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Nigeria’s long-standing dependence on imported palm oil has once again come under the spotlight following Indonesia’s decision to tighten export controls and centralise the trade of strategic commodities, a development stakeholders in the industry say should serve as a defining moment for the country to pursue self-sufficiency.
Industry experts and operators in separate interviews with Daily Independent, believe the policy by the world’s largest palm oil exporter has exposed the vulnerability of Nigeria’s palm oil supply chain and underscored the need for immediate government intervention to boost domestic production, improve productivity and reduce the country’s heavy import dependence.
According to Leye Kupoluyi, the President of the Lagos Chamber of Commerce and Industry (LCCI), the impact of Indonesia’s new export measures is expected to be significant for Nigeria, which consumes between 2.5 million and 3 million tons of palm oil annually but produces only about 1.4 million tons. He noted that supply shortages and increased export levies from Indonesia have already pushed up local palm oil prices and import bills.
Kupoluyi said Nigeria currently spends about $550 million every year to bridge its production deficit, while government data showed that N23 billion was spent on palm oil imports from neighbouring West African countries in a single quarter.
He observed that the tightening global supply is also contributing to inflation in packaged food and cosmetic products as manufacturers grapple with rising input costs. However, he described the current situation as an opportunity for Nigerian producers to expand operations.
“The government needs to study these developments and immediately offer incentives to operators in this sector to empower them to achieve optimal production levels,” he said.
Echoing similar concerns, oil palm expert, Austine Adeniba, who is also the Chief Operating Officer of Eliakim Integrated Services Ltd, described Indonesia’s export restrictions as a “stark wake-up call” for Nigeria.
According to him, the development is a painful reminder that Nigeria, which once accounted for more than 40 percent of global palm oil supply in the 1960s, has become a net importer exposed to international market disruptions.
He noted that Nigeria consumes approximately 2.7 million to 3 million metric tons of palm oil annually for food processing, consumer goods and household consumption, while domestic production remains between 1.4 million and 1.5 million metric tons.
The resulting deficit of about 1.5 million metric tons, he said, costs the country more than $500 million in foreign exchange every year.
“When major exporters like Indonesia restrict supply, domestic prices spike immediately, squeezing local manufacturers and consumers alike,” Adeniba said.
While acknowledging that oil palm is a perennial crop requiring between three and five years before newly planted trees begin production, he stressed that Nigeria could still achieve meaningful improvements through immediate operational interventions.
Adeniba argued that one of the quickest ways to increase output is by improving processing efficiency among smallholder farmers. He explained that more than 80 percent of Nigeria’s palm oil production comes from smallholders operating semi-wild groves using primitive processing methods, resulting in extraction rates of only 10 to 12 percent compared to the 20 to 23 percent achieved by commercial processors.
According to him, deploying subsidised motorised mini-processing equipment across the country’s 24 oil palm-producing states could increase crude palm oil output by between 20 and 30 percent from existing mature trees without waiting for new plantations to mature.
He also advocated expanding the nucleus estate and outgrower model, where large commercial estates provide improved seedlings, fertilisers and guaranteed off-take arrangements, while surrounding smallholder farmers contribute land and labour.
To support this approach, he called on state governments to establish dedicated land banks for agricultural expansion. Another major recommendation by Adeniba is a nationwide replanting programme to replace ageing oil palm trees that have exceeded their peak productivity.
He urged the Federal Government to work through the Nigerian Institute for Oil Palm Research (NIFOR) to distribute high-yielding Tenera hybrid seedlings capable of significantly increasing production per hectare over time.
Recognising the long gestation period of oil palm cultivation, Adeniba further called for dedicated concessional financing tailored specifically to plantation agriculture.
He said existing commercial lending rates of over 25 percent are unsuitable for tree crops and recommended expanding intervention facilities that provide single-digit interest loans alongside a three-to-four-year moratorium on principal repayments while plantations mature.
He also urged authorities to strengthen border enforcement to curb informal imports and ensure strict quality standards, arguing that local producers should not be undermined by substandard imported palm oil entering through land borders.
For Adeniba, achieving self-sufficiency is not about abruptly halting imports but making local production competitive through lower production costs and improved productivity.
Alphonsus Inyang, National President of the National Palm Produce Association of Nigeria (NPPAN), also believes the changing global market reinforces the urgency for Nigeria to strengthen its domestic industry.
He explained that Indonesia’s implementation of the B50 programme from July 2026, which is expected to remove about four million tons of crude palm oil from the global export market annually, will have far-reaching consequences.
Combined with ageing plantations and labour shortages in Malaysia, he said the development is likely to drive global palm oil prices even higher.
Inyang maintained that Nigeria’s immediate priority should be increasing productivity among smallholder farmers, who contribute about 80 percent of the country’s total palm oil production.
According to him, smallholders are currently constrained by labour shortages for plantation maintenance, soaring fertiliser and agrochemical costs, expensive planting materials and limited access to finance.
He therefore urged the government to address fertiliser availability and establish a dedicated financing window specifically for plantation crops.
Beyond immediate interventions, Inyang disclosed that stakeholders are already working with the Federal Government on a National Strategy for Oil Palm Development.
According to him, the strategy is ready for launch by the president and is expected to provide a clear roadmap for the sustainable growth of Nigeria’s oil palm industry.
He expressed confidence that the policy framework would provide the direction and resources required to reposition the sector for long-term competitiveness.
The stakeholders agree that while new plantations will take years to mature, immediate gains are possible through improved processing technology, support for smallholders, affordable financing, access to quality inputs, structured partnerships between commercial estates and farmers, replanting programmes and stronger policy implementation.
With Nigeria spending hundreds of millions of dollars annually to meet domestic demand, industry players believe the country now has an opportunity to rebuild an industry it once dominated globally and move steadily towards palm oil self-sufficiency.
