4Empty bunches & Palm oil mill effluent Value chain of the oil palm from fruit bunch to downstreamPALM OIL UTILIZATION CHARTFresh fruit bunchMill processCrude palm oilEmpty bunches & Palm oil mill effluentCompoundingRefining & FractionationPalm fatty acidRBD OleinPalm mid fractionRBD StearinShorteningMargarineIce creamFilled milkBiscuit creamBlendingCocoa butter equivalentFryingCookingMargarinesFatty alcoholsFatty aminesFatty amidesBiogas, Fuel briquettes, Animal feeds, fertilizerPalm kernelPalm kernel shell
5The Oil Palm & Economic Development The golden days of the industryExport duty and oil palm produce sales tax revenues provided the bulk of the internally generated revenueThe major source of revenue for the economic development of the defunct Eastern Region of Nigeria.Employment: - about 3,700,000 persons or 70% of the 5,250,000 agricultural workforce of the adult working population of 6,596,000 (of the 1962/63 census) of Eastern Region in 1963 were involved in the processing of oil palm products for exports (Usoro, 1974)Currently, across the oil palm producing states, an estimated 5 million Nigerians are directly involved in oil palm cultivation and processing (Omoti, 2009, 2012).
6High capacity to create employment and wealth - from planting materials to the field to the mill to the market.
7The Oil Palm & Economic Development- Now Provides direct and indirect employment to many Nigerians in related activities such as contracting, supplying, trading, transporting and manufacturing etc.Gross value of the palm oil production at plantation level by the industry at current domestic prices c. N180-N250 billion annuallyStill very significant in terms of the Agricultural GDP of the country.The industry has transformed in sophisticated dimensions globally with diversification of utility of palm produceGlobal value of palm oil is about USD 50Billion
8The Oil Palm & Economic Development Industry is still unsophisticated in Nigeria with dominance of small inefficient producers across the value chainIn Nigeria, the climatic and soil conditions of the Niger Delta best support the oil palm.It is widely exploited both in the wild groves which abound in the region and in the cultivated state in small and large plantations.The region accounts for a very significant fraction of oil palm production in Nigeria (Table 2)Almost all of the large estates and about 84% of small holdings are located in the Niger Delta StatesThe oil palm need to be harnessed to again become a very significant sector of the national economy providing the wealth for economic development and the much needed jobs for Nigeria’s teeming population.
9Table 1. Example of Wealth creation e. g Table 1. Example of Wealth creation e.g. 8,000 ha oil palm plantation at maturity average of 15 years. Adapted from 2012 Annual Report, Okomu Oil Palm PlcWealth createdNTurnover (wealth created)6,400,000,000CostsEmployees + supplies + contractors2,500,000,000ProfitGross Profit before tax3,900,000,000Tax (assume) – Federal Government500,000,000Net Profit3,400,000,000Benefit to StateEmployment (direct + indirect) - no3000Employees PAYE Taxes???Benefit to the Investing PublicDividend per shareN7.00
10Opportunities for varied Actors Across the gender spectrumMen,WomenYouths
11Palm oil demand in Nigeria Population growth rate nearly 3% annually = increasing demandPopulation in 2014 c. 170m (National Census, NPC)Palm oil and palm kernel oil account for about 72% of the Nigeria’s total vegetable oil productionEstimated annual demand for palm oil grew by 5% between 2005 and 2012 vs annual growth of 1 – 2% of palm oil production in same periodImplicit in this is a widening supply demand gapOil World Statistics (2008) estimated per capita consumption of vegetable oil in Nigeria = 12.7kg vs. global average 17 kgBy current projected population, Nigeria’s annual requirement is about 3m MT of palm oilWith estimated total national vegetable production of about about 1.3 million tonnes (all other vegetable oils inclusive) there is a supply demand gap in excess of 800,000 MT tonnesGrowing market for frying oils with growing fast food and noodles industrySupply demand gap is partly met from importation and smuggling across the borders
12Table 2. Estimated Oil Palm Holdings outside the Groves in the Niger Delta States as at 2012 EstatesSmall holders1Abia4,58927,7652Akwa Ibom3,09532,2773Bayelsa1,0832,5004Cross River30,67027,8505Delta6,30015,0006Edo27,85626,0007Imo3,41067,6908Ondo16,16910,1439Rivers18,30055,500Total111,472264,725Total National119,000313,000% of National93.784.6Source: Computations from Omoti (2009) and Omoti & Ikuenobe 2012 Field surveys
13Table 3. States of Nigeria suitable for oil palm cultivation Highly suitableSuitable to Marginally suitable1AbiaAdamawa2Akwa IbomBenue3AnambraEbonyi4BayelsaKaduna5Cross RiverKogi6DeltaKwara7EdoNassarawa8EkitiNiger9EnuguOyo10ImoPlateau11LagosTaraba12OndoFCT13Ogun14Osun15Rivers
14Challenges of the industry Land tenureLow productivity, especially among the dominant small producersLow adoption of technology and innovations among the small producersPoor quality produce of and therefore inability to access high niche industrial markets among small producersHighly capital intensivePoor access to cheap development capitaBridging the demand supply gap - reduction in importsLow re-planting and replacement of moribund plantationsHigh reliance on the groves by the small holdersInconsistent policies on tariffs for imported CPO and refined palm oil
15Opportunities in the value chain to impact production Improvement in the traditional processing methods and wide scale adoption of more efficient processing methodsImprovement on quality of produce to enable small producers enter the industrial niche marketMassive new plantings involving nucleus estates and small holders and out-growers schemes linked to estatesInvestment in down stream processingWide scale adoption of improved planting materialsReplanting of old palms using improved materials from advanced breeding lines.
16Opportunities will anchor on Synergy of the vibrant small holder systems and large estates to increase the area under cultivation through active development of small holder growers and organizing them as out-growers to the nucleus plantations in the statesProviding incentives for large industrial estate developmentBringing the vast natural groves under improved planting through gradual replacement with improved genetic materials .This is strategy of providing land for effectively increasing the area under oil palm in the states without compromising the forest and environmental resources of the states.Enhancing the quality palm produce (palm oil, palm kernel, etc) through efficient milling to meet industrial standards and consequently enhancing marketing.
17The desired futureGovernment support to the industry through provision of rural infrastructure and some incentives which build small holders and support to large nucleus estatesIncreased area under improved oil palm holdingsIncreased productivity among the small holders and small millers through deployment + internalization of improved technologies and reduced cost of production.Higher activity among producers leading to higher direct and indirect employment, including artisan and welders at the village levelDiversification of the value chainHigher income for producers and marketers.Stable , peaceful and prosperous rural sector