Growth in the palm oil sector is stalling owing to dominance of old trees and reforms that have so far not led to substantial changes in the industry since their implementation.
From being at the centre stage in the 1960s when the most populated black nation was a leading player in the palm oil industry, even outpacing countries like Indonesia and Malaysia, Nigeria now struggles to meet local demands, a situation stakeholders dub “embarrassing.”
There are hundreds of millions of oil palm trees scattered across wild groves, smallholder farms, and formal plantations, according to the Nigerian Institute for Palm Oil Research (NIFOR), but many of them are unfortunately past their productive timeline.
Read also: FG new committee to bolster palm oil production, tackle adulteration
This is stalling production, affecting yield, skyrocketing prices and shutting Nigeria out on global market gains.
Alphonsus Inyang, president of the National Palm Produce Association of Nigeria, a leading palm oil body in the country, says the dominance of old trees and ineffective policies is stunting the industry’s growth.
“The palm oil industry is dominated by old trees that can no longer produce,” he said. “It is time we adopt effective policies, invest in expanding hectares of palm oil, and give incentives to smallholder farmers who dominate the value chain.”
Studies show that the economic lifespan of an oil palm tree is about 25–30 years, after which its production capacity begins to decline until it can no longer produce. Sadly, this is the state of many trees in the oil palm industry today.
Despite having over three million hectares of land suitable for oil palm cultivation, especially in states like Edo and Cross Rivers, Nigeria falls far behind peers like Colombia and Malaysia in yield.
As a result, production stalls, Inyang explained.
Most recent data from the Food and Agriculture Organisation (FAO) show that palm oil production still stalls, hovering at an average of 1.4 million metric tons as of 2024.
In comparison, Colombia and Malaysia churn out an average of 1.8 and 1.9 million metric tons, respectively in the same period.
With a rising demand of over 2 million metric tons, poor yield has created a supply gap of 450,000 metric tons that is filled through imports. Nigeria spends about $600 million every year importing palm oil from other countries like Malaysia.
But stakeholders hope for more beyond imports. Olatunoye Henry, managing director of FarmTrade Commodity Development, noted that there is no better time than now for Nigeria to invest in palm oil plantations, which, according to him, begins with converting forests into hectares of plantations.
“It is obvious that demand is becoming inelastic while supply is now elastic. Hence, there is a need for urgent steps to be taken towards revamping our oil palm sector.”
Urgent policy reforms
Several initiatives by the federal government to improve the overall welfare of the industry have faced bottlenecks.
For instance, the Presidential Initiative on Oil Palm, which was launched in 2019 to revive the country’s underperforming palm oil sector, has been met by slow and underfunded implementation.
While efforts are being made to produce quality palm seedlings as indicated by NIFOR, there is need to implement policies that can drive growth and push positive reforms in the sector.
“The federal government should work with the palm oil association in creating policies that will boost industry growth,” Inyang noted.
Read also: Nigeria’s top palm oil makers’ profit to hit N161bn as prices climb
Lesson for Nigeria
Indonesia is an example of how effective reforms can change the narrative of an industry.
Through effective reforms, the Asian country has grown its palm industry tremendously over the years.
According to the FAO, Indonesia’s palm oil production is the fastest growing amongst the top five global producers, consisting of Malaysia, Thailand, Colombia and Nigeria.
The Asian country’s palm oil production grew from 4.47 million tons in 2020 to 4.97 million tons in 2021, signalling an outstanding 11 percent growth within a year.
And the reason is simple: the Indonesian government is big on palm oil plantation expansion. This goal led to expansionist policies focused on market creation and production goals with limited incentives for technology-driven intensification.
“We need to adopt effective policies, invest in expanding hectares of palm oil, and give incentives to smallholder farmers who dominate the value chain,” reiterated Inyang.
