In 2011, President Goodluck Jonathan initiated the Agricultural Transformation Agenda (ATA) to drive economic growth, jobs and food security.
This policy was supervised by Akinwumi Adesina, the then agric minister, who later became the president of the African Development Bank (AfDB).
Under ATA, there were sub-sector policies meant to drive key crops on which the nation had comparative advantage.
One of such policies was the backward integration in palm oil, which was targeted at improving the nation’s refining capacity.
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Under the programme, investors with oil palm plantations were granted tax holidays up to five years. Importation of refined palm oil attracted 35 percent duty, while that of crude palm oil (CPO) had only a percent tariff. This was meant to encourage local refining and boost firms like PZ Wilmar, Okomu and Presco that were going into oil palm refining.
The investors were also given limited import quotas to ensure they had adequate CPO for refining. The federal government also helped the investors to secure land through state governments.
Critical oil palm refining equipment had zero or subsidised import tariffs, with investors granted access to cheap funds through the Commercial Agriculture Credit Scheme and the NIRSAL.
The incentives boosted investments in the sector, with PZ Wilmar acquiring over 26,000 hectares for oil palm plantations in Cross River State. Okomu, Presco, Agri Palm and Dufil investing billions of naira in Edo State.
The sustenance of the policy by the current administration has further driven investments in the sector.
The increase in production has helped to reduce the country’s palm oil imports, drive local demand, and forestall constant pressure on the Nigerian foreign exchange market.
“Since the backward integration policy commenced in the oil palm sector, we have seen an increase in requests for land for palm plantations from companies that were previously in refining,” said Churchill Oboh, general-manager of Edo State Oil Palm Programme.
He noted that the policy and strong demand are driving investments into the country’s palm oil industry as major fast-moving consumer goods companies move to ensure 100 percent local content in the production of their goods.
Key investments
Before its recent 50 percent stake acquisition by Wilmar, PZ Wilmar, a subsidiary of PZ Cussons, had 26,500 hectares of palm oil plantations in Cross River State. The firm has 5,549 hectares (ha) of oil palm plantation Calaro Estate, with 2,369ha located in an area known as Calaro Extension.
The firm also acquired 5,595ha at Ibiae as well as 7,805ha at Ibad. Others are Kwa Falls in Akampa Akpabuyo with 2,014ha, and Oban plantations, also in Akampa, with 2,986ha.
Also, Agri Palm Limited, a subsidiary of Flour Mills Nigeria Limited, has plantations at Ugogui and Iguiye near Benin City in Edo State, and has expanded to 4,000ha of established palm in the first phase of local palm oil production needed to support the upstream needs of the group’s oil refining operations in Ibadan.
In 2019, Dufil Prima Foods, makers of Power Oil, was given a concession of 17,954.71ha in Edo State to develop two projects. The company said it would plant 2.3 million palm seedlings on 15,000ha of the acquired land.
Import declining
Data from the Food and Agriculture Organisation (FAO) show that Nigeria’s oil palm fruit production has risen from 10 million metric tons (MT) in 2019 to 11.6 million MT in 2023, a 16 percent production surge.
Nigeria’s Foreign Trade Report data show that the country’s imports from the global top producers declined 26.6 percent in value in 2024 amid foreign exchange volatility.
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Nigeria’s crude palm oil (CPO) imports from Malaysia and Indonesia declined from N17.03 billion in 2023 to N12.7 billion in 2024.
“The backward integration policy that emphasises local sourcing of raw materials is driving palm plantation investments from big players,” said Alphonsus Inyang, president of the National Palm Produce Association of Nigeria (NPPAN), in a telephone response to questions.
“All the major fast-moving consumer goods companies actively adhere to the policy and are investing massively to source locally,” he added.
“We are seeing new plantations spring up daily as the use of palm oil is rising continuously,” said Celestine Ikuenobe, former executive director of the Nigerian Institute for Oil Palm Research (NIFOR).
“Palm oil is now used as biodiesel and aviation fuel. The usage is growing continuously, and this is spurring investments from existing players and new entrants,” he said.
