By Peter Osalor
Nigeria’s once-thriving palm oil industry is often cited as one of the most miserably failed economic opportunities in Africa.
Agriculture has suffered from years of mismanagement, inconsistent
and poorly conceived government policies, and the lack of basic
infrastructure. Still, the sector accounts for over 26.8 per cent of
GDP, and two-thirds of employment.
Nigeria is no longer a major exporter of cocoa, groundnuts (peanuts),
rubber, and palm oil production, mostly from obsolete varieties and
overage trees, is stagnant at around 180,000 tons annually; 25 years ago
it was 300,000 tons. An even more dramatic decline in groundnut and
palm oil production also has taken place.
Use of the oil palm fruit to extract edible oil has been in practice
across the continent for centuries, and it remains an essential
ingredient in much of West African cuisine.
Farmers in the region, who inter-cropped oil palm trees with other
food crops like yam and maize, started the first export trade early in
the 19th Century. Before its close, the industrial revolution in Britain
had created a huge demand for palm oil, which by then had found its way
to use in candle making and as an industrial lubricant.
The economic importance of palm oil grew steadily because of its high
yield, leading European colonists to start plantations in Central
Africa by 1900. As palm oil found wider use in food-processing and
industry, global demand for the commodity surged. By 1982, worldwide
palm oil exports had grown to a staggering 2,400,000 million tonnes per
annum.
For most of this period, Nigeria held centre stage as one of the
largest producers and exporters of palm oil, accounting for more than
40% of global output in the 1950s. At the time of the country’s
independence from British colonial rule in 1960, palm oil contributed
82% of national export revenue.
However, the oil boom of the mid-seventies and the subsequent decline
of farming proved catastrophic to the sector. By the end of the
twentieth century, the Nigerian palm oil harvest had dwindled to just 7%
of global production. More embarrassingly, the once-largest exporter
had turned into a net importer of palm oil, sourcing 180,000 MT of the
commodity from international markets to meet local demand1.
The fundamental flaw with the palm oil sector lies in Nigeria’s
colonial origins, when British trade necessities dictated economic
policy. Because of its primary export orientation at that time, planned
expansion of the industry was slow in coming through and its future
competitiveness had been compromised.
As a result, the bulk of Nigerian palm oil comes from dispersed and
semi-wild groves, and through the use of highly outdated manual
processing techniques. Several attempts to establish large-scale
plantations since the 1960s – including the Cross River State plan and
the Oil Palm Belt Rural Development Programme – ended in miserable
failure.
Currently, 80% of production comes from scattered smallholdings
spread over an estimated 1.6 million hectares of land. In contrast,
plantations occupy only about 300,000 hectares – most of it coming up
over the last decade with private sector investment.
Economic reforms initiated since the reinstatement of democracy in
1999 succeeded somewhat in nudging the sector out of stagnation. Between
2001 and 2005, palm oil production grew rapidly from 760 MT to 800 MT,
while recording a corresponding rise in local consumption.
Much of this movement can be owed to a ban that Abuja imposed in 2002
on the import of palm oil and related products. However, Abuja’s
reversed the ban in January 2008, prompting grave misgivings about the
fate of the industry and impact on local production.
The Plantation Owners Forum has gone so far as to say the move would
severely threaten Nigeria’s Vision 2020 goals for accelerated economic
development. Inconsistent policies like this are largely to blame for
the fact that Nigeria’s palm oil industry continues to flounder despite
the marked resurgence of agriculture through the last decade.
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