Agriculture Business

Stimulating Cottage, Industrial Palm Oil Investments

Investments in production and processing of palm oil has been identified and proven to be a veritable tool of poverty reduction and economic diversification.

From being the world’s leading producer and exporter of palm oil in the 1960s, Nigeria has fallen to being a net importer to meet rising domestic demand. Largely, demand is primarily driven by the household consumers who prefer to consume the technical palm oil (TPO) because of its flavour profile, and its indispensability in most traditional menus.

Household demand is also complemented by an increasing demand for the special palm oil (SPO) which can then be fractionated to meet the needs of industrial processors. Though domestic production is nearly 900,000 tonnes, there is an estimated overall gap in Nigeria of between 150 and 300,000 tonnes of TPO and 200,000 tonnes of SPO, much of which is currently met today through imports.

All of the wild grove harvest is moving through traditional channels which use rudimentary technology, but there is increasing investment in smallholder production with integration into processing.  Most of the private small holders, where the economically active poor dominate, are producing for the TPO market segment.

For the any meaningful transformation to occur, interventions especially from government should first of all target small commercial or cottage industries which processes most of the TPO. There should also be an increased investment in re-planting and upgrading the varieties of existing palm plantations with newer higher oil content varieties, and enhanced linkages between the processors of SPO and the private farmers.

This is currently being addressed under the Agricultural Transformation Agenda (ATA) of the Ministry of Agriculture, through the Oil Palm Transformation Value Chain targeted at bridging the gap in national vegetable oil production, estimated at 350,000 mt through the establishment of a total of 240,000 ha from 2012–2015 by smallholder farmers and estates, and enhancement of yield.

The implementation of the Oil Palm Transformation Value Chain is being carried out in 24 oil palm producing states namely: Abia, Akwa Ibom, Cross-river, Rivers, Bayelsa, Imo, Anambra, Ebonyi, Enugu, Delta, Edo, Ondo, Ogun, Osun, Oyo, Ekiti, Benue, kwara,  Kogi, Nasarawa, Plateau, Taraba, Adamawa and Kaduna (Southern Kaduna).

Seedling Production

Some of the achievements of the scheme include seedling production/distribution – raising nine million improved tenera seedlings obtained from the Nigerian Institute for Oil Palm Research (NIFOR). According to the ministry, under the first phase in 2012/2013, four million nuts were procured and raised into mature seedlings capable of planting 26,666.7ha. The seedlings were distributed to farmers in the following states: Kogi, Edo, Ondo, Delta, Cross River, Ogun, Akwa Ibom, Bayelsa, Abia, Osun and Enugu.

The Second phase of the seedlings production in 2014/2015 involved raising of five million improved seedlings by; 67 Public/Private Nursery Operators in 24 states  totaling two million seedlings; 25 Estate Nursery Operators in 15 states totaling two million seedlings and six Mega Nursery Operators in six States totaling one million seedlings.

Investment Support

Local, private and foreign Companies have enlisted in various oil palm investment activities following the enabling environment created under ATA. Activities being undertaken include production, processing and marketing. Many local investors are planting new farms, expanding existing ones, as well as establishing and expanding processing outfits.

BoI Funding

In 2014, the Bank of Industry launched the N5 billion Cottage Agro Processors (CAP) Fund which has been welcomed by stakeholders as a veritable platform for expanding and sustaining wealth creation in cottage industries across the country.

Under the CAP fund, two oil palm processing cottage industries in Osun State have been commissioned to ease most farmers challenge at the stage of processing, which inadvertently affects the price of their palm-oil.

Speaking on the development, Special Adviser to the Osun State Governor on Agric and Food Security, Festus Agunbiade:“If we don’t take care of processing facilities, then we would just be producing for wastages and if you are sure that your commodities would be processed, you will be encouraged to add more value. From today, in Osun State you can be assured that farmers would be encouraged to grow oil-palm because they are sure that their incomes will increase as wastages are being drastically reduced”.

He also noted that the Minister for Agriculture and Rural Development, Dr. Akinwumi Adesina, understands perfectly the challenges of farming and the farmers through his efforts which has resulted in the increase of production capacity.

“We are also witnessing a better approach to the issue of funding by BOI because they have come down to the real issues; farmers can no longer bear the high costs of commercial bank facilities, it is very good that BOI has now come down to its real mandate and is financing agriculture by charging single digit interest rates. I will advise them that they increase their monitoring activity so that such facilities will be well monitored,” Agunbiade added.

On his part, Barrister Bola Adebowale, Company Legal Secretary to one of the beneficiary cottage industries, E99 Oasis Integrated Services Ltd, commended the initiative as a worthy one under the ATA championed by Dr. Akinwumi Adesina.

“Let me sincerely thank the Bank of Industry for the support provided on this project. This is a clear indication of a financial institution building strong support in the actualisation of agricultural programmes, especially in the oil palm cottage processing mill.

“Today’s commissioning is a great event and a milestone in the annals of the history of farm E99 which was established to aid food production in the country as well as enhance stable food availability to the people. With this Mill, I am sure palm oil produced in the farm will meet the international standard quality,” he said.

 

He stressed that it was heart-warming to note that the problems facing the producers and farmers of oil palm will soon fade away, as it was now possible for farmers to get their palm-oil produced without the body-aching old and unhygienic system.

Fabricator and installer of the machines at the industries, Victor Olomo, CEO Process Concepts and Technologies Ltd, explained that the machines will be used to process palm-oil from harvested bunches from the oil-palm plantation.

“The idea is that we want to produce palm-oil that is of high enough quality that can be safely consumed, used by industries and meet export specifications and this facility here meets the requirement,” he said.

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Ihesiulo Grace

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