5,000.00 3,000.00




1.0          INTRODUCTION

1.1          Background Information

Oil palm is a monocotyledonous tree belonging to the family, palmae and the subfamily, cocoideae. The normal (diploid) chromosome number is 2n = 32. The adult plant possesses an impressive crown of 30 to 45 green leaves, each 5-9m long at the top of a trunk bearing old leaf bases arranged spirally, (Kochhar, 1976; Opeke, 1992; CTA, 2000). The stem may be 30 to 38cm in diameter, with progressive thickening towards the base. On older palms, the stem is punctuated with conspicuous and regularly arranged leaf scars and the stem terminates in a handsome growth of leaves (fronds). The palm leaf is compound and is known as the frond. The leaf is paripinnate with a prominent petiole (0.9 to 1.5m long). The petiole often broadens at the base to form a clasper round the stem. Each palm frond bears, 20 to over 150 pairs of leaflets arranged in more or less two rows along each side of the flattened rachis with the longest pinnate varying up to 120 cm. The pinnae are parallel-veined.

The plant is monoecious with separate male and female flowers (inflorescences) on the same plant. Cross-fertilization is achieved through successive cycles of male and female flower production. It produces bunches of fleshy fruits, the pulp (mesocarp) of which yields a solid, edible, orange-red oil called palm oil. The endosperm or kernel yields a clear, yellowish oil, that is also edible and solid, and is called palm kernel oil. These two products are important in world trade.

Oil palm adapts well to most textures from medium loams to clays. Extremely coarse or fine textures may not always be suitable, especially if they affect water supply to the roots. The climatic and soil requirements constitute the physical factors that are responsible for the growth of oil palm. They include availability of water supply, soil conditions in terms of fertility and topography that is suitable for the growth of oil palm. It is recommended that rainfall of 1600mm to 5000mm per year evenly distributed will enhance the growth of oil palm, (Keu, 2001; Khera, 1976). The oil palm has a wide adaptability range of soils to low pH but sensitive to high pH (above 7.5) and stagnant water. Neutral pH soils are most favoured.

The temperature requirement varies between 180C and 340C. Opeke (1992), observed that oil palm would tolerate even higher temperature provided there is adequate moisture. It requires plenty of sunshine; productivity is reduced in areas with excessive sky overcast. It thrives under conditions of high relative humidity; yields are adversely influenced when the crop is exposed to dry harmattan winds (CTA, 2000).

Oil palm is a lowland crop although it can grow well up to altitude of 900m. It has fibrous root system and benefits from deep soils which are fertile, free from iron deposits and well-drained.

Oil palm is affected by pests and diseases attack. The pests and diseases attack both seedlings in the nursery and mature plants on the field. Some notable pests of oil palm are snails, crickets and mammals especially rodents (rats and mice). Others include leaf-minners, weevils, caterpillars, birds and squirrels. The oil palm diseases include Anthracnose, Freckle, Blast, Ganoderma trunk rot, Vascular wilt disease, Basal rot and crown diseases. These pests and diseases pose serious problems to the production of oil palm. They attack the plants at various stages of growth and development (Uguru, 1996; CTA, 1998).

In the 1950s and 1960s, Kogi State was a major producer and exporter of palm oil and palm kernels  (about 12,000 tons or 2.40% of national palm kernel output)(Idachaba, 2005). At that time, he noted, there were pyramids of palm kernels in John Holt Warehouses at Idah. Also, there was annual loading of palm kernels at Idah River port for export through Delta Inland port of Burutu to Europe. Until after the First World War, palm oil and kernels were supplied entirely from groves of Africa and to a much lesser degree of Brazil. It was not until after the Second World War that the West African groves were studied with thoroughness.

Hartley (1988), postulated that in areas where the palm was already part of the natural vegetation, the factors of greatest importance in the development of a grove was the growth of a dense population. The cutting down of forest areas for annual crop cultivation removed dense shade and created conditions suitable for rapid establishment of the palm.

Because of economic importance of oil palm as high yielding source of edible and technical oils, the oil palm is now grown as a plantation in most countries with high rainfall (minimum 1600mm/year) in tropical climates within 100 north and south of equator, (USDA, 2000). Raymond (1961); McCall (2003), compared the potential oil yield from various crops and placed the oil palm at the head of the list.

The extensive development of oil palm industries in many countries in the tropics has been motivated by its extremely high potential productivity. The oil palm gives the highest yield of oil per unit area compared to any other oil crop and produces two distinct oils – palm oil and palm kernel oil – both of which are important in World Trade, (USDA, 2000). Oil palm seems to be part of the traditional agriculture of Kogi State. The climatic condition and soil type of Kogi State appear favourable for the growth of oil palm. The production and development is in the hands of small-scale holders. They have all been dependent on rainfed cultivation and a large proportion of the palm produced are on wild groves. Apart from the wild groves, three economically important varieties are grown in the study area. These are the Dura, the Pisifera and the Tenera. The Tenera is a cross between Dura and Pisifera (Nigerian Institute for Oil Palm Research, NIFOR, 1985).

Oil palm is rich in palm oil, having higher yield of oil than any other seeds. The processing of oil palm fruits for edible oil has been practiced in Africa for thousand of years, and the oil produced, highly coloured and flavoured is essential ingredient in much of the traditional West African Cuisine, (USDA, 2000). The traditional processing is simple but tedious and inefficient.

The industrial revolution in Europe created unprecedented demand for palm oil in the 19th century. It was needed for the manufacture of soap, candle, margarine and tin plate. When Germany discovered that palm kernel could be made into very good feeding cake for cattle, a market was created for it. The industrial revolution changed all this and turned the oil palm from a subsistence crop to a cash crop. It became the single most important crop from the 19th century when cocoa and groundnut began to challenge its dominance.

Certain transformations in the oil palm industry followed. First, some people started to establish oil palm plantations. The plantation work was facilitated by the existence of slaves who were used to work on these plantations. Second, attempts were made by individual citizens to appropriate oil palms owned by the community. This trend became a source of communal tension and court litigation during colonial era. Third, men began to take interest in the production of oil palm, an affair which used to be left largely to their wives. Men cut the palm fruits and pounded them while women did the rest of the processing. Fourthly, innovations were introduced in the organization of production which economized time and man-power, thus raising the productivity level of the people. Men formed reciprocal work groups for the purpose of cutting and processing the palm bunches and pounding the fruits. Among the Isoko and Urhobo, large dug–out canoes replaced small mortars hitherto used in processing palm fruits. In Ohafia, large round holes (ikweakwu) about eight feet in diameter and four feet deep, paved all round with stone slabs, replaced wooden mortars. These innovations permitted more palm fruits to be processed in a unit time than was possible with wooden mortars.

The end result of all this was that from very humble beginnings, Nigeria soon attained world leadership in the production of palm oil and palm kernels. Early export figures are incoherent; nevertheless, they show rapid growth. Thus, palm oil export from Niger Delta ports rose from 4,700 tons in 1827 to 13,945 tons in 1834. In 1945, export reached 25,000 tons, and by the end of the century the volume had more than trebled, even in spite of trade fluctuations.

Where the oil palm flourished, its commercial exploitation could be constrained by two major problems. First, oil palm production was labour intensive, unlike raiding and kidnapping in slave trade. It involved the risky job of climbing the oil palm to cut the bunches, the gruesome tasks of head-loading the bunches home and then rigorous processing to procure the oil. Second, transportation of produce posed a major difficulty. While slaves were self-transporting, palm oil and palm kernel were not. They were bulky, only water transportation was most profitable.



1.2          The Problem Statement

Oil palm no doubt originated from West Africa of which Nigeria was once a leading producer, (Zeven, 1965; Agboola, 1979). Purvis (1968), reported that oil palm rehabilitation scheme was set at replantation of 24,282 hectares (or 60,000 acres) for the 1962-1968 Development Plan. By 1966, only 20,215.17 hectares (or 49,951 acres) was replanted through efforts of 4,315 participants on the average of 4.68 hectares per participant. This showed a deficit balance of 4,066.83 hectares (or 10,049 acres) unplanted. Again, the plan to rehabilitate 133,551 hectares (or 330,000 acres) by government of the then Eastern Region, 1970-1974 Development Plan, only

117,363 hectares (or 290,000 acres) was replanted. By the two plans, a total deficit of

20,254.83 hectares (or 50,049 acres) was not rehabilitated. Whereas countries such as Malaysia, Indonesia exceed their planned planting targets, Nigeria has never reached her planting targets of oil palm.

In a study carried out on oil palm production in South Eastern Nigeria, Ibe and Nweke (1985), reported similar deficit on planting targets in Nigeria. The summary is presented in Table 1.3 below.

Table 1.3:           Planted area compared with planting targets 1976 – 1981

Annual                                         Cumulative

Target              Planted                        Target          Planted

        Year Ha/Yr           Ha/Yr                 % Ha/Yr          Ha/Yr                  %
        1976 2,000 415 21 2,000 415 21
        1977 3,000 853 28 5,000 1,268 25
        1978 3,000 1,588 53 8,000 2,856 36
        1979 4,000 1,900 48 12,000             4,756 40
        1980 4,000 1,312 33 16,000              7,069 44
        1981      – 1,482 16,000               8,551 53

Source:  Ibe and Nweke, 1985.

The declining productivity and processing of oil palm over the years makes it necessary to carry out an in-depth investigation. The share of oil palm contribution to Gross National Product (GNP) has equally suffered a setback or decline. Ibe and Nweke (1985), estimated production and demand for palm oil in Nigeria. The result showed that demand far exceeded the production. The summary is presented in Table 1.4 below.


Table 1.4: Estimated demand and production of oil palm in Nigeria.

Estimated                                 Estimated

Year                    Demand (Tonne)                     Production (Tonne)                Deficit (Tonne)

1985                   950,000                                   600,000                                   290,000

1990                   1.12 million                             685,000                                   436,000

1995                   1.33 million                             710,000                                   610,000

2000                   1.62 million                             860000                                    760000

2005                   2.42 million                             1067000                                  1353000


Source: Ibe and Nweke, 1985; NIFOR, 2008.


Malaysia which sourced her seedlings from Nigeria, by 1967 has overtaken Nigeria as an important producer of palm oil (USDA, 2000; Akinjide, 2005). The general decline in the palm produce economy in recent years brings to focus the significance of rehabilitation efforts made since 1950s. West African Institute for Oil Palm Research (WAIFOR)’s initial investigation has revealed that uneven, inadequate and seasonal rainfall, the long dry season and the growth of wild oil palms on nutrient deficient sandy soils limited Nigeria’s chance of competing effectively with other leading producers such as Malaysia, Indonesia, and Zaire (Democratic Republic of the Congo). Efforts made in the 1960s to get farmers to rehabilitate wild oil palm groves by planting improved seedlings generally failed. The situation thus appears in Nigeria that neither large-scale monocultures nor small-scale holdings seem able to provide answers to problem of the scarcity of palm oil in one of the countries, which the oil palm is native.

The small-scale farmers who constitute the bulk of oil palm producers in the state seemed not to be adequately involved. Thus, they have continued to rely on wild oil palm groves. Besides, the processing of fruits into oil and kernel is still being done by the traditional method, which is tedious and low yielding. This seems to have negative effects at increasing production of palm produce.

In view of the foregoing, the following questions become pertinent:

  1. What are the socio-economic variables affecting the productivity of oil palm in Kogi State?
  2. What are the motivating factors in the choice of oil palm for cropping by farmers?
  3. What costs are involved in the processing of oil palm?
  4. What is the optimum replacement age of oil palm?
  5. What factors are responsible for the declining productivity of the oil palm industry?
  6. How can the declining production in the oil palm produce be improved?


                    1.3       Objectives of the Study

The broad objective of the study is to examine the economics of small-scale                  production of oil palm in Kogi State.  The specific objectives are to:

  1. identify the techniques being used in the production of oil palm products in the area;
  2. determine factors affecting the resource use efficiency by oil palm farmers in the area;
  • determine the optimum replacement age of oil palm;
  1. determine the costs and returns of oil palm processing;
  2. determine the effect of price on product output; and
  3. identify and describe the constraints of oil palm production.

1.4          Hypotheses

The following null hypotheses will be tested:

  1. The resources used for processing oil palm are not efficiently being utilized.
  2. Socio-economic factors do not influence resource use efficiency.

1.5          Justification of the Study

The widespread acceptance of palm oil as cooking oil and industrial oil means higher demand for the product than other oils. Besides, the presence of carotenoid in palm oil makes it very valuable. Carotene is a precursor for vitamin A, which is very vital for remedy of night blindness (NRDC, 2003). Palm oil is used in the homes as cooking oil. In industries, it is used for the manufacture of margarine, soap, lubricating oils and candles. Palm kernel oil is used as skin lotion or as laxative, when mixed with kerosene, it is used as a wood polish. After extracting the oil, the residue, palm kernel cake form an excellent animal feed. Palm wine obtained by tapping the tree is used as a very good source of alcoholic drink in many social gatherings in Nigeria. Both the oil and wine obtained from oil palm have medicinal value.

Oil palm is a very valuable economic tree crop in Nigeria. It provided large quantity of palm oil and palm kernels, which in the 1960s accounted for 43 percent of the world production. Today, it only accounts for 7 percent of total global output, (WRM’s bulletin, 2001).

“processing” in this context refers to the type of activity which changes the form of the materials with which it works into goods or services capable of satisfying human needs either directly or indirectly, (Usoro, 1974; Lipsey, 1980). In agriculture, the activity would include cultivation, nurturing, harvesting, and for some products, processing. Output of the final products is a function of land, labour and capital, (Usoro, 1974). To achieve increases, the productivity of the various factors (resources) needs to be increased.

1.6          Limitations of the Study

The study has been limited by the fact that: –

  • there was a dearth of information due to lack of adequate record keeping. This gives room for some data to be estimated.
  • where current literatures on oil palm exist or are available, they are scanty, particularly publication on oil palm in Nigeria.
  • there was some difficulty in getting accurate information from the farmers because some believe that such will expose the secret of their business.
  • there was lack of adequate financial support, the high cost of transport fare coupled with other financial problems, imposed a severe limitation on the extent of travels in order to obtain further information. Friends and other well-wishers who supported in this case had been fully acknowledged.
  • the attitude of some of the respondents who withheld information and would even throw away questionnaire after having collected it. This actually brought a set back. With serious prayers and perseverance one overcomes.
  • there was lack of new planting. The activities on field were limited to mere harvesting of oil palm fruits of which owner(s) of the farm may not be easily traced. The problem was overcome by the use of ADP extension staff who were familiar with the oil palm farmers in their respective areas.