Middlemen take advantage as several factors limit palm oil production in Akwa Ibom

A cloud of steam gathered above their heads as Christiana Akpan and Ekaete Okon fetched oil palm fruits from a drum and poured them into a grinding machine. It was a bright Friday morning in March, and the two women were processing palm fruits at a mill in Utu Ikot Ekpo, Etim Ekpo Local Government Area of Akwa Ibom State.

Their tedious tasks demonstrated how local farmers in Akwa Ibom rural communities produce palm oil, a commodity used in homes and industries worldwide.

But the women were not concerned about the tedium of their work. “The work is more than the income,” Mrs Akpan said.

Palm oil is an edible oil commonly used for several purposes, including cooking and soap making. PREMIUM TIMES visited two local government areas in Akwa Ibom State to see the producers at work and understand why they are impoverished despite a constantly high demand for palm oil.

Gospel Mathew lamented that intermediaries buy palm fruits from farmers cheaply because there are no off-takers and government support systems.

Gospel Mathew

Speaking about her latest transaction, the widowed mother of five said a middleman gave her N400,000 to buy palm fruits and process them for him. “I have given him palm oil worth half of the money. I still owe him half.”

She knows middlemen make huge profits from buying palm oil in local communities and selling it in the cities at much higher prices.

Anietie Dickson at his mill in Ikot Ebak

The stories of Mrs Mathew, who owns a local mill in Utu Ikot Ekpo in Etim Ekpo LGA, and Anietie Dickson, a mill owner in Ikot Ebak in Mkpat Enin LGA, are shared by many across rural communities in crude oil-rich Akwa Ibom.

Mrs Mathew’s palm oil mill in Utu Ikot Ekpo, Etim Ekpo LGA

Like many other communities in the state’s 31 local government areas, Etim Ekpo and Mkpat Enin are known for palm oil and palm kernel production. Although the state government gets its significant revenue from federal allocations from crude oil sales, palm fruit processing is the primary source of income for the locals.

The people are primarily subsistence farmers who grow palms, vegetables, and cassava, tap raffia palms, and brew alcoholic derivatives.

“In a month, we can process over 20 drums of palm oil,” Mr Dickson, a father of three, said. A drum contains a dozen 25-litre rubber containers of palm oil.

When the reporter arrived at his mill, situated adjacent to the Government Primary School in Ikot Ebak, on 15 March, only a few women were there.

Most other community women were at the famous “Ukam” market, a few kilometres from the mill.

“Like today, my wife took four rubbers to the market. Another four rubbers are in the house,” Mr Dickson said.

He said 12 women regularly use his mill. “Like this woman who is processing, she bought the palm fruits from the market,” he said, pointing at a woman.

Mr Dickson said not having a vehicle poses a significant challenge for his operations. If he had one, he said wistfully, it would take women to the market to buy palm fruits and his palm oil to the major markets, where he could sell it at higher prices than the middlemen often offered him at the mill.

For Mrs Mathew in Utu Ikot Ekpo, palm oil processing is a family business. Her four-year-old daughter assisted in sorting the palm fruits. Her second daughter, Blessing, 17, stood by to operate the machine when her mother and sister were done sorting the fruits. By 10 a.m., they had processed 90 litres of oil.

“I woke up at 2 a.m. today to set fire to heat the palm fruits, and by 4 a.m., we will start processing the fruits and finish before I leave for work by 8 a.m.,” the teenager said.

“This is the only thing mommy does to feed us. She travels to Abia State to buy palm fruits and bring in a truck for us to process,” she added.

The 17-year-old finds palm oil processing easy, having done it for years.

Her mother said she abandoned tailoring years ago to focus on the palm fruit trade because it is more profitable. When the fruits were abundant, she processed about ten drums of palm oil in a month or more.

Palm fruit fibres

Crude methodology

The use of crude machines is another challenge facing local palm oil producers. For instance, Mrs Mathew’s old, locally fabricated oil and kernel processing machines make production labourious. However, her main concern was the high cost of diesel, which has cut profits despite her increasing the charges local farmers pay her to process their fruits at the mill.

Mrs Mathew said she needed new machines at the mill but could not raise the money.

At the mill in Etim Ekpo, a machine crushes the fruits before another separates the fibre from the kernel. But in Ikot Ebak, a single machine does the job. Mr Dickson said his mill needs two machines to meet the processing demand in the area.

“The machines are costly. I bought one for N520,000, but it is currently sold at over N700,000,” he said.

Experts say factors responsible for the decline in oil palm processing in Nigeria include low industrial processing capacity, over-reliance on smallholder processors and poor financial support for the sector.

Economy of palm oil

Palm oil

Palm oil is a natural source of Vitamin A. It is rich in carotenes (Vitamin A precursors) and antioxidants.

Before the discovery of petroleum crude, the Nigerian economy relied on crop exports. The country was a global leader in palm oil production. Oil palm remains a major crop in southern Nigeria, particularly in Akwa Ibom, Cross River, Imo, Edo, and Ondo states.

Because of the decline in production and rising local demand, Nigeria now imports from the current global leaders – Indonesia and Malaysia. In 2018, Nigeria imported 350,000 metric tonnes of palm oil. In the third quarter of 2022, imports from Malaysia alone were nearly N20 billion.

Subsistence farmers are responsible for about 80 per cent of the total palm oil production. This may explain why Nigeria has remained fifth among the global palm oil producers and stagnant in its output, producing 1. 4 million tonnes annually in the last three years.

Cost Analysis

Bags of palm fruit

Mrs Mathew told PREMIUM TIMES that farmers sometimes process at her mill and leave with only the oil. She then sells the kernel.

A cluster of palm fruits, Mrs Mathew said, cost between N25,000 and N27,000. A cluster, according to her, produces about 30 litres of oil.

When PREMIUM TIMES visited the village in March for this report, a 30-litre container of fresh palm oil cost N24,000, while a 25-litre container sold for N21,000.

But Mrs Mathew considered processing lucrative because, aside from the oil, there were the kernels—a by-product in high demand, too.

She explained that palm oil is of two types: fresh oil extracted on the first day of processing and oil with an odour extracted on the second day.

She said the latter is not suitable for consumption and is sold to middlemen in Aba, Abia State, for soap making.

Iboro Charles, from Ikot Obio Ema, a community in the Etim Ekpo, trades in non-fresh palm oil. He said his primary challenge in the palm oil trade was price instability.

Iboro Charles

Mr Charles, who acts like a second-level middleman, buys from women in local communities to sell to the middlemen at the local government headquarters.

“The challenge I am facing is instability in price. You could buy today, and the next day, the price would drop. This is not the edible type. We buy it from the women at N18,000 and bring it here to sell at N19,500,” Mr Charles said.

He identified finance as his primary challenge.

“If you have financial muscle that will enable you to buy more, that is when you will get more profits,” he said.

Mfreke Donald is a middleman. She said a minibus charges N25,000 to convey about 50 25-litre palm oil containers to Uyo, the state capital. Then she pays N1,300 per container to transport them to northern Nigerian cities where demand is high, such as Kaduna, Maiduguri and Sokoto.

According to Mrs Donald, 25 litres of oil cost about N21,000 in Akwa Ibom but sell for over N30,000 in the north.

“In sending (palm) oil to the north, it is the more the quantity, the higher the interest,” Mrs Donald said.

Middlemen

Ini Akpabio, a former dean of the Faculty of Agriculture at the University of Uyo, told PREMIUM TIMES that middlemen operate across agri-business in the state. The professor of agricultural extension said the fishing industry, particularly crayfish, is the worst affected.

However, Mr Charles does not see the role of the middlemen as negative. He said the women producers in the villages do not have the means and the time to take their products to Uyo, where the price is higher.

He said even he would take the product to the city and northern part of the country if he could finance the logistics.

A middleman, Yaknse Effiong, said it is not cost-effective for a local woman with 50 litres of oil to take it to the city.

“We (middlemen) buy in drums and convey them to the city for sale,” she said.

Usman Yakubu, also a middleman, spoke in the same vein. “The women cannot take just four or five (25 litres containers) of palm oil to the city for sale. It will cost them a lot of money in terms of transportation. By going to their homes to buy, we have saved them a lot of expenses.”

Mr Yakubu, who buys in Akwa Ibom for sale in northern Nigeria, said he has suppliers in over 20 local government areas in the southern state.

Ibrahim Umar, who also buys across the state’s local government areas, said the operation of middlemen is capital-intensive.

“I have travelled everywhere in this state to buy palm oil, but we also target major local markets for palm oils.” He said women bring large quantities of oil to them on market days.

Otobong KenJoshua, who owns a foodstuffs shop in Uyo, said you cannot stop middlemen from going to local communities to buy palm oil.

“Even if they try to stop them, the local women will take them to access roads to the community,” she said.

Despite Akwa Ibom being a leading palm oil-producing state, many women still travel to neighbouring states like Abia to buy palm fruits.

Akwa Ibom State Governor Umo Eno announced plans to revamp the state-owned oil palm plantation during a fact-finding visit to a farm last July.

During a visit to President Bola Tinubu in January, Mr Eno solicited support from the federal government in reviving the Ibom oil palm sector, saying Nigeria has the capacity to export palm oil.

Solutions

Mr Akpabio said the government should link farmers operating mills in the village with buyers to enable them to sell their products directly. He said the Anchor Borrowers Programme of the Central Bank of Nigeria recorded success by linking farmers with off-takers.

“The idea was that when a farmer produces, off-takers would go and buy because the farmers’ main challenge is how to make money, not to produce lots of goods. The farmer’s main motivation comes when he makes money, not high-level production when he is unsure of selling.

“The government should form cooperatives for them and give them revolving loans. The next person would get the loan when the first beneficiary has paid back. Government has a role to play by ensuring that farmers are adequately rewarded for their sweat,” the professor said.

He said market unions have derailed in their activities.

“Their main focus was to ensure that people do not bring poisoned foods and sell them in the market without being traced. The market unions and middlemen are the ones causing problems. They are making far more money than the farmers who sweat and then blame it on transportation, fuel hike, and dollar,” Mr Akpabio said.

On obsolete machines, Mr Akpabio suggested that farmers should be given loans to buy modern ones. He also noted that extension farmers were not enlightening local millers on how to get modern machines.

Machines at Palm oil processing mill in Ikot Ebak, Mkpat Enin LGA

“They are the ones that will introduce the improved machines to local oil millers. The problem of funding will be there, and that is where the government and cooperatives come in to provide soft loans. The palm oil farmers should bring counterpart funds no matter how low. That is why cooperatives that people pay dues last longer.”

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Mrs Donald said she would be happy if the government subsidised the cost of machines for farmers.

However, there is no indication that the Akwa Ibom government plans to implement any of the professor’s or farmers’ recommendations. The state’s Commissioner for Agriculture, Offiong Offor, did not return several calls or reply to text messages sent to her.

More Pictures:

25 Litre container for palm oil measurement

Palm kernel, a component of palm fruit processing

Christian Akpan (Left) and Ekaete Okon

Mrs Mathew’s palm oil mill in Utu Ikot Ekpo, Etim Ekpo LGA

Mrs Mathew’s palm oil mill in Utu Ikot Ekpo, Etim Ekpo LGA

Blessing Mathew operating palm kernel machine