Nigeria’s palm oil imports from Malaysia surge by 65.3% despite weaker naira
NIGERIA – Despite naira devaluation and increased local production, Nigeria’s palm oil imports from Malaysia have surged by 65.3% in the first nine months of 2023, according to data from the Malaysian Palm Oil Council.
Between January and September 2023, Nigeria’s palm oil imports from Malaysia increased to 234,324 metric tons (MT), up from 141,786 MT during the same period in 2022, marking a substantial increase of 92,538 MT.
This surge in imports comes in the wake of the Central Bank of Nigeria’s decision to float the naira currency in June, aiming to bridge the gap between official and unofficial exchange rates.
Since then, the naira has depreciated by 62%, making exports more attractive but imports less so.
“Nigeria’s oil palm imports from Malaysia will continue to increase for the time being because our investment in the industry is still very insignificant,” Henry Olatujoye, Managing Director of Palmtrade and Commodities Development Nigeria Ltd stated.
“If we estimate the pocket smallholder farmers to be contributing up to a million tons, we’d still have a shortfall compared to demand.”
According to the United States Department of Agriculture (USDA), palm oil production in Nigeria reached 1.4 million metric tonnes (MT) in 2022, showing a 9% increase from 2020/21 when production stood at 1.28 million MT.
However, local production only accounted for around 78% of consumption, with Nigeria consuming two million MT in 2021, leaving a deficit of 0.6 million MT between 2012 and 2021.
Local palm oil producers such as Presco and Okomu, which reported strong earnings following the ban on dollar imports of palm oil, may begin to face declining demand due to the availability of cheaper imported palm oil.
Analysts suggested that the lower cost of imported palm oil means that local producers will need to offer more competitive pricing to maintain sales.
In addition, Alphonsus Inyang, President of the National Palm Produce Association of Nigeria, explained that palm oil prices in Nigeria have risen and remained the most expensive among Crude Palm oil-producing countries due to the high cost of production.
He also highlighted the lack of funding and government support for oil palm production as factors contributing to the neglect of the sector.
Globally, palm oil prices fell in August, driven in part by elevated seasonal production and abundant global export supplies, as reported by the United Food Agency in its September global food price report.
The solution to bridging the demand-supply gap, according to Olatujoye, lies in the sector’s ability to convert forest to plantation development, under Good Agricultural Practices,” as palm oil is an essential ingredient in a wide range of products.
