From being the world’s leading producer and exporter of palm oil in the 1960s, Nigeria has fallen to being a net importer to meet the growing domestic demand. Demand is primarily driven by the household consumers who prefer to consume the technical palm oil (TPO) because of its flavor profile, but it is complemented by an increasing demand for the special palm oil (SPO) which can then be fractionated into refined, bleached and deodorised (RBD) to meet the needs of industrial processors. 

Though domestic production is nearly nine hundred thousand (900,000) tons, there is an estimated overall gap in Nigeria of between one hundred and fifty thousand (150,000) to three hundred thousand (300,000) tons of technical palm oil (TPO) and two hundred thousand (200,000) tons of special palm oil (SPO), much of which is currently met through imports.

The Nigerian oil palm belt covers twenty-four states including with Ogun, Ondo, Oyo, Edo, Osun, Cross River, Anambra, Enugu, Imo, Abia, Ebonyi, Ekiti, Akwa-Ibom, Delta and Rivers as leading producers. Within the oil palm belt in Nigeria, eighty percent (80%) of production comes from dispersed smallholders who harvest semi-wild plants and use manual processing techniques. 

Several million smallholders are spread over an estimated area ranging from one million, six hundred and fifty thousand (1,650,000) hectares to two million, four hundred thousand (2,400,000) hectares and to a maximum of three million (3,000,000) hectares. 

The estimate for oil palm plantations in Nigeria ranges from one hundred and sixty nine thousand (169,000) hectares (72,000 ha of estate plantations and 97,000 ha of smallholder plantations) to three hundred and sixty thousand (360,000) hectares of plantations.

In a further bid to encourage local production of palm products to satisfy local demand, importation of bulk crude and refined vegetable oil was prohibited in 2001. 

In response to this ban and consequently increasing demand for local product, there has been some increase in private sector investments in the development of new oil palm plantations and the expansion of existing ones. Smallholdings and out grower schemes were also being promoted by the Federal and State Governments.

Palm oil forms an important part of the local diet in Nigeria because animal fats such as milk and butter are hardly consumed. It is used both as a cooking material and as an ingredient in soups, sauces and a variety of local dishes. 

The demand for Palm Oil is high because it is consumed every day in almost every home in Nigeria mainly for cooking purposes. 

Palm oil is one of the few highly saturated vegetable fats and is semi-solid at room temperature. Like most plant-based products, palm oil contains very little cholesterol. 

Palm kernel oil (PKO) is an important and cheap source of oil for soap manufacturers, bio-fuel, cooking oil, vegetable ghee, Shortenings, Margarine, CBS, CBE, ice cream, dough, creaming, coating, and other specialty fats while palm kernel cakes are used in animal feed production.

The market for Palm Kernel Oil (PKO) is very large. About eighty percent (80%) of all the edible vegetable oil consumed in Nigeria is made from refined palm kernel oil. 

In Nigeria, the major buyers of palm kernel oil are vegetable oil refineries and soap making companies and our focus would be on vegetable oil refineries and soap making companies. We shall narrow down to vegetable oil refineries since their demand is far above supply.

It is estimated that only about seventy-five percent (75%) of the demand for palm kernel oil by local vegetable oil refineries and soap making companies is being meet in Nigeria.

Extensive market research has revealed that palm oil, palm kernel oil (PKO) and palm kernel cake are everyday goods used by individuals as well as Industries. Thus, the market is ongoing and is not dependent on economic cycles and can be described as a FMCG (fast-moving consumer goods) commodity market. 

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