Palm Oil as the New Crude Oil

• Palm Oil as the New Crude Oil

Palm oil, which used to be Nigeria’s biggest export produce before the discovery of crude oil has now been adopted by Asian countries earning over $ $25.2 billion in exports.

Historically, Nigeria was the world leading producer of palm oil as at independence. But unfortunately, Indonesia and Malaysia have overtaken Nigeria. Today, Nigeria imports palm oil. With crude oil still the country’s major source of foreign exchange earning, the call to diversify the country’s revenue source has been a mantra over the years.

Palm Oil and its Purposes

Palm oil is gotten from palm fruit and is used as cooking oil. It is also used as raw material to manufacture margarine, non-dairy creamers, ice cream, soaps and detergents. In addition, it is used in the production of greases, lubricants and candles. More recently, the biofuels market has provided a significant new non-food use for palm oil where it is used as the feedstock for the production of biodiesel and as an alternative to mineral oils for use in power stations.

Furthermore, fatty acid derivatives of palm oil are used in the production of bactericides, cosmetics, pharmaceuticals and water-treatment products.

Value of Palm Oil Globally

Global palm oil market demand was 74.01 million tons in 2014 and is expected to reach 128.20 million tons by 2022. However, Nigeria presently produces at a deficit as local production and importation of palm oil into the country, presently stands at 55 per cent. However, with improved practices and technology, Nigeria could make more than $35 billion dollars from palm oil, if farmers followed the correct processing system.

Local Manufacturer’s Perspective

Speaking on the matter, the Chief Executive Officer, Red Palm Oil, Mrs. Eno Udoh whose company produces palm oil said: “In the early years, Nigeria used to be one of the largest exporter of palm oil, producing more than 40 per cent of the world production. The British administrators took the plant to Malaysia and they later surpassed Nigeria and are now the largest producers with Indonesia.

“Presently, there are small groups of people who harvest the wild palms using manual processing techniques. Majority of these groups are women in the village especially in Akwa Ibom.”

Udoh whose previous business venture was predominantly import-based said the exchange rate fluctuations forced her and others who were majorly importing to look inwards, saying that she decided to go into the business by setting up a factory in Akwa Ibom.

Udoh added: “Due to the recent economic issues in the country, I decided to look inwards. So I decided to go back home and look at what we can export to earn foreign exchange and what I can give to the community.

“Growing up, my aunt back in the village would always give us a keg of palm oil and so I decided to go into palm oil. Also, I enjoy the processing especially going through the process to see how you can get an organic refined oil. Also to the process that brings to organic low cholesterol process which is an extra process to be clarified. Low cholesterol is preferred by a lot of people because of health issues, which means it would cost double.

“Looking around, most people end up buying adulterated or mixed oil. The difference between my oil and others is that it is purely organic.”

Challenges and Potential

To export this product poses both challenges and rewards. The major challenge is that a lot of the farmers in the business still operate as small scale and in most cases, do not meet the required standard for export. Also, the documentation, certification, accreditation and packaging is a major obstacle for these farmers.

Udoh said: “I am still going through the process, but the Nigerian Export Promotion Council (NEPC) is encouraging people like us through capacity building and tools to empower us. Recently, the Chief Executive Officer, NEPC, Mr. Olusegun Awolowo had a seminar on packaging for export products and also encouraging us on how to go about exporting the products.

“Not until recently, agriculture was abandoned; everyone was going into politics and we had oil money so people weren’t thinking about agriculture. Now, reality has hit in and people are going back into the farms and agriculture is the big thing now.”

Furthermore she added: “As many hands go into agriculture, there would be more production of agriculture products which in turn increase variety of exportable produce and then creates multiple FX earnings for Nigeria.”

Speaking on the process it takes to export, she said: “It is not easy. There is a process and standard we need to meet and it involves a whole lot of money. It is not an easy process but it is a process we are going through. However, it is not difficult and it does not discourage others. NEPC is doing a whole lot to encourage us to export. The last time they brought in a Japanese man to talk on the right ways to package for export. They have given us a lot of tips and education on how best to get your goods ready for export.”

“I would want government to encourage the small scale farmers in processing, production and export. Government should provide land areas for rural farmers to encourage mass production of palm oil and also improve seedlings for small farmers and machines to process.

Request for Government Support

With the array of end products this fruit can get as well as the demand for it in the international market, various practitioners have argued that palm oil should be given attention, just like some other agricultural produce.

The potential in palm oil is huge and if the federal government decides to put in funds to aide farmers to produce, process as well as export, it would be a major foreign exchange income earner.

Udoh added: “There are so many things you can get from the palm fruit. The palm fruit cake is used as stock feed; the nut itself has oil as is used for pomade for the hair so it has so much functions.

“So this is something government should put in more money like they did in the north with ground nut. They should put in more money to grow more palm fruit type that takes less time to harvest. Malaysia that is leading in palm oil production now, got it from Nigeria. If governments are able to put in more funds into agriculture and palm oil especially we wouldn’t need to bring in engine oil, palm oil, soaps the list goes on.

“Governments could help give out mills to local governments or encourage palm farmers in processing. It would make things much easier in producing, she added.

Furthermore she posits: “I think government should put in more funds and educate those that are into palm oil, and help create an easy way. The palm process in the village is still very crude way and I might say not totally hygienic. The government can provide these machines and also educate farmers on how to use them.”