September 17, (THEWILL) – Despite strict forex restrictions against palm oil, the commodity has remained a major foreign exchange consumer in the Nigerian merchandise trade, data by the National Bureau of Statistics (NBS) have shown.
THEWILL had tracked the trend in palm oil imports in recent times, which revealed continued increase in the shipment of the commodity into Nigeria, a country known for abundant oil palm in many parts of the country.
Besides, palm oil falls under the nation’s foreign exchange restrictions; it is among the 43 import items banned by the Central bank of Nigeria (CBN) for Forex Exchange. This implies that importers sourced their foreign exchange from alternative channels such as the parallel market where the Naira exchanged N750/$ against N467/$ in the then official window – pointing to the important role the commodity plays in the economy
The 2023 Second quarter (Q2) Foreign Trade in Goods Statistics (FGTS) released by NBS recently showed that agricultural imports have continued to increase, with palm oil constituting a major component.
Palm oil imported during the period, from Malaysia, was valued at N19.60 billion. This was 33.9 percent higher than the N14.64 billion worth of the commodity imported, from Cote d’Ivoire, in the corresponding period of the preceding year.
The figure for Q1 2023 was not provided, however, data by the Malaysia Palm Oil Council, however, showed that Nigeria’s palm oil imports from Malaysia rose by 353 percent in the first four months of 2023.
Specifically, between January and April 2023, Nigeria’s palm oil imports from Malaysia increased to 92,961 tons, up to 72,448 tons from 20,513 tons in the same period in 2022. The country imported 227,035 tons of palm oil from Malaysia for the whole year 2022.
The CEO of Palmtrade and Commodities Development Nigeria Ltd, Henry Olatujoye, has been quoted in the news as saying that Nigeria’s oil palm imports from Malaysia will continue to increase in the near term as Nigerian investment in the industry remains very low.
Palm oil is a highly sought commodity among manufacturing and processing firms, which use it as raw material to produce various consumer and industrial goods.
The CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said that the palm oil produced in Nigeria is grossly inadequate, adding that the users would pay any amount to bring in the commodity if it would boost their margins.
“When products are expensive, it has a way of benefiting the producers because they will adjust their prices to maximize their profit”, Yusuf, immediate past director-general, Lagos Chamber of Commerce and Industry (LCCI) said.
An operator of a medium-enterprise palm oil processing firm, Emmanuel Ebong said the NBS figures do not reflect the actual value of the commodity that is shipped into the country. “A large quantity of palm oil is smuggled across the borders, particularly from Cameroun and Benin Republic. It is a huge business among the inland waterway transporters plying between Nigeria and the neighbouring countries. They are the real suppliers to the large manufacturing firms using the commodity”.
The NBS Q2 Trade in Foreign Goods report also revealed that cashew nuts has displaced cocoa as the major agricultural exports commodity, pushing cocoa to the third position after Sesamum seeds.
Previously, cocoa (especially processed and semi-processed) occupied top positions among agricultural export commodities.
Export of agricultural products was dominated by ‘Cashew nuts Shelled’ valued at N57.79 billion followed by ‘Cashew nuts in shell,’ with N55.02 billion and ‘Sesamum seeds’ with N38.32 billion.
By direction of trade, ‘Cashew nuts Shelled’ worth N52.53 billion and N4.05 billion were exported to Vietnam and
India, respectively. Furthermore, ‘Cashew nuts in shell’ worth N34.72 billion and N18.83 billion were exported to Vietnam and India respectively, followed by exports of ‘Sesamum seeds’ worth N13.39 billion and N5.50 billion to Japan and China, respectively.
The displacement of cocoa by cashew nuts in the agricultural export priority points to a major challenge in Nigeria’s cocoa production which experts have drawn attention to.
In a document titled, “Addressing the Challenges of Cocoa Production in Nigeria”, by the Managing Director, Sunbeth Global Concepts (SGC) – a commodity trading firm – Olasunkanmi Owoyemi, noted that Nigeria’s cocoa production is on the decline.
“Nigeria may be the fourth largest producer of cocoa globally, only trailing behind Ivory Coast, Ghana, and Indonesia, but its output is still comparatively low. Ivory Coast produces 2,200,000 tonnes of cocoa beans annually, while Nigeria’s total annual output is about 340,163 tonnes.
“If any segment of the agricultural industry has shown a potential to improve the country’s economy and contribute to employment generation, it is the cocoa industry. In the right position, the industry will generate more jobs for farmers and other players involved in the production value chain.
The industry, however, continues to grapple with limiting challenges, such as poor infrastructure, inadequate research and development, the lack of funding for farming startups, dearth of mechanised farming techniques, poor education of farmers, aging farmers and the lack of protection of local industries, all of which hamper its potential.”:
Owoyeme noted that despite this decline, cocoa remains the country’s principal non-oil foreign exchange earner. The declining price of crude oil continues to provide momentum for conversations about economic diversification into sectors such as agriculture. If any segment of the agricultural industry has shown a potential to improve the country’s economy and contribute to employment generation, it is the cocoa industry. In the right position, the industry will generate more jobs for farmers and other players involved in the production value chain.
To address these challenges, there is a need for collaboration between the government and private sector for investments in infrastructure development. Plus, rural cocoa-producing areas should receive higher priority during the execution of infrastructural development projects.