Palm Oil’s Bet on Revitalizing the Nigerian Economy

Palm Oil’s Bet on Revitalizing the Nigerian Economy

Palm Oil as they say is a Silent Goldmine. It was a lifesaver in the 80’s and has the potential to help rebuild the oil driven economy that has lost its steering. But how can this happen? This article explores the road map.

Historians believe that the use of palm plants as a food source dates back 5,000 years ago to West Africa. Oil palm trees grow in warm climates that have an abundance of rain and sunshine such as Nigeria, Malaysia and Indonesia. Palm plants produce two exportable commodities.

The pulp of the tree is crushed to form palm oil while the seed is crushed to form palm kernel oil. Palm oil has several applications including cooking, lubricants, candle-making, cosmetics, and can even be eaten prior to being crushed. It is cheaper to produce biofuel using palm oil making it a cost-efficient substitute to using soybeans or other crops.

Palm Oil is in abundance in Nigeria, specifically in Enugu, Imo, Ondo, Edo,, Ekiti, Cross River, Delta, Akwa-Ibom, Bayelsa, Anambra, Oyo, Abia and Ogun States, and these are considered to be the largest producers of palm oil. Palm tree plantations are spread over an area estimated to range from 1.65 million to 2.4 million hectares.

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Palm oil industry is considered the industry that will revitalize the Nigerian economy and reduce its excess dependence on oil. Here is a statement from the Governor of Nigeria’s central bank Mr. Godwin Emefiele about palm oil, “in the 60s, Nigeria controlled 40 per cent share in the global palm oil chain’’. We were exporting our palm oil to different parts of the world, but because we found crude oil, we receded and abandoned it. The price of a ton of palm oil is more than the price of a barrel of crude oil. So, what happened?

“For other countries, when they had the opportunity in agriculture and in the crude sector, they did not let their guards down; unfortunately, we did and that is what we are paying for today. We will grow that market again and after that, we will go into cocoa,” he said. From his statement, the value of Palm oil on the Global market is greater than that of Crude oil (which is Nigeria’s main export)

Here is a detailed price comparison:

  • As of January 27,2020, one barrel of crude oil today sold for about $53.14 which is N1,9263.25 (exchange rate N362.50 = $1).
  • A barrel contains 159 liters. Which means crude oil sold for $0.334 per liter.
  • As of January 24, 2020—Palm oil closed on January 24,2020 at $2,925.00 per ton which is N1,060,312.50 (exchange rate N362.50 = $1).
  • A ton is 1,000 liters. Which means palm oil sold for $2.93 per liter on the international market.

So Where Do We Go from Here?

A liter of crude oil sells for $0.334 while a liter of palm oil sells for $2.93 (almost ten times the value of crude oil). Palm oil is easily produced locally and with the governments drive for more hands in the agricultural sector, this would be the best area to invest money, time and human resource into as it will yield more returns.

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