Introduction
The Central Bank of Nigeria (CBN) is currently leading a national campaign for the ban of imported foreign palm oil products, in a bid to resuscitate the Palm Oil and Kernel Industry across ten states of the Nigerian Federation, beginning with Akwa Ibom, Cross River, Delta, Edo State, Rivers, Abia and Imo.
To demonstrate seriousness, the apex bank has closed all import windows for oil palm and its derivatives, warning disobedient importers and smugglers to prepare to have their accounts blocked, among other punitive measures, if they do not quit smuggling of the products and key into the new initiative.
The CBN is supporting that campaign with an initial N30 billion soft loan which is already being disbursed to existing farmers in the identified states; in addition to land, fertilizer and other needed inputs. There will also be provision for those desiring to participate in the out growers scheme. It is only when the oil palm starts fruiting that the beneficiary farmers would start repayment. It takes an average of two and half years for the palm trees to mature and start yielding fruits.
The second phase of the CBN initiative will be for those who are coming new to invest in the oil palm/ kernel production (raw produce processing) business. This will be take effect from mid-2020. If you are from any of these states and you are looking for where to invest, why not position yourself now in order to take advantage of the opportunity? The prerequisites for qualification for the second (next, upcoming) phase are simple: just do your business plan, then get a tentative factory space, identify the machinery and equipment you will buy and the sources of your produce supply, and then walk into your bank and ask for the credit facility, which the CBN has already arranged for all those who will be specific about what they want to do with the loan.
Background Treatise
Palm oil with kernel, used in domestic cooking and the production of soap, lubricants, industrial fats, beverage, cosmetics, etc., was the staple of Nigeria’s commerce with the outside world in the nineteen fifties and sixties up until the time petroleum was struck in commercial quantities. Nigeria was the world’s foremost exporter of palm oil and palm kernel until 1967 when the country lost this enviable position to Malaysia. Malaysia and Indonesia have since then achieved a remarkable increase in palm oil export. Palm oil export is currently traded on the Kuala Lumpur commodities exchange whereas in Nigeria, exports of palm oil are scarcely existent. In the nineteen fifties, Nigeria supplied Indonesia with its first palm seedlings. In 1970, Indonesia produced half as much palm oil as Nigeria. By 1991, it was producing three times as much, and in the mid nineteen nineties, Nigeria started to import Indonesian palm oil, and worst still hydrogenated oil from dubious sources.
The number of large palm oil mills in Nigeria are few, scattered, and in most cases, badly run. Worse still, a greater proportion of the palm trees in Nigeria today grow tall and wild. It is only recently that attempts were being made by companies like PRESCO, PZ, and OKOMU Oil, to cultivate in plantations the improved high yielding and early maturing species whose heights are relatively short and which are far easier to harvest. The difference in oil production yield from a plantation-grown palm to one that grows in the wild is a 5:1 ratio.
Now is the time to grab the Opportunity!
Anyone from the South-South and South-East States looking for where to invest should consider going into the production of palm oil and kernel. Now is the best time to invest in the industry, after the several years of neglect. You can join by starting small; processing raw palm fruits and kernels and obtaining supplies of raw materials from those farmers already cultivating oil palm trees. Or you can even start from the grassroots, cultivating the palm trees on small land areas, before integrating unto processing. In the first three years, all the raw material required could be purchased directly from the large numbers of local dealers. Thereafter the farm will provide the necessary raw materials. The trees do best in humid tropical climate. The seeds are planted in small containers and are kept separate for about a year until they are mature enough to move into the farm. The plants are then cultivated by farmers until it is time to reap the fruits, usually 30 months after planting. The fruit is then steamed and transported to the pressing machines. Palm plants produce two tradable commodities. The pulp of the tree is crushed to form palm oil while the seed is crushed to form palm kernel oil. Residues from the palm kernel oil are collected as palm kernel cake and used to make animal feeds.
