The palm oil production dilemma

Dar es Salaam. Tanzania has all it takes to grow and produce enough palm oil to meet local demands, but inadequate investment is bogging the sector down.

Despite such a huge potential, the country relies on imported raw materials for producing edible oils and soaps. Tanzania has more-or-less similar weather conditions with Malaysia from where it imports most of its palm oil. Malaysia is the world’s second largest producer of palm oil while Tanzania is not even on the list of palm oil producing countries.

Tanzania imports 55.5 per cent of its total edible oil requirements despite having a vast and promising production potential in palm oil and sunflower sub-sectors.

Sunflower oil contributed about 40 per cent of edible oil requirement of 330,000 tonnes in 2017, according to the Bank of Tanzania (BoT) research paper ‘Potentiality of Sunflower Sub-sector in Tanzania of March 2017’.

The 60 per cent deficit is plugged by imports, which cost the country over Sh600 billion, annually.

However, Mr Adam Zuku, a former director for Industrial Development at the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) is optimistic that the gap could still be plugged if proper investment is made in palm oil.

Mr Zuku says once a farmer plants the palm trees, there is a decades-long harvest guarantee, adding that the farmer can harvest three to four times a year.

He suggests that smallholder farmers are organised into groups to generate a data portfolio, which will stipulate the number of producers and the production capacity.

While current oil palm farmers are complaining over lack of market, industrialists say the volume of produce is still far below the required amount to attract investors. A Bakhresa Group (BGC) corporate affairs director, Mr Hussein Sufian, told The Citizen that his company was willing to establish industries, but there were still concerns over reliability of raw materials.

“Tanzania once sold palm tree seeds to Malaysia, which is currently the major exporter of palm oil to the country. With this in mind, Tanzania has a huge opportunity to become one of the top producers of palm oil if policies and long-term strategic plans are in place,” he says.

He is optimistic that palm oil production will reduce edible oil imports if local plantations and manufacturing industry get serious investors.

However, Peter Ntendwa (62), a palm oil farmer and owner of a processing plant at Ugunga village in Kaliua District, Tabora Region, denies the claim that the amount of palm oil produced is below the required amount because there has been no thorough research conducted to prove it.

“I have been in this economic activity for 42 years now, interacting with other farmers, but I have never seen or heard of a person, company or people from the government conducting research on this potential sub-sector,” he says.

Mr Ntendwa owns 16 hectares of palm trees in various areas of Kaliua District and he has a small hand-operated machine for processing palm oil at his home. He produces between 200 and 250 litres of palm oil every harvesting season.

“As we speak, I have more than 1,200 litres of processed palm oil in my store. I don’t know where to sell it,” he claims. Mr Ntendwa blames massive importation of edible oil as a source of his woes.

“Don’t listen to those lies,” he tells this reporter, explaining that those are excuses, which importers make so that they can get tax exemptions for their imported edible oils and maximise their profits.

Mr Godfrey Izidori, is the first person to set up a palm oil processing plant in Kaliua in the 1990s, but was forced to shut it down because of lack of market for his products. “Whoever says that we don’t have enough palm oil is lying. I have been running the plant for almost a decade, processing at least three tonnes per day,” he says.

Mr Izidori decided to close his business after struggling to sell. He is, however, positive that once manufacturing industries are introduced and the market is guaranteed, he will resume his business.

He was of the opinion that palm tree plantations should be given same priority as tobacco, an important cash crop in the region, and establish cooperative societies where small scale farmers can get seeds, agricultural inputs and access to loans.

Besides, agricultural extension officers should visit farmers and advise on proper ways of planting and growing palm trees.

“Truth be told, the weather is not bad for palm oil growing, but we need investors who will pump their money in plantations and big industries, which will be fed by small factories. This will also create many jobs for the youth,” he notes.

He suggests that Tabora should be included in the list of top palm oil producing regions and considered when investment opportunities occur.

The crop is mainly grown in the western part of the country, particularly in Kigoma District, where the local farmers have been engaging in palm oil cultivation since early 1920s. Currently, oil palm production in Tanzania is carried out primarily by smallholder farmers in Kigoma Region, Kigoma Rural District in particular, as well as in Mbeya Region (mostly Kyela District) and some parts of Tanga Region.

At the local level, women are in charge of boiling and milling of palm oil as well as in selling palm oil products.

Background

According to Biofuels, Land Access and Rural Livelihoods in Tanzania Report from a survey conducted in 2009, things were somehow better in 2005 and later, when Felisa Ltd planted its first hybrid palm seedlings in the region.

The company started operations at a 100-hectare palm oil plantation, which was located 75 kilometres from Kigoma town. They later obtained another 4,258 hectares of land which was 150km from the town where they planned to plant oil palms.

More recently, African Green Oil Limited has applied for land-lease to the Tanzania Investment Centre (TIC) for more than 10,000 hectares of land in the Rufiji river delta in south-east Tanzania for palm oil plantation.

African Green Oil Limited has been granted a lease for 250 hectares of land as a trial investment.

They will get more land depending on their performance. The company aims at starting a 20,000-hectare palm oil plantation by 2020.

according to their website.

AGO current annual planting is 800ha with the aim of reaching 2,500 hectares by 2013. AGO had already acquired 5,000 hectares and planted 435hectares by May 31, 2009.”

Two other oil palm projects identified by the report are Tanzania Biodiesel Plant Ltd, with 16,000 hectares in Bagamoyo and InfEnergy Co. Ltd, with 5,818 hectares in Kilombero.

A report commissioned by Oxfam (2008) mentions other projects: TM Plantations Ltd, a Malaysian company planning plantations in Kigoma; Sithe Global Power, LLC (US), with plans to develop 50,000 hectares of oil palm plantations and refineries in Tanzania; InfEnergy (UK) which has optioned a 10,000 hectare site for an irrigated oil palm plantation; an unknown “palm oil group” from Malaysia, planning to plant 40,000 hectares in the Kigoma area.

According to the paper “Tanzania Government Perspective on Biofuels” presented in 2009 in Nairobi by the Ministry of Agriculture, Food Security and Cooperatives the “Areas Earmarked for Biofuels Crops Production” include oil palms in Kigoma and in Ruvuma, near the border with Mozambique.

However, the above-mentioned projects appear to not show impact on the palm oil production today.

As the government takes some measures to revamp the product, it is better to ask, what are the projects currently doing? What went wrong?

In a move to revive the production of palm oil in the country, the government decided to make palm oil seeds as the sixth cash crop in terms of priority.

The crop joins other five top cash crops including cashewnuts, cotton, tobacco, coffee and tea, with the view to embark on mass farming of the cash crop.