Economic Importance Of Oil Palm Farming That You Need To Know
Economic growth and prosperity are central to long-term poverty alleviation for social and environmental sustainability and as far as Agriculture is concerned Palm Tree Farming still takes the lead.
Oil palm is one of the world’s most important oil crops which has boomed during the last few decades due to the rising global demand for vegetable oil; and will likely continue to increase in the future.
In many situations where oil palm was recently expanded, farmers switched from food or other cash crops to cultivating oil palm. Elsewhere, fallow land or forests were converted to oil palm plantations.
Numerous studies in different countries showed that oil palm cultivation has contributed considerably to rural economic development and the expansion of oil palm has brought about significant income gains for farmers, laborers, and other people involved in the supply chains, including traders, intermediaries, and small-scale processors. It also represents one of the most effective avenues for;
- Poverty alleviation,
- Food security,
- Ensuring economic stability in Nigeria.
- Creation of employment opportunities for both skilled and semi-skilled people.
For many tropical countries, palm oil is an important contributor to gross national product and foreign exchange earnings. In 2018, the total value of the international palm oil trade amounted to US$30 billion, with Indonesia and Malaysia being the biggest exporters.
Recent Indonesia’s surprising ban on palm oil exports offers Nigeria a lucrative opportunity to plug the gap in the international market, knowing that Nigeria was once the world’s largest palm oil producer but today, it produces too little than its imports.
The ban exposed Nigeria’s fragile dependence on oil imports and its glaring inability to provide alternative supply to international buyers in a market it once led.
All thanks to the government who launched a $500 million plan to increase funding to producers of oil palm through low-interest loans, to raise domestic output by 700 percent by 2027.
The result has been relatively better but weak as Palm oil production rose from 955,000 metric tonnes in 2015 to 990,000 metric tonnes in 2016, and 1 million metric tonnes in 2017. In 2018 and 2019, Nigeria’s palm oil production averaged 1.1 million metric tonnes, and then it climbed to 1.2 million metric tonnes and 1.4 million metric tonnes in 2020 and 2021 respectively.
According to the Central Bank of Nigeria, if Nigeria had maintained its market dominance in the palm oil industry, the country would have been earning approximately $20 billion annually from the cultivation and processing of palm oil as today.
However, few organizations in Nigeria have been able to sustain Palm Oil Production such as Okomu Oil Palm Company and Okitipupa Oil Palm PLC. This organization has been able to develop responsible tropical agriculture through its activities, with key initiatives that ensure positive and long-term economic performance, social welfare, health, security, and natural resource management.
Now, Flap Multipurpose Cooperative Society has introduced Palm Tree Farming in Ketu Epe, Lagos, PalmRich Estate. This allows individuals who are interested in contributing to the economic growth of the country, to own their Palm Tree Farm which they might consider establishing a palm oil producing company.