The past six months have meted on Nigeria the dire consequences of investing all (or most) of its wellbeing on revenue from crude oil exports. With the crash of global oil prices sending Africa’s number one producer of the product into financial austerity, the continent’s largest economy is now in a desperate search for new sources of revenue. One agricultural scion believes the answer could lie in another kind of oil– one with which the world’s most populous black nation is also abundantly blessed. Abdul Oroh is the Commissioner for Agriculture and Natural Resources in Edo, one of the states in Nigeria’s oil producing Niger Delta region. Unlike its neighbours, Edo is not richly blessed with crude oil reserves, but for Oroh, the palm oil in the state as well as its other agricultural resources, are more than enough to tap from. The state’s palm oil resources is attracting investors, among them Dufil Prima, makers of Indomie Noodles, which is pouring in $600 million into Edo’s palm sector. In an interview with Femi Adekoya published in national daily the Guardian, Abdul makes a case for palm oil as an able alternative to crude, stating that it can generate even more export revenue. Here is an excerpt of the interview:

What is driving investors’ interests in the rice and oil palm industries in Edo State?

Nigeria has a huge population and a market but we import huge volume of rice especially for a commodity that has become a staple food for humanity. From China to the United States and to the whole world, their primary food is rice so is Nigeria. Although we eat a lot of cassava based foods too, but virtually everybody eats rice and we spend a lot of money either importing it or getting it smuggled into our country. Today as we speak, a tonne of crude palm oil is about $700 ($83 per barrel) and the value of crude oil is about $46. For us, we are not panicking in Edo State because we are not dependent on oil. We want to develop agriculture and this is an opportunity for us.

How come there is still a demand-supply gap in the oil palm industry despite the huge potential of the industry?

The problem is that people in Abuja still keep giving waivers to importers and I also know that they are giving out these waivers because the propensity to import is still there and there is a supply vacuum ‎which means what is produced locally cannot meet the demand. So even if we double or triple our local production now, we probably will still not meet the local demand.

What is your assessment of federal government’s backward integration policy?

Well, to have a backward integration policy is not a bad policy. I just told you the price of crude palm oil but I have not told you about palm kernel oil which is almost twice the amount of crude oil palm and not to talk of the vegetables that we eat. Presco generates about 95 per cent of electricity from palm kernel oil waste. We commissioned the plant sometime last year and they are even flaring some. They do not depend on PHCN and they also distribute power to some of their communities while the remaining five per cent is diesel. There is so much advantage in putting a lot of investment in agriculture. If we invest in oil palm, production or rice, cocoa and even cassava because of the value chain, we will gain the whole word. We have the advantage of the European Union market and we have an ambition to grow more than we are today.

How will investors help to drive this market?

They will be driving the market in many ways. For instance, investors like Dufil Prima Industries coming into the state are not coming in to learn on the job, they have experience and are already on ground producing Indomie. In fact Nigerians and Americans eat Indomie. Indomie is a very successful brand and the producers of this brand have also diversified into vegetable oil. The advantages are very many and the best way to start is what we are doing presently which is to provide lands for investment in agriculture. Land, labour and capital in elementary economics. We have a fairly educated labour force or trainable labour force. We have a friendlyiInfrastructural base ‎where most of our rural areas are connected with accessible roads. So, with their experience in other countries and Nigeria, and their capacity to raise money from the banks or from international community to invest, the sky is our stepping stone. All we need is just to give them incentives, security, lands, visible co-existence and according to the Governor of the State, once we see that you are serious, we will give you a free certificate of occupancy, but I also expect the federal government to give their own incentives. We do not control international trade as a sub national state, we do not control waivers and imports, we cannot guarantee a loan for investments, only the federal government can do this under their various promotional schemes. We expect that if the federal government is serious about the agricultural transformation schemes, they should be able to support industries to grow. We do not have time to waste as a nation.

What seems to be the challenge in Nigeria’s processing industry, especially the agro-allied value chain?

People still do their garri, lafun, starch and the rest, but we are talking about cassava to produce ethanol, quality flour, pharmaceutical products, sweetners, but all the industries are not here. The promise to get Chinese to establish industries have not been fulfilled even after we gave land to the federal government. The money they said they are going to set aside for the local millers is yet to materialized too. As for the oil palm industry, like I said if you plant cassava today, in 8 months you can harvest it, but for you to get the maximum result, within 24 hours, you must take it to the mill otherwise it will go bad, but oil palm is different because it takes about 18 months. Clearly, the market is big, open and wide for investments. We do not need to be importing vegetable oil from anywhere, people should import from Nigeria. We need to make Nigerian oil the benchmark for the world market. I will advise that anything we can produce must be encouraged so that we can produce more. In this modern world of globalisation, you cannot impose total ban on import, but I believe if we are producing sufficiently, the market forces will determine whether to import or not, but because we are not producing enough we have to import. If people know they can get palm oil in Edo State, why will they want to import from Malaysia.

What is the level of investment being expected by the state under the current drive?

We are looking at a $1.5 billion, with a company like Dulfil Prima accounting for about $600 million. This is just the beginning. Other investors are also willing to spend $30 million and some are planning to start small while some plan to start big. They are ready to start off in a big way and we know that when we finish the paper work with Dulfil, they also have the capacity to come out in a big way. The good news is that we have a government that is trusted by the people because they have seen developmental changes in the State and they yearn for more.

http://www.ventures-africa.com/2015/01/forget-crude-palm-can-be-nigerias-next-oil-cash-cow/