know that Nigeria was also the largest producer of another type of oil: […]

Many know that Nigeria is the largest crude oil producer in Africa, but only a few might know that Nigeria was also the largest producer of another type of oil: palm oil. In the 1960s, Nigeria dominated the world in palm oil production and export, with Nigerian production totaling 43% of global production, but was later surpassed by countries such as Malaysia or Indonesia.

Today, Nigeria is still among the world’s top-five producers but very far away from Indonesia or Malaysia’s production. In fact, despite being one of the largest producers of palm oil, Nigeria is still a net importer. According to TBY sources, annual crude palm oil (CPO) demand in Nigeria totals approximately 1.5 million tons, while national production only totals about 900,000 tons, creating a 600,000-ton deficit. The Ministry of Agriculture estimates at least another 1.5 million ha of land is needed to catch up with demand. 2018’s budget will assess and declare large areas of land that will be good for palms.
Many expect demand to grow in line with expected population increases, and Okomu Oil Palm Company, Africa’s largest palm oil producer, estimates 4.5% growth projections. Palm oil and its derivatives have more names that you can imagine. Palm oils are also referred to as Elaeis guineensis, Arachamide mea, Glyceryl, Azelaic acid, Calcium lactylate, Cetyl ricinoleate, Decyl, Myristate, Hexyldecanol, Isostearyl, Myristoyl, Polysorbate, Triacetin. In fact, palm oil appears in packaged products with up to 250 more different names. It is estimated that up to 50% of the packaged products that you can find in any local supermarket contain palm oil or its derivatives, including foods, cosmetics, and cleaning supplies. Perhaps palm oils are so common because of their productivity; palm oil fruits have higher yield than any other type of vegetable oils.
Okomu Oil Palm and the government are demonstrating increased interest and investment in CPO. In the private sector, Okomu is investing USD45 million in a new production mill, drastically increasing capacity. In October 2017, the CEO of the Nigerian Stock Exchange (NSE) toured the site of the new facility. Okomu is recognized as a large supporter of infrastructure and the broader economy, providing job opportunities and economic diversification.
In a moment when the federal government wants to diversify the economy away from oil, palm oil is an avenue for poverty alleviation, food security, and economic stability. Palm oil cultivation provides employment for unskilled and semiskilled workers in 24 states in Nigeria, including the nine states of the Niger Delta (Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo Rivers, and Ondo). Most of the production in the Nigerian oil palm belt comes from small farm-holders using manual processing techniques, and women have historically played an important role in the value chain of this product.
The Nigerian government is displaying further complementary efforts to support the palm oil industry. Once seen as a competitor, Indonesia is potential collaborator in the agriculture sector, particularly in palm oil research and production. Indonesia and Nigeria are strengthening economic ties following Nigerian Vice President Yemi Osinbajo’s visit with his Indonesian analog in Jakarta. Vice President Osinbajo met too with members of the Indonesian Chamber of Commerce, who are eager to learn more about investment opportunities in Nigeria.
With Okomu Oil Palm Company expecting to double production in the next five to six years, and other companies such as Presco Plc. and PZ Wilmar Ltd. also investing to increase its production and improve the value chain, foreign investors will not have to look hard for opportunities. Even more, Okomu Oil Palm Company received the Roundtable on Sustainable Palm Oil (RSPO) certification in 2Q2017, which is required to export to Europe. If investments continue, Nigerian palm oil could become a source of forex and again cross several borders at levels not seen since the 1960s.

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