The mirage of palm oil availability - by Matthew Eshalomi August 19, 2008 | posted by Mobolaji Aluko (Archives)

 

GUARDIAN

 

Tuesday, August 19, 2008 

The mirage of palm oil availability
By Matthew Eshalomi

I HAVE had to comment on a recent write up in The Guardian Sunday July 27, 2007 on page 78 on Vegetable and Edible Oil Producers of Nigeria (VEOPAN) imploring the government to maintain a ban on edible oil importation.

While a group that identified itself as Association of Nigerian Trade Merchants (ANTraM) is lobbying the government to lift the ban, it is stated that VEOPAN claims that local companies which process palm oil to edible oil have stated to embark on expansion programmers to boost production in order to increase supply to meet the country needs and also get enough for export to earn foreign exchange. This claim is extremely false. Where is the excess palm oil for export?

In fact, the reverse is the case; several major plants processing palm oil in the country especially in Lagos, Anambra, Imo and Rivers States have shut down their plants due to lack of appropriate input palm oil to be processed into vegetable oil. To substantiate my view, a few of the palm oil processors that immediately come to my mind will surface.

Listed here are plants with refineries that have either gone out of production or are operating below 25 per cent installed capacity due to lack of palm oil input.

 

Refinery Capacity

Tonnes/day

Annual Tonnage

*

Envoy Oil Ltd. Onitsha, Anambra, State

100

30,000

Golden Oil Ltd.Onitsha Anambra State

350

105,000

*

Golden Oil + Ext. Ltd. Ogba, Lagos State

700

210,000

*

Real Oil Ltd. Ojota, Lagos State

100

30,000

*

E. Amobi Manf. Co. Ltd Onitsha Anambra State

100

30,000

*

Rivoc Port Harcourt, River State

100

30,000

*

Premier Agro Oil, Ibadan, Oyo State

100

30,000

*

I.F.M.P. Ltd,, Ogba, Lagos State

330

90,000

*

Sudit Oil Ibadan, Oyo Stae

100

30,000

*

Leena Oil Ibadan, Oyo State

60

18,000

*

Pioneeroil, Lagos State

100

30,000

 

In the whole write up no data or statistics was produced to back up the positions taken by either party. The shelves in supermarkets all over the country are heavily stocked with imported brands of vegetable oils smuggled in through our porous borders.

Of special interest on how best to resuscitate oil palm industry by stakeholders is a story which appeared in the Punch of October 2, 2007 page 6, which showed that in 2006, Malaysia produced 15 million metric tonnes of palm oil from an area of 4 million hectares, while Nigeria produced slightly above one million tonnes of palm oil from an area of 360,000 hectares according to data from the Nigerian Institute of Oil Palm Research, Benin City, Edo State.

 

Palm Oil Production

Country

Metric Tones

Malaysia

Indonesia

Nigeria

Colombia

15,860,000 p.a

15,900,000 p.a

1,287,000 p.a

711,000 p.a

Source:- Food + Agricultural Organisation. NIFOR, Nwanwe and Ikuenobe 2006.

Nigeria in 1988 produced 750,000 tonnes of palm oil which placed her in the third position worldwide next only to Malaysia and Indonesia. (Daily Times August 25, 1989) according to Mr. David Atage, Director NIFOR, Benin City. NIFOR produced 4.7 million sprouted seeds in 1988 of which 3.7 million went to DFFRI assisted programmes. After almost ten years, the recent figures are not impressive. I can live with this recent NIFOR data. What are the capacities of the major companies known to have large palm plantation and as palm oil producers? There are few that come to mind namely:-

 

Companies

Palm Fruit Oil

Presco Industries Ltd. Benin, Edo State

22,000 tonnes/year

Okomu Palm Oil Ind. Ltd. Edo State

25,000 tonnes/year

Oil Pal Co. Ltd., Ajagbodudu, Delta State

6,000 tonnes/year

OBJ Farms

20,000 tonnes/year

Adapalm Nigeria Ltd. Imo State

8,000 tonnes/year

Risonpalm Ltd. Rivers Stte

4,000 tonnes/year.

 

Risonpalm with initial work force of about 17,000 and installed production capacity of 40 tonnes ffb (fresh full bunch per hour) cannot today achieve much, with production capacity of 20 per cent installed capacity as December 2007 as reported by Sunday Vanguard, December 2, 2007 page 21. The RBD (Red Palm Oil with Free Fatty Acid (FFA) less than five per cent) produced annually from these majors is less than 1000,000 tonnes.

The phenomenal growth of the instant noodles industry in the country is due to their versatility and their unique capacity to capture with ubiquitous and penetrating speed the consumers in any country in which they are introduced, this has put additional burden on the demand for palm oil which is a very important ingredient in their production process.

The instant noodles companies are awash with excess liquidity and they pay for and buy in advance all available edible oil in the country, leaving palm oil processors with little or nothing for their plants to process.

VEOPAN claims that it is providing job opportunities for not less than 1.8 million farming family involved in the production of oil seeds and related crops. Nigeria with a national production of less than 1.3 million tonnes of palm oil and a population of over 140 million that means each family produces less than 700kg per year, i.e. an average of less than 2 kg/day. Barely enough for local needs. If on the basis of this production they have no case to insist on no-review of the ban to accommodate commercial processors be allowed to import limited controlled quantity of Red Crude Palm Oil to put their plants into useful operation.

The palm oil produced by the small holding contains FFA in excess of 12 per cent and in some cases as high as 18 per cent. They are not suitable for large-scale commercial processing into Vegetable oil due to the FFA being beyond five per cent and in most cases too dark to allow being bleached to international standards.

Last year, the Vegetable Oil Sub-Sector of Manufacturers Association of Nigeria reported that the market has been very unstable because of high cost of input, excessive smuggling of vegetable oil and faking. Recently the group lamented the shortage of palm oil, which is the major raw material for vegetable oil production.

It also condemned the Federal Government for signing a contract to supply palm oil to China, whose local demand has not been met. Where does it intend to get the oil from. We urge the government to issue licence to bona fide processors of palm oil into vegetable oil, whose equipments could be verified and attested to, to import crude red palm oil having less than 5 per cent Free Fatty Acid as input material for their plants. This will revive these plants with daily capacities in excess of 3,000 tonnes/day.

 

Dr. Eshalomi is Chairman of the Vegetable/Edible Oil Sub-Sector of the Manufacturers' Association of Nigeria (MAN).