Manufacturers Urge Agric Minister To Withdraw Ban on Raw Material

Investors and members of the Manufacturers Association of Nigeria (MAN) in the agricultural sector have called on the Minister of Agriculture, Chief Audu Ogbe to help in the reversal of forex policy by the Central Bank of Nigeria (CBN).

The forex policy of the CBN included one of MAN’s most important raw materials, Crude Palm Oil (CPO) on the ‘not valid for forex’ list.

Recently, President of the Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs said that forex should be made available for genuine manufacturers that use CPO as a major raw material for production of end goods such as noodles, biscuits, cosmetics, etc.

According to him, this decision by the apex Bank has threatened the existence of several manufacturing companies who rely heavily on Crude palm oil as a major raw material for production.

“These companies have invested heavily in plants and machinery worth several billions of dollars in the country and what the CBN is indirectly telling them is that it could not be bothered with the challenges this policy is posing to our members,” Jacobs noted.

The manufacturers’ chief further revealed that these companies have been involved in the agricultural sector of the nation’s economy as part of their backward integration program, thereby creating more jobs and strengthening Nigeria’s ability to be self-sufficient in food, beverage and cosmetic production.

Dr Jacobs commended the present administration for its efforts in trying to revolutionalise local industries through this policy; but stressed that there are certain indices that must be taken into consideration before full implementation of such policy.

He explained that while the policy is a welcomed development, there should be no sudden obstruction to importation of the raw material that is needed for local production, especially when demand for such material cannot be met locally.

According to Index Mundi, a data portal, the domestic palm oil produced in Nigeria equaled 930,000 MT in 2014. The consumption of palm oil in Nigeria amounts to 2.0 million MT per annum.

The official figures states that the shortage in oil palm industry is estimated to be around 900,000 MT annually. This poses a very precarious situation for the manufacturing sector that depends largely on CPO as a major source of raw material.

If this shortage is not filled with importation of high quality food grade palm oil, the economy will lose further investment in the manufacturing sector as companies would be forced to shut down and relocate their business outside the country, like it happened in the past.

It is pertinent to note that 90.0% of crude palm oil is consumed by the food industry and the remaining 10.0% is used by the non-food industry. Food products like noodles, biscuits, vegetable oil, margarines, cereals and bakeries, depend on CPO as raw material.

The Noodles industry alone consumes 72,000 MT of imported palm oil and the leading, domestic palm oil producers cannot meet this demand. Nigeria today produces only 1.7% of the world’s consumption of crude palm oil, which is insufficient to meet its domestic consumption that stands at 2.7% and likely to increase in coming years.

Jacobs explained that for Nigeria to meet the shortfall in local usage of crude palm oil and be self sufficient, Nigeria needs a total plantation of 300,000 hectares of land, which presently is not available.

He emphasized that backward integration program is a long and gradual process, and most of the major users of CPO have already embarked on huge investment in plantations across the country.

Palm plantations takes time to come to full maturity before it can be harvested and while this process is ongoing, there must not be a total shutdown of the plants due to inability to access forex to purchase high grade CPO from foreign markets.

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