WHY PRESCO and OKOMU OIL is still a GOOD STOCK to watch out for this year..
the vision of the Central Bank of Nigeria (CBN) which is pursuing a policy of reviving the oil palm arm of the agro-business sector in Nigeria. It is obvious that the demand for palm oil in the global market is healthy enough to encourage any businessman desirous of investing in the sector that has proved to be even more profitable than oil and gas.
It goes without saying that oil palm business is sustainable in the long run because it is renewable unlike hydrocarbon which is a wasting asset. It is from this perspective that the present administration in CBN took the bull by the horn as part of its effort to return agriculture to its pride of place as a major economic activity that once buoyed the economy of the country.
It is pertinent to observe that Oil Palm supply gap is estimated at 1,250,000 metric tonnes. This is even as local demand is estimated at 2,500,000 metric tonnes and local production is 1,250,000 metric tonnes. It is, therefore, germane to point out why the apex bank is so committed to bringing back the lost glory of the sector that financed the major infrastructure in the south, especially, the South east in the colonial and immediate post-colonial era in the country.
CBN’s intervention in the Oil Palm value chain, in our considered opinion, is aimed at increasing production from 1,250,000 metric tonnes to 2,500,000 metric tonnes by 2028 through the cultivation of approximately 350,000 hectares. The overall policy objective is to meet local demand for palm oil and its derivatives and at the same time improve local processing quality and standards; conserve foreign exchange reserves; create jobs and enhance the skills of Nigerian people along the oil palm value chain; facilitate easier access to funding for palm oil majors, Small and Medium Enterprises (SMEs), and smallholders in a way that will improve and grow the economy.
Information available to this newspaper indicate that the key value chain development activities in the sector which the CBN is deliberately pursuing involves the funding of oil palm majors and SMEs towards plantation development and mill construction and upgrade.
It also includes a policy thrust to develop the out-growers framework for implementation, pursue a pilot scheme of the out growers’ scheme and facilitate land allocation to investors by state governments. It is instructive to point out that there are ongoing discussions between moribund oil palm estates such as Adapalm in the South east and possible investors. So far 170,000 hectares of land has been allocated to investors across 11 States.
For instance, the Edo State Oil Palm Program (ESOPP) launched by Godwin Emefiele in 2019 is expanding. So far, a total of 65,000 hectares have been allocated by the state government to oil palm investors while the CBN has provided funding for the projects in the State to the tune of N51.29 billion. On its part, the Ondo state government has flagged-off its Red Gold Project. The state allocated a total of 54,000 hectares to oil palm companies and is supporting smallholder farmers towards the cultivation of a total of 6,000 hectares across three senatorial districts, in phases. The support is in form of providing ISPO, a government certification scheme issued through a ministerial regulation and as such is legally binding. The farmers have commenced nursery development, part of which commenced last year and will be transplanted to the main fields this year.
Other states are also having talks with CBN through their Deposit Money Banks (DMBs) towards accessing facility for oil palm development by small holder farmers.
Already, industry watchers are mapping out plans, projections and forecasts for 2022 and beyond with the hope that 350,000 hectares will be cultivated by 2028 as expected. In the final analysis and within the period under review, that is to say, total approved disbursement to Oil Palm Major/SME/Smallholders by CBN from inception of the policy to April 2022, is put at N73.38 billion.
