…If production fails to improve
Nigeria’s vegetable oil importation is projected to gulp N1.04 trillion ($2.07 billion), if nothing is done to improve production in the next ten years. MSMEsToday can authoritatively report based on information available to us the Fostat agricultural outlook for the period of 2020-2029.
With international vegetable oil average price of $775.7 in the last ten years, Nigeria spent a total of $1.08 billion on importation of 1.39 million tonnes of vegetable oil. This is projected to increase to $2.07 billion with the increase of 62% in importation in the next ten years all things being equal.
The report revealed that Nigeria importation of vegetable oil would grow by more than 62% from 1.39 Metric tonnes in 2020 to 2.25 metric tonnes in 2029. This represents 15% of the total projected Africa countries vegetable oil importation during the period under review.
Over the years, Nigerian oil palm industry have produced both low and high quality palm kernel oil. Together these account for 74 percent of total vegetable oil consumption in the country. However, due to shortfall in production and domestic market, the country requires an annual importation of about 300,000 metric tonnes to meet the shortfall.
According to fostat report, vegetable oil production was responsible for only 56.45% of the total vegetable oil consumed in year 2020. Though, Nigeria being the leading countries in vegetable oil production among other Africa countries still need to improve production to reduce expected spending on vegetable oil production. The country’s production is projected to grow by 14.22% in the next ten year to 1.94 metric tonnes from 1.70 metric tonnnes in 2020. The country will need to put more efforts in production by adding almost 300,000 tonnes to meet the projected importation levels. About 20 percent of the oil produced is considered to be of high quality and passes 17 quality tests that make it exportable. Nevertheless, the domestic market prefers the ‘tangy taste’ of locally produced oil, which contains a high amount of free fatty acids (FFAs) and has high iron content.
In term of consumption, Nigeria consumes an estimated 1 million tons of vegetable oil annually. However, the report shows that, a total of 3.01 million tonnes of vegetable oil was consumed in 2020 and expected to increase by 36.31% to 4.11 million tonnes by 2029. Considering the average international price of vegetable oil of $775.7 per ton in the last ten years, it depicts that Nigerians spent a total of $2.34 billion on consumption vegetable oil during the period of last ten years.
The fostat report shows that, price of vegetable oil per ton will reach $921.8 in the next years and that Nigeria’s vegetable oil consumption projected to grow by 36% to reach 4.11 million tonnes, this indicates that a total of $3.79 million will be spent by Nigerian on vegetable oil by 2029.
There is urgent need for improvement in vegetable oil production if we are to save the huge and scarce foreign exchange on importation of vegetable oil. To achieve this, will be for government to aim at policies that will assist in increasing palm tree plantations and productivity in the country. Subsidize hybrid seedlings has to be distribute to farmers to replace the low-yielding and old trees. Although Nigeria’s palm oil production has shown some response, production deficit remains high at about 300,000 tons per annum. As a result, the country imports palm oil to satisfy local demand.
