Nigeria’s palm oil imports from Malaysia rises 65.3% despite weaker naira

Nigeria’s Palm Oil imports from Malaysia – a top global producer have surged by 65.3 percent in the first nine months of 2023 despite naira devaluation and local players ramping up production, data from the Malaysian Palm Oil Council shows.

The country’s palm oil import from Malaysia increased to 234,324 metric tons (MT) between January-September 2023, from 141, 786 MT in the corresponding period of 2022. This indicated a 92,538 MT increase.

In June, the Central Bank of Nigeria floated the naira currency to bridge the gap between the official and unofficial rates. Since then the naira has devalued by 62 percent, an incentive for export but a disincentive for importation, according to experts.

“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, said.

“We estimated that our local/domestic consumption is averaging 2.4 million tons in a year, and our first-class developers – Okomu, Presco, and others, do not annually produce up to 800,000 tons.

“If we estimate the pocket smallholder farmers to be contributing up to a million tons, we’d still have a shortfall compared to demand,” Olatujoye added.

According to the United States Department of Agriculture (USDA), the production of palm oil in Nigeria reached 1.4 million metric tonnes (MT) in 2022, a 9 percent uptick from 2020/21 when production stood at 1.28 million MT.

Based on a USDA estimate, local production accounts for around 78 percent of consumption, and Nigeria consumed two million MT in 2021, leaving a deficit of 0.6 million MT between 2012 and 2021.

Also, last week, the apex bank fully liberalized the country’s foreign exchange market by lifting the dollar ban on the 43 items in which palm oil was included.

Palm oil producers, Presco and Okomu which reported bumper earnings following the dollar ban on importers of palm oil might start seeing a decline in demand owing to cheap imports.

Analysts say it is cheaper to import palm oil than buy locally which means the local producers will need to offer more competitive pricing to maintain sales.

Alphonsus Inyang, president of the National Palm Produce Association of Nigeria said Palm oil prices in Nigeria have gone up and have remained the most expensive in any Crude Palm Oil producing country, due to the high cost of production.

“The lack of funding and interest in oil palm production by successive governments has led to the neglect of the sector, and more farmers have lost their livelihood through lack of profit for maintenance/expansion to produce more.”

Globally, palm oil prices fell in August driven in part by elevated seasonal production and abundant global export supplies, the United Food Agency said in its September global food price report.

The solution to the demand-supply gap, according to Olatujoye, “is our ability to convert our forest to plantation development, under Good Agricultural Practices,” as foods like noodles, vegetable oil, biscuits, chips, margarines, shortenings, cereals, baked stuff, washing detergents, and even cosmetics are made from palm oil.

Tags: prices, estimate, Production, Malaysia, palm oil, imports, Nigeria