Nigeria imported 304,043 metric tons (MT) of palm oil from Malaysia in 2023, up from 227,035 MT in 2022, indicating a 77,008 MT increase or 34% increase, data from the Malaysian Palm Oil Council (MPOC) has shown.
This is despite the devaluation of the naira, import duty of 35 percent and increased local production of the crop.
“In Nigeria, the palm oil market size is huge and growing. Local producers are not able to satisfy the requirements of the food industry and households,” the MPOC said on its website.
“The major factors that drive palm oil usage in Nigeria are the level of customer demand provided by the growing Nigerian population and the international price of crude palm oil,” it added.
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According to the United States Department of Agriculture (USDA), palm oil production in Nigeria grew by 9 percent from 2020/21 to 1.4 million metric tonnes in 2022.
However, local production still fell short of demand, with Nigeria consuming two million metric tonnes in 2021, leaving a deficit of 600,000 metric tonnes. This indicates that while local production has increased, it has not kept pace with the country’s growing demand for palm oil.
In the face of years of stagnant output growth and growing local demand, Nigeria’s production deficit has widened considerably, and on average, over the last five years, around 25 percent of yearly domestic palm oil consumed in the country was imported.
“A decline in the international price of crude palm oil always leads to increased imports of palm oil, as well as smuggling from neighbouring West African countries,” MPOC said in one of its reports.
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“Despite paying an import duty of 35 percent, Nigeria importers are not discouraged from importing more palm oil from Malaysia and Indonesia as the demand is always there and imported palm oil is still cheaper than locally produced palm oil,” it added.
According to the Plantation Owners Forum of Nigeria (POFON), 80 percent of palm oil planted areas are either wild trees or managed by smallholders and medium-sized plantations with an estimated oil yield of fewer than 0.5 tonnes per hectare.
Twenty percent of the planted areas are managed by commercial estates with an estimated oil yield of 1 to 2.3 tonnes per hectare. This gap in production and demand had led to Nigeria being a net importer of palm oil to satisfy local demand.
“For the record, the highest volume of MPO ever imported by Nigeria was 384,000 MT registered in 2011,” the South East Asian Council said.
