NIGERIA – Nigeria, sub-Saharan Africa’s largest economy, is expected to register a 12% rise in palm kernel oil production in MY 2022/23 to about 440,000 metric tons (MT), up from the previous periods 393,000 MT.

This is according to a GAIN report by USDA forecasting that palm kernel seed production reach 1 million MT, up 11% from MY 2021/22 estimate of 900,000 metric tons.

Oil extraction rate is also expected to improve, due to private sector investors improving operation efficiency by upgrading to more modern crushing and extraction equipment and machinery.

In 2016, the Central Bank of Nigeria (CBN) introduced foreign exchange restrictions on palm oil imports to encourage domestic production.

Fast forward to 2021, the Government of Nigeria through the CBN launched a US$500 million loan oil palm producer (i.e., including smallholders and big plantations) program with low interest rates.

The funding program seeks to increase local production by 700 percent to 5 million MT by 2027 through encouraging private investments.

The efforts have started to bare fruits as companies that previously refined imported palm oil i.e., PZ Wilmar, Dufil Pharma Foods, Agri Palm Limited, are currently investing massively in developing large plantations.

Also, existing players like Okomu Oil Palm Plc and Presco Oil Palm Plc have doubled their plantations – production has increased by 100 percent over the past five years.

These companies are also investing in technology to boost extracting and crushing processes.

The sector has also witnessed consolidation of operations with Presco Oil Palm Plc recently acquiring a majority stake in SIAT Nigeria Limited (SNL), for N21 billion (US$50 million) cash.

This follows SNL acquisition of Risonpalm, which owns 16,000 hectares of old palm plantations – including the Cross River State Government’s industrial oil palm complex.

SNL has 17 additional planting sites of 15,215 hectares, with 51% of plantings completed over the past 5 years.

The investments are driven by the high demand of palm kernel oil, which is expected to reach 1.95 million MT during the period under review, up about 10 percent from 1.7 million metric tons of previous marketing year.

Nigeria’s per capita consumption of edible oils stands at 12.5 kilograms compared to the world average of 20 kilograms.

In international markets, the widening between soybean oil and palm oil prices is expanding the demand for palm oil in Nigeria.

To bridge the gap, the West African country turns to palm oil imports. In 2022/23, Nigeria is forecasted to import 450,000 MT from Malaysia, Indonesia, Cote D’Ivoire, and Ghana.

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