Contact to us

creekvibes… best design news magazine in Lagos.

Mobile or watsapp: 08144076201, PR, Damage Control, News Circulation

Niger Delta Oil Palm Fruit Byproduct Enterprise


By Ikechi K. Agbugba (PhD),
Full-time Lecturer/Researcher,
Dept of Agricultural & Applied
Economics
Rivers State University, PMB 5080
Port Harcourt City, Nigeria
Email: ikechi.agbugba@ust.edu.ng


Niger Delta is known for its oil palm production activities and has participated in oil palm product trade in the 1960s. It is mostly situated in the Southern region of the country and has a network of creeks that occupies the southern part of the state, and the northern area comprising of thick forests and farmlands. The region is endowed with great natural resources. Majority of the people are farmers due to large landscape available to them, and so they take farming as an integral part of their occupation (NIFOR, 1995).
Oil palm no doubt originated from West African of which Nigeria was once a leading producer. Some sources have reported that oil palm rehabilitation scheme was set to proceed with replantation of 24,282 hectares for the 1962-1968 development plan. By 1966, only 20,215.17 hectares was replanted through efforts of 4,315 participants on the average of 4.68 hectares per participants. This showed a deficit balance of 4,066 3 hectares unplanted, whereas countries such as Malaysia and Indonesia exceeded in their planned planting targets, and Nigeria has never reached her planting target of oil palm.

The declining productivity and production of oil palm over the years has deemed it necessary to carry-out an in-depth investigation. The share of oil palm contribution to Gross National Product (GNP) has equally suffered a setback or decline. Estimated production and demand for palm oil in Nigeria, shows that demand for it exceeded its production.
A dense population of wild oil palm groove in Rivers State of about 125 stands per/ha is recorded. Dense grooves have disappeared; and this has led to indiscriminate felling down of oil palm trees without replanting. Consequently, outputs of palm oil and palm kernel oil has been low. However, Nigeria has become a net-importer of palm oil (USDA, 2015). It appears that neither large-scale monocultures nor small-scale holdings seem able to provide answers to insecurity problems of palm oil in Nigeria. Smallholder farmers who constitute the bulk of oil palm producers seemed not to be adequately involved. Thus, they have continued to rely on wild oil palm grooves. This seems to have negative effects at increasing production of palm produce.


In view of the foregoing, the following questions become pertinent. What are the socio-economic variables affecting the productivity of oil palm? What costs are involved in the production of oil palm? What factors are responsible for the declining productivity of the oil palm industry? How can the declining production in the oil palm produce be improved.
However, the widespread acceptance of palm as cooking oil, as well as industrial oil means higher demand for the product than other oils. Besides, the presence of carotenoid in palm oil makes it very valuable. Carotene is precursor for vitamin A, which is very vital for remedy of night blindness (National Research Development Corporation, 2003). Palm oil is used in the homes as cooking oil, in industries; in the manufacture of margarine, soap, lubricating oils and candles. Palm wine which can be obtained by tapping the trees is used as a very good source of alcoholic drink in many social gatherings in Nigeria. As a matter of fact, both the oil and wine obtained from oil palm have health, medicinal and therapeutic values. In other words, oil palm is a very valuable economic tree crop in Nigeria and provides large quantity of oil and kernels, which in the 1960s, accounted for about 43 percent of its world production. Today, it only accounts for 1 percent of the total global output.
The present monolithic economy as a result of over dependence on crude oil (petroleum) makes it necessary to focus on such economic tree crop like the oil palm. This is because the oil palm was one of the major export crops that provided its economic independence. However, it is believed that oil palm has the potential capacity of properly developing and naturally boosting Nigeria’s economy, using Malaysia as case study (Hartley, 1988; CTA, 2000). Hence, the importance of the contribution of oil palm to Nigeria’s economy and to the nutrition and health statuses of Nigerians cannot be over emphasised.

Oil Palm Development in Nigeria
The development of oil palm has been slow in Nigeria. This is because contrary to the situation in Malaysia and Indonesia, whose production is based on large-scale non-culture, in Nigeria, 80% of production comes from dispersed smallholders, who harvest semi-wild plants and use manual processing techniques. Until now, oil palm has been grown as a plantation crop in countries with plentiful supply of low-cost labour. It is however, expected that future labour costs will rise in order to maintain the profitability of oil palm growers, so as to obtain an increased selling price for oil, increase yields by a comparable amount or reduce labour requirements by doing the work efficiently. The oil palm has a main advantage over other oil crops in that it is perennial plant, and thus, in contrast to annual crops gives complete ground coverage and efficient light interception through the year. Also, as a tropical crop it has a longer growing season even in area with moderate dry season than the temperate crops.
The greater part of the oil palm industries in West Africa is still dependent on the exploitation of many semi-wild groves. The rate of extraction efficiency in Malaysia today is considered to be higher than that of most palm oil producing countries.
An aspect of development in any sector is the policy thrust. In Nigeria, the policy thrust on oil palm development was poorly conceived. Increase in the export of oil palm products is dependent on the policy measures affecting the essential stages of industry-research in cultivation, processing, transportation and communications.
Also, in Nigeria, 80 percent of production comes from dispersed small holders who harvest semi-wild plants and use manual processing techniques

Social and Economic Benefits of Oil Palm
Oil palm is a tree crop which has both social and economic value (Usoro, 1974). The social significance of the oil palm tree arises not only from the palm wine Drink at social gatherings but also from local customs which govern the various uses of the tree’s products. Okiy, Nwawe and Ikheloa (2006), observed that the benefit of oil palm cultivation is the generation of employment (planting, maintenance and harvesting). Although employment generation reduces social unrest, Wakker (2004), reported that extensive cultivation of oil palm plantation can lead to Deforestation and loss of biodiversity in forest areas converted since many have replaced. Community forest gardens and agricultural lands. Soil erosion, spills and dumping of Palm oil mill effluent are especially problematic; it is the most polluting rural industry in South-East Asia.
Oil palm products have made significant economic contributions to the export trade in Nigeria. Reports have recorded that the significance of palm oil and palm kernel exports in the Nigerian economy stems from two factors. First of all, the contribution of the industry to its export earnings; and secondly, the fact that export production of palm products is a major source of income to a reasonable and substantial proportion of the rural agricultural population in the Southern States of Nigeria. Idachaba (2005), noted that in the 1950s and 1960s, Rivers State was a major producer and exporter of palm oil and palm kernels which were major products of oil palm. Hartley (1988), observed that in1975 to 1985 during which coconut oil stood still, export availabilities of oil palm oils. Importantly, the yield of sap depends on the extraction method used and the age of the tree. Slightly fermented, the sap becomes palm wine. Complete fermentation processes followed by distillation, yields edible industrial or pharmaceutical alcohol (CTA, 2000). More so, palm wine product, which is bottled and sold can be packaged for export (CBN, 2018).

Important Findings
Respondents’ Socio-Economic Features

With respect to their sexes, findings from research carried-out indicated that majority (60.4%) of the respondents are females, while the rest (39.6%) are males. Traditionally, the female-folks are household keepers and great farmers who most often do not necessarily migrate to the cities in search of white-collar jobs. According to an International Labour Organisation (ILO) report, more than 67 per cent of African women work in agriculture, and are mostly smallholder or subsistence farmers. Importantly, fewer than 1 to 5 working class women in sub-Saharan Africa receive regular wages or salaries (USDA, 2015). In order words, more women participated in production, harvesting, storage, processing and marketing (Ejionwu, 2018).
Regarding age, the modal class in the age distribution of the respondents was 31 – 50 years (67.7%) and are the active work force exhibiting that vast experience in life. The profession’s requirements for innovation and physical strength make it ideally suited for those in this age bracket. However, respondents less than 31 years were 13.5%, while respondents above 51 years were 18% and are said to be in less active stage.
Regarding respondents’ marital status, the findings showed that majority (78.1%) were married 15.6% of the respondents were single. A good number of them get married in other to expand their family sizes and share household responsibility; hence, they reduce the number of hired labour. Married persons are more likely to indulge in positive and income generating ventures than the single ones and are consequently more responsible. The rest (4.2% and 2.1%) were either divorced or widowed, respectively.
Regarding respondents’ level of education, majority (86.4%) of them recorded as having at least a secondary school certificate, an indication that the respondents were literate. Educational level is a strong determinant of adoption of new technology by farmers. This may be the reason why more respondents use (adopted) modern technique for processing.
Regarding their occupation, majority (38%) of the respondents were farmers. The rest were (17.7% and 14.5%) were either students or civil servants, and engaged in processing of oil palm fruits.

Respondents` Years of Experience
Regarding respondents’ number of years of experience, majority (38. 5%) of them have engaged in processing for 11-15 years. About 16.7% and 28.1% indicated 1-5 years and 6-10 years, respectively. The least farming experience with 16.7% was 1-5 years. The result showed that the people were experienced farmers. The long years of experience may have helped them to acquire wealth of knowledge as well as been able to identify and overcome the barriers they faced.
Regarding respondents’ household size, majority (61.5%) of the respondents had household sizes of 5-8 persons, the rest (25%) having 1-4 persons, 7.3% of the respondents had 9-12 members, while the rest (6.3%) of the respondents had greater than 12 members. Though larger household size may help in family labour, the larger the family size, the less the quantity of food availability to each person in the household.

Profitability Analysis
Gross margin is a proxy for evaluating the profitability analysis of an enterprise and used when fixed capital is negligible. In other words, it is the difference between revenue and costs. The costs include variable costs such as daily tax payment, cost of purchases of products, transportation cost, to mention a few. For this study, gross margin analysis is used in measuring the profitability or performance of palm oil production in the area of study.
From the finding, the business recorded a gross margin of five million eight hundred and forty-nine naira, one hundred and twenty-four kobo (N5, 850, 100, 24 or 1616049.77 USD). This indicated the profits made from oil palm processing enterprise. The average profits per person was sixty thousand, nine hundred and twenty-eight naira per trip (N60,928.00 or 168.31 USD). However, if four trips are made weekly, the average profit is two hundred and forty-three thousand seven hundred and fourteen naira (N243,014.00 or 671.31 USD).
The study was conducted to examine the economics of small-scale Oil Palm fruit byproduct Production in Ogba, Egbema and Ndoni Local Government, Rivers State. The study revealed that the age of oil palm processing farmer is concentrated between the ages of 31 and 50 years (67.7%). This means that there are active participants and perhaps more of who are physically least able and who show interest in oil palm production. The study also found that an (average of N60,928.00) is being carried from oil palm producers majority of oil palm producers, up to 62.5% are full-time farmers. The implication is that as oil palm produces in the area has oil palm production as sole business.
The profitability analysis shows that the oil palm production (processing) is a profitable venture. This is further confirmed by the gross margin (GM) analysis which has a margin of N5,849,125. The study also found out that production has not been able to keep pace with consumption demand. It does not show proportionate increase of output of the extent that is will meet up local demand.
A major constraint apart from financial support is processing. Processing is being done by local processing method which an individual spends an (average of N8,720.37) per labour (man/day: milling/pressing/packing/clarification), this has contributed to low yield of palm oil. The main problem has been that of inadequate financial support and other incentives to boost palm oil production.

Conclusion
Oil palm production is a profitable venture which must be encouraged and at the same time it is capital intensive and majority of the farmers still operate their production on a small-scale in Niger Delta. The crop has been a major player in Nigeria’s export business before independence and will continue to grow and develop the economy. It is therefore, adequately considered a major economy-builder from the agriculture sector level, a huge employer of labour and catalyst in the development of the manufacturing industries. However, due to the locality of the mills, the government should also improve the condition of feeder roads, which will ease transportation problems, social amenities such as electricity, which should be regularly supplied as it will enhance pipe borne water supply as provided in areas where oil is processed as it will facilitate palm oil production.

Recommendations
Based on the findings, the following recommendations were made:
(i) Solid researches and development projects on Oil Palm production and processing similar to those carried-out in Malaysia, Indonesia and other South Asian countries should be undertaken and further backed-up by a conscious desire to implement the findings.
(ii) Proper packaging and storage of extracted oils would encourage the slow-down chemical deterioration (rancidity), which could occur in poorly processed palm oil from oil palm factories/refineries. This therefore, becomes relevant because improper storage has led to sales of palm oil with foul odour in the market.
(iii) The need for credit policy to offer credit assistance to oil palm producers particularly the purchase of processing equipment for distribution purposes to small-scale oil palm producers should be undertaken by government at all levels in Nigeria. This is because a producer processing 300 quality of oil palm bunches spends an average of N528,125.00 for equipment (an aspect of fixed cost).