NIGERIA – Despite facing currency devaluation and an increase in local production, Nigeria experienced a significant surge of 34% in its imports of Malaysian palm oil in 2023, according to data from the Malaysian Palm Oil Council (MPOC).
The country imported 304,043 metric tons (MT) of palm oil from Malaysia in 2023, a substantial increase from 227,035 MT in the previous year, indicating an additional 77,008 MT.
This surge in imports comes as a surprise, given the devaluation of the naira and the efforts to boost local palm oil production in Nigeria.
The exchange rate fell to a new low of N1,460 per dollar at the parallel market, leading to expectations of further weakness due to worsening dollar shortages.
Nigeria continues to import palm oil in large quantities from Malaysia, Indonesia, and neighboring West African countries.
The palm oil market in Nigeria is described as substantial and growing, with local producers unable to meet the demands of the food industry and households.
The factors driving palm oil usage in Nigeria include the growing population and international crude palm oil prices.
Despite a 9% growth in palm oil production in Nigeria from 2020/21 to 1.4 million metric tonnes in 2022, local production still falls short of demand.
In 2021, Nigeria consumed two million metric tonnes of palm oil, leaving a deficit of 600,000 metric tonnes. The production deficit has widened over the years, leading to Nigeria being a net importer of palm oil to meet local demand.
The decline in the international price of crude palm oil has contributed to increased imports and smuggling from neighboring West African countries.
Importers in Nigeria, despite facing a 35% import duty, continue to import palm oil from Malaysia and Indonesia as demand remains high, and imported palm oil remains cheaper than locally produced palm oil.
The Plantation Owners Forum of Nigeria (POFON) indicates that 80% of palm oil planted areas are managed by smallholders with low yields, while 20% is managed by commercial estates.
This production gap has contributed to Nigeria’s status as a net importer of palm oil.
Despite the challenges, Malaysia remains a significant supplier, and the recent surge in imports highlights the ongoing demand for palm oil in Nigeria, driven by population growth and economic factors.
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