By Siaka Momoh
Nigeria has invested more than $400 million in Nigerian oil palm industry in the last decades. Compared to what Malaysia is doing, we have only scratched the surface.
In this regard the big opportunity for Nigeria and other developing countries to reap the benefits of the ongoing robust global development for biofuels has suffered a set back.
The United States Environmental Protection Agency’s (EPA) imposition of a trade barrier to renewable fuels from palm oil is the cause of this business hindrance.
And we have a lot of room to do more cultivation. According to Pieter Vandessel of Presco Plc, Nigeria’s Palm oil production in 2010 was 882,400 metric tonnes while total oil palm production was 1.5 million metric tonnes; two million hectares of oil palm is planted in Nigeria and oil palm turn-over in 2010 was $2 billion. And Nigeria has invested more than $400 million in Nigerian oil palm industry in the last decades he said. Compared to what Malaysia is doing, we have only scratched the surface.
At the beginning of its entry into palm production project, palm was grown as an industrial plantation crop, on newly cleared rainforest or peat-swamp forest and not on degraded or abandoned agricultural land which has practically been sucked dry as it applies in the Nigerian situation.
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Since the 1970s, the exposure of land on which oil palm is grown has been stretched in Malaysia and Indonesia to more than 30 fold (Malaysia) and 12 fold (Indonesia), respectively. Yet Malaysia is much smaller in terms of land mass. The country is only one third the land size of Nigeria, with 2006 population figure of about 28.29 million. While Nigeria has a land area of 923.300 square kilometers, Malaysia can only boast a mere 329,847square kilometres. And palm oil can thrive very well in at least 26 states in Nigeria!
The global development for biofuels offers enormous opportunity for greater agriculture investment, particularly in Africa, where there remains a significant potential for expansion and a need for economic development and food security.
The Initiative for Public Policy Analysis (IPPA), the Nigeria-based public policy think-tank, submitted comments to EPA in response to the body’s imposition of a trade barrier to renewable fuels from palm oil.
Citing the importance of the crop to the long-term sustainable development in Africa, IPPA noted that this decision reflects a long-term trend of undermining food security and poverty alleviation throughout the developing world in the interest of protecting domestic producers.
The US has a long history of protecting its producers. Developing countries’ palm oil would pose a threat to American seed farmers and biofuel producers. And while the US and Europe advance the practice of protectionism and trade distortions, African’s small farmers and US consumers will bear the burden of the EPA’s decision.
“Palm oil’s low-cost, high efficiency profile makes the product a popular source of important calories for the African continent, and an ideal crop for development,” wrote Thompson Ayodele, Director of IPPA. “Less land is committed to oilseed cultivation, more can be devoted to conservation and other foodstuffs. Meanwhile, US consumers stand to gain significantly from sourcing this low-cost biodiesel feedstock.
“Over the last few years, a number of African countries have been attracting billions of dollars in investment for the development of domestic palm oil sectors. Local and foreign investment in the sector has continued to gain currency in many African countries. Liberia alone has attracted more than USD $2.6 billion in investment in recent years from countries such as Malaysia and Indonesia, promising millions of dollars in government revenue and bringing more than 35,000 jobs to the country.
IPPA argues: “Unfortunately, amidst increasing demand for vegetable oils for edible and energy purposes has also been the emergence of non-tariff barriers to trade. The European Union’s Renewable Energy Directive has been widely decried by developing countries from Brazil to Malaysia for its application of distortive technical criteria, and the EPA is now following suit.
“But the EPA’s imposition of a trade barrier, in violation of WTO rules and the US’s commitment to open markets, will greatly undermine this potential. Without reversal of the EPA’s decision, Africa’s long awaited development will remain stagnant, while US consumers remain reliant on higher-cost biofuel sources.”
The Initiative for Public Policy Analysis (IPPA), the 2005 award-winning organization, is Nigeria’s public policy research institute or think tank. Its major concern is with the principles and institutions that enhance economic development and wealth creation, with particular focus on Africa and Nigeria.
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