Nigeria’s palm oil production jumps as old plantations race back to life
by ODINAKA ANUDU
March 5, 2018 | 1:00 am| | | Start Conversation
A worker holds harvested oil palm fruit for a photograph at the PT Perkebunan Nusantara plantation and production factory in Kertajaya, Banten Province, Indonesia, on Monday, June 20, 2011. PT Perkebunan Nusantara VIII is a state owned palm fruit plantation and palm oil factory. Photographer: Dadang Tri/Bloomberg via Getty Images
A silent revolution is taking place in the oil palm industry as old plantations are now being replanted just as abandoned mills are aggressively resuscitated.
The impact of this revolution is that Nigeria’s production output has raced to 1.3 million metric tonnes (MT), from 950,000 MT recorded in 2015, BusinessDay investigation reveals.
With national demand standing at 2.1 million MT, stakeholders say with consistent policy, government support and huge investments the 800,000MT gap in the industry will be plugged.
BusinessDay visited major plantations and mills across the country to ascertain the true state of the oil palm industry. One of the startling discoveries is that the once abandoned Adapalm, located at Ohaji, Egbema, in Imo State, is now in full gear.
As of the first half of 2017, this mill was abandoned and overrun with weed and snakes due to poor management by Roche Group, which took over the plant from Imo State government.
But between July and November of 2017, Imo State government entered into a joint venture(JV) with VTU, a Vietnam investor, which has so far pumped N300 million into the mills. The JV also involves the Ohaji community, which has a stake in the business.
The mill is fed from the 4,300 hectares of oil palm plantations in Ohaji and it currently produces 30 tonnes of palm oil per hour, BusinessDay found.
Apart from jobs provided by the mill, smallholder farmers bring quantities of oil palm to the company for sale.
“Many Chinese companies in Nigeria and abroad have already contacted us. The demand is high and it is very difficult to meet it,” Jude Oparah, operations manager, Imo-VTU Oil Palm, told BusinessDay.
“There is a room for expansion here and we intend to go downstream. We want to start crushing kernel to get Palm Kernel Oil (PKO) and process oil to get margarine, detergents and other things,” Oparah said.
Who would have believed that Calaro Estate in Cross River was where Malaysians took oil palm from?
Despite the shame of lagging far behind Malaysia, PZ Wilmar is showing what $300 million can do for the oil palm industry.
This estate is now a hub of oil palm with PZ Wilmar planting 5,500 hectares of land.
PZ Wilmar, a JV between PZ Cussons and Wilmar of Malaysia, has 26,500 hectares (ha) of oil palm plantation in Cross River State, with a plan to increase it to 50,000 ha in few years.
The firm acquired the defunct Calaro Oil Palm Estate (in Akampa/Odukpani), formerly owned by Cross River government, as well as the 12,805-hectare Kwa Falls oil palm plantation, formerly owned by Obasanjo Farms. It also bought the 5,450-hectare Ibiae Oil Palm Estate and another 8,000 hectares estate in Biase.
PZ Wilmar is concluding the construction of two processing plants at Calaro Estate, with one serving as Kernel Crushing Plant (KCP) and the other for Fresh Fruit Bunch (FFP), BusinessDay found.
PZ Wilmar is building an integrated plant, whereby all the by-products of oil palm are converted into electricity and other products to ensure nothing is wasted.
The company currently processes Crude Palm Oil (CPO) into vegetable oil in its Lagos plant, providing money to smallholder farmers in Cross River to develop their plantations, according to Solange Wanwi, outgrowers’ officer.
It recently entered into a N232million Pilot phase of Out-growers agreement with Heritage Bank, BusinessDay understands.
Despite the huge investment which has created a lot of jobs to Nigerians, multiple taxes by government agencies and frequent harassments by villagers are hurting the firm, BusinessDay gathered.
Another cheery story is that Okitipupa Oil Palm Plc is now ready for business after five years of closure. Governor Rotimi Akeredolu has handed the company over to the owner, Mobolaji Osomo, Nigeria’s former minister of housing and urban planning.
The firm has two mills—one at Okitipupa and the other at Ikpokemuyi in Ondo State. The former has 20 tons per hour capacity while the latter’s capacity is estimated at 22 tons per hour, senior officials of the firm told BusinessDay.
The mill is currently old and needs total overhauling. The board of the company sat two weeks ago and is expecting an investor to take over the mills and resuscitate them.
Already, a multinational oil company Victory Crystal Investment is interested and wants to invest $13m to resuscitate the mills, BusinessDay was told.
Okitipupa has plantations at Ikoya, Ilitutun, Igbotako, and Omotosho, all in Ondo State, and the plantations have been active even while the mills were abandoned.
Firms in the food and beverage sub-sector buy oil palm from the plantations, a senior official said.
“It needs total overhauling because the mill is old. It was established in 1984 and there are certain technologies that need to be brought in,” the official said.
BusinessDay gathered that Araromi-Ayesan Oil Palm, which was a shadow of itself early last year, is now on. It has 10, 468 hectares of plantations and already has a board chaired by Femi Okunniyi.
Okomu is a big player in the industry. Located in Edo State, Okomu produces 50 tons per hour while Presco, another major player, has an output of 45 tons per hour.
The rise of crude oil in 1970s forced Nigeria to abandon its oil palm industry. The country produced 43 percent of global output in 1960s but this is no longer the case.
In terms of production volume, Nigeria is the fifth largest palm oil producer today, behind Indonesia with 36 million MT, Malaysia with 21 million MT, Thailand with 2.2 million MT and Colombia with 1.3 million MT, data from the global oil palm industry shows.
Data from the National Bureau of Statistics (NBS) show that Nigeria imported a total of N7 billion worth of CPO in the second quarter of 2017, with Indonesia accounting for 76 percent of the total import within the period.
Nigeria imported about 552,000 metric tons of crudepalm oil in 2016, according to data from Solidaridad Network. Currently, 80 percent of demand is met by smallholder farmers.
Henry Olatujoye, national president, National PalmProduce Association of Nigeria (NIPPAN), said that the country needs over two million hectares of commercial palm oil plantations to meet up with the current demand.
“There has been increase in palm oil production in Nasarawa, Adamawa, Cross River, Ondo, Edo and many states, and many large firms are organising farmers into clusters and are providing them with high-yield seeds.
“But large and established firms are only cultivating 400,000 hectares, which are insufficient. Smallholder farmers are doing above 900,000. However, established enterprises need to cultivate up to two million hectares to plug the gap,” Olatujoye said.
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