75% crude palm oil import waiver a threat to local industry – Presco MD

Uday Pilani, managing director, Presco plc speaks on the implication of the 75 percent waiver on crude palm oil import tariff granted to companies operating in the Free Trade Zones (FTZ) to the local palm oil industry in this interview with OLUYINKA ALAWODE.

Domestic market

For the local industry to grow and be profitable, people will have to plant, so there must be some protection for the local industry to survive, because the challenges of producing palm oil here in Nigeria are different from the challenges of producing the foreign ones.

But government must ensure protection for the local farmer by putting proper duties on the imported crude palm oil. If not, the local producer that produces at higher costs is forced to sell at the same prices as the cheap imports and cannot survive. That was how the local industry was killed in the 1960s.

The importer just sits in front of a computer and does all the transactions, one man, one show; but as a local producer, I provide jobs to about 10,000 Nigerians who are feeding about 100,000 Nigerians. I am encouraging Nigerian contractors, encouraging capacity building and supporting more than 45 villages, which are my host communities and I am paying taxes.

Presco plc

Our company has had very tough times but it is only now that we have grown in size, we have become efficient because we now have the money to use the latest technology in our palm oil production process. We have been able to use economy of scale to grow.

But for 15 years, we were just able to survive. What our company had was the courage to continue and the stamina and the long-term vision.  But for the new entrant, how many entrepreneurs or companies would be willing to suffer for 15 years before they start making profit?

Import duties

We want the normal duties put on imported crude palm oil. It should not be duty-free nor should hoodwinking be allowed. What we want are transparent policies, one rule for all players in the industry, not that some companies would pay duties and some would not and those who do not pay duties would have unfair advantage in the market. There must be a level playing field.

For instance, there is a company in the Lekki Free Trade Zone – the Export Processing Zone supposed to export its processed palm oil after getting waivers to import crude palm oil. But after processing, it pushes the product into the Nigerian market. Why did such a company go into the Export Processing Zone when it does not have the export market because it ought to have done the research before then.

If they have a refinery and need crude palm oil to process and package for the domestic market, they should not get import duty rebate. If they get the rebate, they should not say when the oil is ready that they do not have export orders and therefore push it into the Nigerian market and then crash the prices, threatening the local industry

Synergy

We have the Plantation Owners’ Forum of Nigeria and we have submitted joint action request to the government on this and we continuously raise our voices through several other channels. We, the plantation owners and some representatives of smallholders, have expressed our wish to further discuss these issues with the minister. The meeting is necessary to save the oil palm industry from imminent collapse. This 75 percent CPO tariff waiver for free trade zone companies is impending doom for Nigeria’s local oil palm industry.

Sometimes ago, we led a coalition of stakeholders to meet with the minister to discuss the then issue of ECOWAS Trade Liberation Scheme (ETLS) and increasing waiver to import crude palm oil into the country. The minister’s personal assurances and the platform that created for subsequent engagement with the ministry’s oil palm transformation team have impacted to further raise the bar of both large scale and smallholder oil palm development in Nigeria.

But it would seem that the adversaries of the oil palm transformation agenda are at it again. It is with utter shock that we discovered the regulation providing for 75 percent rebate on Crude Palm Oil (CPO) tariff for companies operating in the Free Trade Zone.

We are dismayed because of the distortion the provision creates in the oil palm industry and the confidence question it raises on government policies, especially oil palm as a target crop of the Agricultural Transformation Agenda. The situation became further worrisome with the recent release of the Nigerian Ports Authority that 17 ships laden with crude palm oil and other items are scheduled to berth at the ports in November and December 2014.

In response, we called an expanded meeting of the Plantation Owners’ Forum of Nigeria (POFON) and the organised smallholders represented by Oil Palm Growers Association of Nigeria (OPGAN) and the National Palm Produce Association of Nigeria (NPPAN) at Presco plc, Edo State on Friday, 7 November 2014, to discuss the two debilitating issues of 75 percent waiver on crude palm oil tariff granted to companies that are operating in the Free Trade Zones (FTZ) and the unprecedented and unmitigated importation of crude palm oil (CPO) into the country.

The plantation owners and smallholders have analysed the grave situation presented by the two above issues. We are unequivocal in our submission that the twin issues of 75 percent CPO tariff waiver for companies in the FTZ and the rising wave of CPO imports are the albatross that will spell doom for the already bourgeoning oil palm industry and the Agricultural Transformation Agenda (ATA).