Like many other commodities, Nigeria has a deficit in palm oil production, requiring substantial investments by big players, who will not only produce but process it into some of the many by-products that can be extracted from the oil palm crop.
Flour Mills of Nigeria (FMN) according to information seen by Agribusiness Insight in a factsheet, is now stepping up its position in this space, with an ambitious plan for a tenfold increase of its current production within about seven years. While companies like Okomu, Presco, PZ Wilmar, SNL and other big players have in recent years been ramping up investments to expand production, the sector still needs more players in order for Nigeria to erase its deficit and become self sufficient in palm oil production.
Located in Edo state, the palm oil investment by FMN currently sits on 11,600 hectares spread across three locations; Iguobanor and Iquiye (Agri Palm 1) and New Land (Agri Palm 2), which are 25 kilometers apart.
FMN acquired Agric Palm Limited in 2013, and the renewed optimism to now rapidly grow the business is perhaps in response to the state’s emphasis in recent years to establish itself as the centre of palm oil production in the country.
Last year (2018), Godwin Obaseki, Edo state governor had exclusively told this reporter that the state was finalizing its master plan on agriculture with specific reference to oil palm.
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“We have an institution from Indonesia that is working with us on this. Once it is completed, we would have identified the areas where we want to allocate land for oil palm. We would have finalized communication action programme with the communities involved those areas,” he said. This year, in another exclusive interview, he told this reporter Edo state was ready for the investors, as plans had been finalised.
According to FMN’s palm oil factsheet seen by Agribusiness Insight, when the company took over control of Agric Palm, “the plantation was in poor shape as regards to regular upkeep and planting density of trees”. Upkeep activities are now up to date and the yields are steadily increasing, according to the company, which says it is now proceeding to plant the areas with very low or no plant density.
During 2020, the Nursery will be established and planting will commence in 2021, planting 2,179ha over a period of two years till 2023. Also during 2023 planting will commence in the Agri Palm 2 area where there is an area of 7,800ha to be planted. This area will be planted-up over a period of 3 years completing in 2025. This will bring the total area planted to 11,626ha by 2025.
For processing, a Crude Palm Oil (CPO) Mill capacity of 45 tons per hour will be constructed by 2025/26. It is also projected that yearly CPO production will increase from the current 2,700 tons to 22,000 tons in 2027, an almost tenfold increase within seven years once the mill is commissioned and projected to grow to 52,000 tons by 2030.
The Agriculture Promotion Policy document by the Federal Ministry of Agriculture and Rural Development, estimates the country’s production to be 4.5 million metric tonnes, while demand is 8 million metric tonnes, leaving a 3.5 million deficit. The deficit was however disputed during a meeting of the Plantation Owners Forum of Nigeria (POFON) attended by this reporter, as the body considered the deficit to be much lower and in the region of 1 million metric tonnes. The bottom lime however is; there is a deficit, and it needs to be filled.
At some point in 2017, Nigeria was reported to have imported 450,000 tons of palm oil at the cost of N116.3billion, making quite a number of people raise concerns on the enormity of importation. However, considering the country’s deficit is at least 1 million metric tonnes (according to POFON), and possibly as high as 3.5 million metric tonnes (according to the agric ministry), the cost of importation could be even more shocking.
The Central Bank of Nigeria (CBN) has given some attention to Palm Oil as one of its intervention crops, and even threatening to blacklist accounts of those illegally bringing it into the country. Under its Oil Palm Development and Expansion Initiative, the CBN says it has so far disbursed over N30 billion to the oil palm sector, but more of this is required for Nigeria to bridge the current deficit. Operators require access to more finance in order to scale up in the capital-intensive venture, where return on investments could take up to 10 years.
