Palm fruit and palm oil
Nigeria is the fourth largest producer of palm oil in the world accounting for 3% of global production. The Nigerian Institute for Oil Palm Research (NIFOR) estimates that upstream palm oil production is 0.98 million tons.
Groundnut is second largest source of domestic edible oil in nigeria
Groundnut is second largest source of domestic edible oil. With the assumption of 1 million tons of unshelled groundnut crushed annually, estimated production and consumption of Groundnut Oil per annum is 0.4 million tons. Other oils like Soybean, Cottonseed and Sesame oil, in total contribute to the production of maximum 0.1m MT.
Total domestic edible oil production is estimated at about 1.5million tons.
Considering Nigeria’s population of about 194m [as per FAOSTAT] and per capita consumption of 12.5 Kg per person per annum against the world average of about 20 Kg per person per annum, estimated annual consumption is 2.4 million tons.
Domestic Supply and Demand Gap
Hence, Nigeria has deficit of 0.9 million tons worth of more than USD 800 million.
Mechanisms to fulfill this Gap
Import of refined palm oil / vegetable oil is prohibited and there is a duty of 35% on the import of Crude Palm Oil / Crude Vegetable Oil.
By adopting this policy, country is able to generate employment in manufacturing / refining industry and also supports oil palm plantation by protecting them with an additional margin of more than $300 per ton on and above sales price realized by Malaysia and Indonesia’s palm oil plantation.
2 largest organized oil palm plantations in Nigeria has continuously reported a gross profit margin of more than 50% and operating profit in the range of 30-40%. In the year 2016, while the economy was in recession, inflation was sky rocketing, these palm oil porocessing companies has booked best ever performance, reported gross profit margin more than 70%. On an absolute basis this represents a gross profit margin of 280,000 Naira per ton on CPO sales price of 400,000 Naira per ton – which is highest in the world.