Overview of the Oil Palm Sector

Report
Overview of the Oil Palm Sector in
Nigeria
Omorefe ASEMOTA
Executive Director,
Nigerian Institute for Oil Palm Research, PMB 1030,
Benin City
Oil palm – Enough space for attention away from to crude oil
obsession
Source: Cartoon from The Vanguard 20th November 2014
Possible income using improved planting materials ( assume extraction rate 20%)
Un-improved
materials
3–5
NIFOR tenera
hybrid
15 – 25
Oil yield tonnes ha-1
0.5 – 1
3–5
FFB income (N ha-1)
60, - 100,000
300 – 600,000
Oil income (N ha-1)
100, - 200,000 600, - 1,000,000
Yield (FFB) tonne ha-1
yr-1
E
PALM OIL UTILIZATION CHART
Value chain of the oil palm from fruit bunch to downstream
Fresh fruit bunch
Mill process
Palm kernel
Empty bunches &
Palm oil mill
effluent
Palm kernel shell
Palm fatty acid
Palm fatty acid
Crude palm oil
Refining & Fractionation
RBD Olein
Palm mid fraction
Compounding
Biogas, Fuel briquettes,
Animal feeds, fertilizer
RBD Stearin
Shortening
Fatty alcohols
Fatty amines
Fatty amides
Frying
Cooking
Shortening
Margarines
Blending
Margarine
Ice cream
Cocoa butter
equivalent
Filled milk
Biscuit cream
The Oil Palm & Economic Development
The golden days of the industry
• Export duty and oil palm produce sales tax revenues provided the
bulk of the internally generated revenue
• The major source of revenue for the economic development of
the defunct Eastern Region of Nigeria.
• Employment: - about 3,700,000 persons or 70% of the 5,250,000
agricultural workforce of the adult working population of
6,596,000 (of the 1962/63 census) of Eastern Region in 1963
were involved in the processing of oil palm products for exports
(Usoro, 1974)
• Currently, across the oil palm producing states, an estimated 5
million Nigerians are directly involved in oil palm cultivation and
processing (Omoti, 2009, 2012).
High capacity to create employment and wealth - from
planting materials to the field to the mill to the market.
The Oil Palm & Economic Development- Now
• Provides direct and indirect employment to many Nigerians in
related activities such as contracting, supplying, trading,
transporting and manufacturing etc.
• Gross value of the palm oil production at plantation level by
the industry at current domestic prices c. N180-N250 billion
annually
• Still very significant in terms of the Agricultural GDP of the
country.
• The industry has transformed in sophisticated dimensions
globally with diversification of utility of palm produce
• Global value of palm oil is about USD 50Billion
The Oil Palm & Economic Development
•
Industry is still unsophisticated in Nigeria with dominance of small
inefficient producers across the value chain
•
In Nigeria, the climatic and soil conditions of the Niger Delta best
support the oil palm.
•
It is widely exploited both in the wild groves which abound in the region
and in the cultivated state in small and large plantations.
•
The region accounts for a very significant fraction of oil palm production
in Nigeria (Table 2)
•
Almost all of the large estates and about 84% of small holdings are
located in the Niger Delta States
•
The oil palm need to be harnessed to again become a very significant
sector of the national economy providing the wealth for economic
development and the much needed jobs for Nigeria’s teeming population.
Table 1. Example of Wealth creation e.g. 8,000 ha oil palm
plantation at maturity average of 15 years. Adapted from
2012 Annual Report, Okomu Oil Palm Plc
Wealth created
Turnover (wealth created)
N
6,400,000,000
Costs
Employees + supplies + contractors
2,500,000,000
Profit
Gross Profit before tax
Tax (assume) – Federal Government
Net Profit
3,900,000,000
500,000,000
3,400,000,000
Benefit to State
Employment (direct + indirect) - no
3000
Employees PAYE Taxes
???
Benefit to the Investing Public
Dividend per share
N7.00
Opportunities for varied Actors
Across the gender spectrum
• Men,
• Women
• Youths
Palm oil demand in Nigeria
•
Population growth rate nearly 3% annually = increasing demand
•
Population in 2014 c. 170m (National Census, NPC)
•
Palm oil and palm kernel oil account for about 72% of the Nigeria’s total vegetable oil
production
•
Estimated annual demand for palm oil grew by 5% between 2005 and 2012 vs annual
growth of 1 – 2% of palm oil production in same period
•
Implicit in this is a widening supply demand gap
•
Oil World Statistics (2008) estimated per capita consumption of vegetable oil in
Nigeria = 12.7kg vs. global average 17 kg
•
By current projected population, Nigeria’s annual requirement is about 3m MT of
palm oil
•
With estimated total national vegetable production of about about 1.3 million tonnes
(all other vegetable oils inclusive) there is a supply demand gap in excess of 800,000
MT tonnes
•
Growing market for frying oils with growing fast food and noodles industry
•
Supply demand gap is partly met from importation and smuggling across the borders
Table 2. Estimated Oil Palm Holdings outside the Groves
in the Niger Delta States as at 2012
State
Estates
Small holders
1
Abia
4,589
27,765
2
Akwa Ibom
3,095
32,277
3
Bayelsa
1,083
2,500
4
Cross River
30,670
27,850
5
Delta
6,300
15,000
6
Edo
27,856
26,000
7
Imo
3,410
67,690
8
Ondo
16,169
10,143
9
Rivers
18,300
55,500
Total
111,472
264,725
Total National
119,000
313,000
% of National
93.7
84.6
Source: Computations from Omoti (2009) and Omoti & Ikuenobe 2012 Field surveys
Table 3. States of Nigeria suitable for oil palm cultivation
Highly suitable
Suitable to Marginally suitable
1
Abia
Adamawa
2
Akwa Ibom
Benue
3
Anambra
Ebonyi
4
Bayelsa
Kaduna
5
Cross River
Kogi
6
Delta
Kwara
7
Edo
Nassarawa
8
Ekiti
Niger
9
Enugu
Oyo
10
Imo
Plateau
11
Lagos
Taraba
12
Ondo
FCT
13
Ogun
14
Osun
15
Rivers
Challenges of the industry
•
Land tenure
•
Low productivity, especially among the dominant small producers
•
Low adoption of technology and innovations among the small producers
•
Poor quality produce of and therefore inability to access high niche industrial
markets among small producers
•
Highly capital intensive
•
Poor access to cheap development capita
•
Bridging the demand supply gap - reduction in imports
•
Low re-planting and replacement of moribund plantations
•
High reliance on the groves by the small holders
•
Inconsistent policies on tariffs for imported CPO and refined palm oil
Opportunities in the value chain to impact
production
• Improvement in the traditional processing methods and wide
scale adoption of more efficient processing methods
• Improvement on quality of produce to enable small producers
enter the industrial niche market
• Massive new plantings involving nucleus estates and small
holders and out-growers schemes linked to estates
• Investment in down stream processing
• Wide scale adoption of improved planting materials
• Replanting of old palms using improved materials from
advanced breeding lines.
Opportunities will anchor on
•
Synergy of the vibrant small holder systems and large estates to increase
the area under cultivation through active development of small holder
growers and organizing them as out-growers to the nucleus plantations in
the states
•
Providing incentives for large industrial estate development
•
Bringing the vast natural groves under improved planting through gradual
replacement with improved genetic materials .
•
This is strategy of providing land for effectively increasing the area
under oil palm in the states without compromising the forest and
environmental resources of the states.
•
Enhancing the quality palm produce (palm oil, palm kernel, etc) through
efficient milling to meet industrial standards and consequently enhancing
marketing.
The desired future
•
Government support to the industry through provision of rural
infrastructure and some incentives which build small holders and support to
large nucleus estates
•
Increased area under improved oil palm holdings
•
Increased productivity among the small holders and small millers through
deployment + internalization of improved technologies and reduced cost of
production.
•
Higher activity among producers leading to higher direct and indirect
employment, including artisan and welders at the village level
•
Diversification of the value chain
•
Higher income for producers and marketers.
•
Stable , peaceful and prosperous rural sector
Thank You

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