Cross River Oil Palm Sector Success Story And More That Can Be Done BY EMMANUEL ETIM

In Breaking News, Business & Economy, Columnists, National News, Opinion
Emmanuel Etim
Emmanuel Etim

Beginning 1950s and till mid-1960s, Nigeria remained the largest producer of crude oil palm world over. It had a market share of 43.0%, supplying 645,000 MT of palm oil, on annual basis, across the globe.

Today, from being the largest producer of oil palm, Nigeria is now a net importer of palm oil. According to IndexMundi, a data portal, the domestic palm oil produced totaled 850,000 MT in 2012.

The consumption of palm oil in Nigeria amounts to 1.0 million MT per annum. The official figures states that the shortage in oil palm industry is estimated to be around 150,000 MT annually.

90.0% of palm oil is consumed by food industry and the remaining 10.0% is used by the non-food industry. Foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents and even cosmetics thrive on palm oil. Noodle industry alone consumes 72,000 MT of imported palm oil and the leading, domestic palm oil producers fail to meet this demand.

On a global basis, the value of the oil palm industry amounts to $40 billion – $50 billion. The production of Crude Palm Oil grew by 8% – 10% in 2013 achieving a total volume of 57 million MT – 58 million MT. Indonesia produced 30 million MT and Malaysia produced 18.9 million MT between 2013 and 2015.

The industry reached about 62.5 million tons in 2015 attributed to the increasing demand from food, chemical and bio-diesel industries. Nigeria today produces only 1.7% of the world’s consumption of palm oil which is insufficient to meet its domestic consumption which stands at 2.7%.

More than 42 countries across the world are engaged in production of oil palm, with South-East Asia including Indonesia, Malaysia and Thailand, contributing as high as 90.0% of the world’s production, dominating the industry.

Indonesia surpassed Malaysia as the largest exporter of Crude Palm Oil in 2006. Ivory Coast, the only exporter of palm oil in Africa, is inclined to double its oil palm production to 600,000 tons by 2020.

For generations now, economies across the globe have taken to oil palm plantations as a method to eradicate poverty with the economies of Malaysia and Indonesia standing testimony to it.

Due to the immense commercial value of palm plantations, many African states are also adopting the formula of the South-East Asian states to eradicate poverty and Cross River State is set to be one of these.

The Cross River State success story in the oil palm sector is worthy of note and commendation. The purpose of this treatise is to highlight this and encourage further growth in the sector to establish the state as a clear leader and contribute in the economic diversification drive of the state government.

In 2010 the Cross River State Government under the Senator Liyel Imoke administration drew in Foreign Direct Investment in the Oil Palm sector with the arrival of Wilmar.

Wilmar is the largest oil palm plantation developers and palm oil producers in the world. Together with PZ; renowned consumer goods producers, they formed a joint venture PZ Wilmar.

PZ Wilmar then bought over the 5,500-hectare, previously defunct Calaro oil palm estate formerly owned by Cross River government, the 12,805-hectare Kwa Falls oil palm plantation, formerly owned by Obasanjo farms, the 5,450-hectare Ibiae oil palm estate as well as another 8,000 hectares estate in Biase. Today, over $500 million is being injected into the venture in Cross River State.

This 50,000 hectares oil palm plantation developed in Cross River State is currently the largest in Nigeria although just above 50 per cent of the projected plantation size is currently being cropped with oil palm having reached 26,000ha and pushing to reach 50,000ha.

The company is also in the process of developing a mill and refinery. The PZ Wilmar partnership is impressive, committing, in principle, $650m into oil palm plantation estate including mills and refining facilities.

This PZ Wilmar’s commitment to long term business development is a pathway to stimulating massive economic growth and development in Cross River State.

When the 50,000 hectares of oil palm is fully developed, it is expected that it will produce more than 250,000 metric tons of oil palm annually. At the present market price of oil palm in Nigeria which is N100,000 per ton, a whopping N25 billion will be generated in the Cross River State economy.

It is also estimated that about 20,000 new jobs would have been created. This is wonderful when added to other things like taxes and other indirect jobs down the entire value chain.

The company has built a state-of-the-art refinery in Lagos State where it produces and packages new high-quality Nigerian cooking oil brand, Mamador, and where it has started local production of the internationally-acclaimed Devon King’s brand. The refinery also produces palm oil derivatives for other PZ Cussons products and for household and food products manufactured in Nigeria.

Even with this level of success in palm oil sector in Cross River State, it is not yet uhuru. The achievement is still a far cry from the potential the sector holds in the state.

The potential for oil palm development in Cross River State is the development of at least 1,000,000 hectares of palm estate, with an annual production of 5,000,000 tons oil palm production, annual income of N500 Billion and job creation statistics in the region of 250,000 at the first instance.

In order to meet this potential, Cross River State Government must be proactive and draw in more investors in the sector to partner with the state in the developing new oil palm estates including the setting up of oil palm mills and refineries in the state.

PZ Wilmar must also be encouraged to further expand its investment to at least 500,000 hectares in the next decade and to build oil palm mills and refineries in Cross River State.

Also worth mentioning as other investors to be encouraged are Dansa Holdings, Real Oil Plantations Limited, an indigenous oil palm company and IBAD Farms Limited which has about 10,000 hectares farm of which almost 45% has been cultivated.

There must also be efforts for the state to partner with development agencies and institutions such as the World Bank, Africa Development Bank and United Nations Industrial Development Organization UNIDO to promote the development of the Oil Palm sector in the state as an avenue for job creation, poverty reduction and economic development.

I have a dream that someday, at least a tenth of the land mass in Cross River State will be cultivated with oil palm. I have a dream that in the near future Cross River State will not only be the largest producer of oil palm in Africa but also a leading player in the sector globally. I have a dream that soon, Cross River State will lead Nigeria to return to the glorious days when oil palm was a leading foreign exchange earner in the country.

If Cross River State continues in this path of success in the oil palm sector, this dream will not only come to fruition but the state will become a leading economy in Nigeria and Africa.

Emmanuel Etim is a development consultant based in Nigeria (emmanuel.etim22@gmail.com)

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