The apex bank said the move was aimed at identifying “promising approaches” to revitalise the sector and enable the country regain its position as one of the leading global producers of palm oil.
Speaking yesterday during a meeting with the governors of the South-south and South-east states, the CBN Governor, Mr. Godwin Emefiele, noted that Nigeria still expends close to $500 million on palm oil importation annually.
He also said the CBN will in due course address challenges in the cocoa, cassava, beef/cattle ranching, dairy and fish sectors.
He said: “We are determined to change this narrative. We intend to support improved production of palm oil to meet not only the domestic needs of the market, but to also increase our exports in order to improve our forex earnings.
Present at the stakeholders engagement were Governor of Edo State, Mr. Godwin Obaseki, Governor Udom Emmanuel of Akwa Ibom State and Governor of Abia State, Mr. Okezie Ikpeazu, who all commended the CBN governor for his laudable initiatives towards economic revolution.
However, Emefiele further disclosed that the apex bank will work to encourage viable off taker agreements between farmers and large-scale palm producing companies, adding that loans will be granted through the Anchor Borrower Programme (ABP) and the Commercial Agriculture Credit Scheme (CACS) initiatives at not more than nine per cent interest per annum to identified core borrowers.
He said with an estimated three million hectares of land under cultivation, abundance of suitable arable land, the cooperation of state governments in the oil palm producing zone is desired to make land available to investors with proven financial and technical capabilities, who will be able to support developments of large scale palm oil plantations in the country.
He, however, disclosed that all the states in the South-south and South- east regions have already agreed to provide at least 100,000 hectares for the initiative, which is also designed to accommodate the small holder farmers.
Emefiele also emphasised that the renewed focus by the CBN to support improved growth in the agriculture and manufacturing sectors was “clearly in line with the federal government’s determination to diversify the base of Nigeria’s economy away from a reliance on crude oil, so as to insulate the economy from the vagaries and shocks associated with volatility in crude oil prices.”
He also reiterated the resolve of the bank to deal with unrepentant smugglers who are bent on frustrating its efforts to revive key sectors of the economy as well as create jobs for Nigerians.
He said: “Let me stress that we are not unmindful that our current focus to make life difficult for smugglers of the products being targeted under our intervention will be resisted by unpatriotic and recalcitrant beneficiaries of the status quo.
“We will not be deterred by their criticisms but will appeal to Nigerians to support these initiatives. No doubt, there will be initial pain caused by this new focus, but the medium and long run benefits remain unassailable and glorious for our dear country.”
He added: “Soon every region of our beloved country will feel the positive impact of our intervention in the agricultural sector.
“These efforts we hope will not only enable us to conserve our foreign exchange, but also create jobs on a mass scale. As these measures begin to bear fruits, we are very optimistic that our states will become more economically viable, given the massive economic activities that will occur from catalysing activities in our agricultural and manufacturing sectors.
“Although the economy has recorded some investments in the oil palm value chain over the last three years, these investments fall short of our expectations, and our expected target of self-sufficiency in oil palm production is far from being achieved.
“Prospective investors, both local and foreign, have at different fora identified the factors preventing investments in the sector to include, among others, difficulty in acquiring farmlands and the dearth of long term funding sources at affordable costs.”
According to him, the stakeholders’ engagement had been expanded to include executive governors and other top government functionaries from the oil palm producing states to elicit their buy-in and set a partnership model that would, with immediate effect, stimulate investments in the palm oil plantations, such that within the next three to five years, the global share of the country’s oil palm production would more than double.
“Our ultimate vision is to overtake Thailand and Columbia to become the 3rd largest producer over the next few years,” Emefiele added.
Lamenting the shortcomings of the oil palm value chain, he said: “As some of you may recall, in the late 50’s and 60’s, Nigeria was not only the world’s leading producer of palm oil, it was also the largest exporter of palm oil, with close to 40 per cent of the global market share.
“Today we are a distant 5th among leading producers of palm oil; we barely produce up to three per cent of the global supply of palm oil, with estimated production of 800,000 metric tonnes (MT) of palm oil, while countries like Malaysia and Indonesia produce 25million and 41 million tonnes of palm oil respectively.”
Continuing, he said: “We have also become a net importer of palm oil, importing between 400,000 – 600,000 MT of palm oil in order to meet local demand for this commodity. Despite the availability of over 3m hectares of farmland for palm oil cultivation, production remains low at close to two tonnes per hectare, relative to a global benchmark of 25 tonnes per hectare.
“This is as a result of the maturation of existing palm trees, as some of these trees were planted in the 50’s, as well as low investment in replanting high yielding palm oil seeds. As some of you may know, the usual life cycle for optimum palm production is 25 years.
“Ladies and gentlemen, if we had kept pace with our peers in supporting improved cultivation of palm oil, at the current global market price of $600 per tonne, and an assumed production level of 16m tonnes, Nigeria could have generated close to $10 billion worth of foreign exchange for the country. This analysis does not take into consideration the amount of jobs that could have been created in our rural communities from large scale small holder developments.
“This conversation is indeed important as it forms part of our overall strategy to reduce our reliance on crude oil imports, diversify the productive base of our economy, create jobs and conserve our foreign exchange. Despite placing oil palm in the forex exclusion list, official figures indicate that importation of palm oil had declined by about 40 per cent from the peak of 506,000 MT in 2014 to 302,000 MT in 2017.”