Importation of palm oil into the country gulped $1.4bn (about N504bn) in the past five years, investigation has shown.
Global import data from the United States Department of Agriculture indicate that Nigeria imported a total of 2.04 million tonnes of palm oil between 2014 and the first few months of 2019.
The statistics showed that the country imported 506,000 tonnes valued at $376.3m in 2014 and 263,000 tonnes valued at $174.4m in 2015.
In 2016, the nation imported 298,000 tonnes of palm oil worth $219.2m while in 2017, 302,000 tonnes valued at $226.7m were imported.
In 2018, the country imported 330,000 tonnes of palm oil valued at $210.7m while the first few months of 2019 witnessed the importation of 350,000 tonnes valued at $239.4m.
During the five-year span, average global price for palm oil ranged between $743.7 per tonne and $683.9/tonne.
Nigeria imports palm oil from Malaysia in Asia and Cote d’Ivoire, Benin – two countries in West Africa neighbours of the country.
The importation of palm oil from the three countries makes up for supply shortfall of over 1.42 million tonnes.
Local consumption is put at 2.4 million tonnes while local production is put at 980,000 tonnes as of 2018.
Concerned about the huge foreign exchange spent on importation of Crude Palm Oil, and determined to boost local production, the Central Bank of Nigeria had in June added palm oil on its list of imports ineligible for official foreign exchange.
Despite the shortfall in local production, local producers of palm oil have continued to record declining revenues.
Two major organised oil palm plantations listed on the Nigeria Stock Exchange, Okomu Oil and Presco, which reported a gross profit margin of more than 50 per cent and operating profit of 40 per cent during the 2016 recession recently posted declining profits in the first-half of 2019.
Presco’s profit was reported to have slowed down by 24 per cent while Okomu’s plunged 57 per cent.
Asked why this is so, the Managing Director, Okomu Oil, Mr Graham Hefer, said global palm oil prices had declined (palm oil currently sells less than $500) due to the ongoing trade war between China and the United States.
He said, “Note that whilst the company is experiencing lower prices, it is still making a profit, albeit a lower one.
“The world price has declined due to the ongoing trade war between China and the USA.”
Hefer said that India, the largest importer of the CPO, had raised import duties and locally, the postponement of the March elections in Nigeria and the unmitigated inflow of huge quantities of illegal oil and olein (refined palm oil) from Benin Republic led to a glut in the local market.
He listed other factors responsible for the declining profitability as illegal imports and adulterated products, poor infrastructure, double taxation and road touts.
Others, according to him, are lack of financing options for tree crops, corruption and extortion, especially at the ports and logjam at Apapa port leading to delays and high demurrage charges.
Analysts support this position.
“If measures to address the porous borders are put in place, local demand would revert back to local producers,” an analyst with CSL stockbrokers, Gbolahan Ologunro, was quoted as saying in a recent report.
Once the largest global producer of palm oil,($62bn per annum) Nigeria is now number four and its contribution to global market share is 1.4 per cent as of 2018, (according to USDA), against 45 per cent in the 60s.