CBN lays out rescue plan to end oil palm importation

…Bemoans loss of $10bn Forex earnings from Oil Palm value chain

Mathew Dadiya- Abuja

The Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, on Monday, laid out another rescue plan for oil palm production, and ended the importation of the product into the country.

This is even as the CBN Governor lamented the loss of an estimated $10 billion annual foreign exchange earnings that would have accrued from the value chain.

Currently, Nigeria expends over $ 500 million annually for its import.

But in a bid to change this narrative, and return Nigeria to her hitherto position in the 50s and 60s, as world’s leading producer of palm oil, the apex bank, Monday, held a strategic meeting with the South-South governors in palm oil production belt zone.

Lamenting the back position Nigeria now assumes in the production of palm oil, a commodity she once dictated its pace,

Emefiele regretted that Nigeria is now a net importer of palm oil, importing between 400,000 to 600,000 MT of palm oil in order to meet local demand for a commodity it had once commanded its control.

“As some of you may recall, in the late 50s and 60s, Nigeria was not only the worlds leading producer of palm oil, it was also the largest exporter of palm oil, with close to 40% of the global market share.

Today we are a distant 5th among leading producers of palm oil; we barely produce up to 3 per cent of the global supply of palm oil, with estimated production of 800,000 MT of palm oil,

while countries like Malaysia and Indonesia produce 25million and 41 million tonnes of palm oil respectively”, said CBN governor.

Lamenting declining position of Nigeria in Palm oil production, the central bank governor said that Nigeria had become a net importer of the product, importing between 400,000 and 600,000 MT of palm oil in order to meet local demand for this commodity.

Emefiele regretted that despite the availability of over three million hectares of farmland for palm oil cultivation, production remains low at close to 2 tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare.

“This is as a result of the maturation of existing palm trees, as some of these trees were planted in the 50s, as well as low investment in replanting high yielding palm oil seeds. As some of you may know, the usual life cycle for optimum palm production is 25 years”

“If we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10bn worth of foreign exchange for the country.

This analysis does not take into consideration the number of jobs that could have been created in our rural communities from large scale smallholder developments”, he added.

On why he chose to bring Executive Governors from the oil Palm producing states to the meeting, Emefiele said the bank was keen on securing their buy-in to set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations,

such that within the next 3-5 years, the global share of the country’s oil palm production would more than double.

The CBN, Emefiele added, has designed intervention packages to resuscitate Palm oil production. This includes using part of CBN’s Anchor Borrower Program (ABP), granting loan at 9 per cent and working with off-takers.

“On our part, the ABP and our Commercial Agriculture Credit Scheme (CACS), the CBN will work with large corporate stakeholders and smallholder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals in order to enable improved cultivation of palm oil.

We will also work to encourage viable off-taker agreements between farmers and large-scale palm producing companies. Loans will be granted through our ABP and CACS programs at no more than 9 per cent p.a to identified core borrowers.

Some of the targeted large scale farmers are in our midst today and we shall use the opportunity of this engagement to achieve concrete results”, Emefiele promised.

The meeting had in attendance, other key players across the palm oil value chain.

Three governors from the south- south; Akwa-Ibom state governor, Mr Emmanuel Udom, his counterpart from Edo state Governor Godwin Obaseki and Abia state governor, Okezie Ikpeazu were in attendance.