December 22, 2021

Steering sustainable palm oil production in Southern Nigeria

Oil palm serves as an important commodity for both producers and consumers in Nigeria. Not only is it one of the world’s largest palm oil producers, but Nigeria is also the largest consumer of palm oil in Africa! Since time immemorial, palm oil forms a key ingredient in West African cuisine. However, despite its importance, the oil palm industry in Nigeria is plagued by an array of challenges.

Mainly produced by small holder farmers who lack the required skills to produce sustainably, low on-farm productivity, low-quality fruits, and lack of consistent buyers are among the major challenges they face. Being highly perishable, Fresh Fruit Bunches (FFBs) are often sold to small-scale processers at low prices after harvest. Local processers employ inefficient non-mechanized processing practices resulting in low oil extraction rates - below 10% per ton of FFB. In addition, using manual mills poses a risk to food and human safety as well as producing poor-quality oil.

2SCALE, in partnership with Okomu Oil Palm PLC- one of Nigeria's leading vegetable oil producing company is steering the development of an inclusive value chain. Since its inception in 1976, Okomu has always relied on its oil palm estates for the supply of raw material. However, with a growing population and increasing demand for oil palm products, these estates can no longer meet Okomu’s demand. As a result, part of its inclusive agribusiness agenda is to integrate about 5,000 smallholder oil palm farmers into its supply network. This will not only meet the company’s growing demand for high quality oil palm products but will also provide a stable market for the small holder farmers. Mr. Billy Ghansah, the Agriculture Coordinator at the Okomu Oil Palm factory explains:

For 30 years now, it has been part of our agenda to integrate smallholder oil palm producers into our supply chain. Our desired approach is to build a sustainable relationship with local producers and to create a transparent pricing mechanism whereby prices are linked to the world oil palm market prices. By filling this existing supply gap, we will have quality raw material and enhance livelihoods of smallholder oil palm farmers. This is important for us especially at this point since we are in the process of constructing two new oil palm mills within Okomu’s estates.

In partnership with 2SCALE, Okomu Oil PLC has made great strides to establish relationships with farmers.

Currently, we have 2,867 smallholder producers in our database, with an average of 160 trees each,

adds Mr. Billy.

As part of the capacity building, these farmers are undergoing continuous trainings to improve production and harvesting techniques. However, harvesting is a skilled job, and the plan is to train and employ young men who will harvest for the small holder farmers at a fee.

Sustainable palm oil production: the new normal

Oil palms should ideally provide a constant yield, as each individual palm produces harvestable FFBs every two weeks. This proves that with modern on-farm practices and stable, competitive markets, it is a viable agribusiness venture for farmers.

Mr Isaac Ode is a lead farmer from Urhenzen cluster in Edo state. His parents were rubber and cocoa farmers. However, a common phrase in his village made him venture into oil palm instead. He narrates,

Money does not grow on trees; it grows on oil palm trees! this was a popular phrase I heard from villagers when I was still young. I can attest that it is true since in my career as a Financial Auditor, I realized that oil palm farmers made significant profits compared to any other agricultural commodity. With this information, I bought my first oil palm trees in 1982. I planted the Dura variety and have in the past year planted 1,100 Tenera variety which I received from Okomu on credit.

In the past, Mr. Isaac sold the FFBs to women traders in the local market. However, prices are unstable especially during the peak season when production is high, and markets are flooded with produce. High transportation cost is also a challenge that led him to acquire a manual mill as he explains,

The fruit bunches are bulky. It is thus costly to transport them to the market. This challenge made me acquire my own manual mill to ease the burden. Despite having low extraction rates, it was a viable solution since there was no consistent buyer with competitive rates to buy the produce. However, the agreement with Okomu has provided a solution to a challenge we have faced for decades. They collect the fruit bunches from our farms and the prices are dependent on the international market prices. In addition, we can now access quality inputs on credit and repay during the harvesting period.

Improved livelihoods: a joy for the women

Harvesting, transportation and milling are time-consuming and labour-intensive processes. While harvesting is mostly done by men, the processing is a woman-led activity. It involves repetitively boiling and filtering the fresh fruits with water to extract oil, while palm kernel oil is obtained by rigorously cracking the palm kernels to get the oil.

45-year-old Mrs Victoria Pius is one of the women who for years has processed palm oil. Although the sales made provide a livelihood for her family, she attests that the process is very tiring and time-consuming. She narrates,

My husband acquired oil palm trees when we were still young in our marriage. However, the process of extracting oil is very tiring and takes a lot of time. Despite all the effort, prices in the open market are unstable but we sell to make ends meet. However, the collaboration with Okomu has come to solve all these challenges. They come and collect the fruit bunches from our farm and are very open in the pricing formula they use when purchasing from us. As a woman, I am particularly relieved that I no longer have to spend hours processing oil!

For Victoria and her husband, they purchased 200 seedlings of the Tenera variety on credit in the past year.

My husband and I know that the Tenera variety is more productive than the traditional variety we currently have. Having completed repaying for the 200 seedlings we got from Okomu, our aim is to buy more seedlings in the coming months to further increase on yields,

She adds.

The support of 2SCALE towards integrating smallholder farmers into Okomu’s supply chain is a key step towards building an inclusive oil palm value chain in Nigeria.

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