Imo State Government looks inward to reawaken its sleeping asset, Adapalm, in a strategic move necessitated by the need to create jobs and boost revenue. Ogama Melford reports
In response to pressure arising from Covid-19 lockdown and sundry factors that have left economies worse off, Imo State Government is reviewing, strategizing and relaunching the state’s revenue generating mechanisms and processes to reboot its multi-million naira Adapalm oil palm plantation and processing plant in Ohaji/Egbema local government area, South-Eastern Nigeria. The investment regarded as one of the outstanding projects established in 1983 by the administration of Samuel Onunaka Mbakwe, a lawyer and first civilian Governor of the state had almost paled into historical archives but is now being rejuvenated to raise the state’s internally generated revenue (IGR).
Adapalm Mills Nigeria Limited was established as an offshoot of the Agricultural Farm Settlements by the first Premier of then Eastern Nigeria, Dr Michael Okpara, to support various administrations of the region and make a success of the scheme. The mill and its plantation located in Ohaji area of the LGA and patterned after Israel’s famous Kibutz farm settlement employed more than 800 and made annual sales estimated more than one billion naira at inception.
Before this effort to resuscitate the project, Adapalm had already paled into such insignificant level that it was perceived as a complete shadow that betrayed the founder’s dreams. Regrettably, it became an abode for hoodlums, rodents, and reptiles, abandoned by the state and Roche Group, the Irish company that took over its management. CherryAfrica learnt that this level of decadence deterioration stemmed from negligence by successive administrations in the state that paid only lip service to reversing the deterioration of the plant.
The company was renamed Imo Palm Plantation by Rochas Okorocha’s administration when he also attempted like others before his to bring the company back to life.
These, however, add up to anything until Emeka Ihedioha initiated the resurgence in his days as Governor before the Supreme Court judgment that turned the table against him. That move saw the Special Adviser to the Central Bank of Nigeria (CBN) Governor on Development Finance, Tony Ifechukwu, and Michael Ananabiet, Head, Development Finance Office visiting the plant for the examination of physical facilities at the project sight. Prince Eze Ugochukwu, then Senior Special Assistant to Ihedioha on Public Enlightenment, stated that the Mill was expected to benefit from CBN’s Anchor Borrowers Fund targeted at growing the agricultural sector.
Imo State Governor, Senator Hope Uzodinma, is further fuelling the revival at Adapalm. To keep the project on track and propel it to higher pedestal, he has appointed Goddy Esom Obodo, a former legislator and Commissioner for Commerce and Industry as General Manager and Chief Executive Officer since May, to steer the affairs of the company and drive the initiative. While the latest initiative aims to create a palm plantation hub and a value chain for the products of the mill, there is also a plan not only to position Adapalm as the nucleus of palm oil processing in the south eastern Nigeria, but also to equip it as a centre of excellence and a base to groom smallholder palm owners and teach them production management in palm oil processing.
Expectations are high that Obodo, an indigene of Amafor in Ohaji/Egbema LGA, who took over from retired General Austin Kalu Egwuagu-led Interim Management Committee (IMC) earlier constituted by Governor Uzodinma works assiduously to quickly return Adapalm to the status of a thriving concern on the path of profitability in sync with the government’s battle cry of reconstruction, rehabilitation and recovery. Though the third Ohaji man at the helm of affairs at the expansive mill, he is the first landlord to manage the mill, and knows the responsibilities that goes with this.
’’This is the first time a core landlord is superintending the affairs of Adapalm since its establishment and everything would be done to stabilise the huge investment,” Obodo told CherryAfrica. This objective recently laid the government under necessity to partner with the Central Bank of Nigeria (CBN) and Bank of Agriculture (BOA). The partnership is aimed to facilitate a N52 billion loan part of which would be channelled to get the machines at the processing plant back to life. It was gathered that a team made of the representatives of the two apex institutions visited the state not long ago for on-the-spot assessment of the plantation and plant.
WHAT WENT WRONG?
Obodo said: “What went wrong was that at a stage after about 5-9 years, as usual with Nigerians, our people felt the experts should go that there should be indigenisation and we can now manage it ourselves. They started fighting the expatriates, and they left. It was then handed over to our people who took over when the mill was at its peak of production. In our usual way, we like to eat; we don’t like to produce. Unfortunately, that’s the mentality of some of our people. The mill at that time operated at its fullest capacity and the money was everywhere. People were making merry forgetting the fact that today will come and that this thing has a lifespan and that when its at its peak we need to prepare for the ageing period when it is young and have some arrangement for investment system. But it went that way till the politicians came over and decided to use it as compensatory ground for political office holders. When they come, if they win elections, those who supported the winner would be made board members and they come here and continue to share the proceeds without thinking of how they will grow this place. Of course, if a machine that has 10 years lifespan is used for 8 years you know that its almost gone. So, deterioration started setting in until the last government gave final death sentence to it. That was during Rochas administration. At that time he came and discovered that ADA palm was established by Eastern Nigerian Government and there were some monies owed that were supposed to be paid back. The repayment was not as expected but was going at snail speed so when he came, he didn’t want to pay or do anything, so he had to change the name from ADA palm to Imo Palm, so that the ownership is changed. By so doing the people that loaned money to ADA palm won’t have the authority to ask Imo Palm to repay.”
According to analysts, the move by the state government is in the right direction, citing the fact that Palm oil remains the second most traded vegetable oil in the world after soy. Palm oil is also the most productive vegetable oil with capacity to produce about ten times more oil than its nearest competitor soybean. There is equally a surge in demand for its use in biofuel and electricity production. Even as it is copiously used in manufactured food products, it is also an important ingredient in cosmetic/healthcare products and today found in more than 50 per cent of packed supermarket products.
Requirements by the European Union that 20 per cent of all energy used and 10 per cent of all transport fuel will come from renewable sources by 2020, will most likely increase this further and see global demand for palm oil growing steadily in the foreseeable future, according to industry experts. This development conforms with forecasts by the World Bank that it will take an additional 6.3 million ha of palm plantations to meet global demand by 2020.
According to M. Shahbandeh, a research expert covering agriculture and fast-moving consumer goods (FMCG), the global production of palm oil decreased from approximately 74.02 million metric tons in 2018/2019 to about 72.27 million metric tons in the market year 2019/2020.
The desire to glean from the benefits accruing from this is the strong reason Nigeria is strategizing to overtake Thailand and Colombia and emerge as the third largest palm oil producer after Indonesia and Malaysia. In that period, Indonesia and Malaysia were the leading exporters of palm oil worldwide.
Worldwide, the import volume of palm oil has reportedly increased over the recent years. Import volume of palm oil has increased worldwide over the past few years. In 2017, according to the World Bank, the average price for palm oil was $649 per metric ton. It was $639 in 2018. This, the Bretton Woods institution says, is expected to rise to around $744 per metric ton by 2025.
This explains the CBN’s interest in transforming the milling section of Adapalm Nigeria Limited to increase capacity and take not only palm nuts from its plantation, but also from smaller farms. The idea is to enable small farmers process their nuts at the mill and get optimal value, instead of selling raw nuts. With this, analysts gathered that the products and derivatives such as palm oil, cake, palm kernel, palm kernel oil (PKO), fibre, shells, and sludge, for instance, can serve as raw materials for other industries.
Palm oil industry worldwide statistics published by Shahbandeh in March indicates that worldwide production has increased in volume in recent years, with the largest producer, Indonesia, producing a record 48.3 million metric tons in 2020. Indonesia and Malaysia took advantage of the lush opportunities in the global palm oil market to ship out a total in excess of 48 million of the 53 million metric tons exported in 2019/2020. In 2018, the value of imports by India alone was about $7 billion.
“Within the United States, the estimated value of the palm oil market has steadily risen since 2015 and is expected to grow through 2022. In 2004, just under 770 million pounds of palm oil was imported into the United States. Most of the palm oil sold on the U.S. market is edible oil used in processed food,” he said.
On March 19, the Governor of the Central Bank of Nigeria (CBN) informed a gathering of the Governors of the 11 palm oil producing states in the south east and south south regions and other top officials of the government that the apex bank had commenced partnership initiatives aimed to revive the sector in the regions and enhance their contribution to the effort by the federal government to return the country to the league of leading world producers of palm oil, and insulate the economy from the shocks of crude oil prices in the global market.
The strategic meeting, it was gathered, aimed to craft a partnership model that sufficiently stimulate investments in the palm oil plantations to double the country’s palm oil production within the next five years. It was also aimed to evolve ways to reduce the country’s dependence on crude oil, diversify the productive base of the economy, conserve foreign exchange and create jobs through palm oil-related projects.
While the CBN Governor says Nigeria has the capacity to generate $10 billion annually going by the current international market price of $600 per ton and an estimated production of 16 million tons if it did not backslide from practising improved cultivation of palm oil, it is on record that the country still spends about $500 million on palm oil importation yearly, even with the product prominent among the 43 items on foreign exchange exclusion list compiled by the apex bank. This narrative is what the government wants to change without further delay.
Obodo said: “Adapalm Nigeria Limited Ohaji was established in 1974 as an offshoot of Ohaji Farm settlement established in 1963 by Dr Michael I. Okpara. It sits on an area of land measuring 4,310 hectares donated by the people of Ohaji, Egbema and Agwa. Since its inception till date this is the first time a core landowner in the person of Dr. Goddy Esom Obodo has been appointed to head this multibillion agro industry owned by the Imo State government.
“Today the establishment which was created to contribute to the overall development of Imo State in the areas of employment of youths, development of the rural areas, especially it’s catchment rural communities, growth of internally generated revenue of the state and introduction of modern agro-machines and methods to Imo farmers is now a shadow of itself due to neglect by past administrations and poor handling by past Managements.
One is therefore not surprised that the development-hungry and agriculture- friendly governor of Imo State Senator Hope Uzodinma appointed a seasoned administrator and vocational agriculturist Dr. Esom Obodo to lead the establishment back to the dream of its founding fathers.
“Today Adapalm is bouncing back; its palm processing mill is now functioning fully, security of the plantation and the entire estate is returned through a rebranded security outfit, workers are being retuned for greater performance while efforts are in top gear to link it back to the international community for technology advancement. We salute the courage of the Governor of Imo State, Uzodinma, for his avowed decision to bring Adapalm back to its lost glory using this vibrant hard-working son of Ohaji as the point man. Adapalm when fully rehabilitated is capable of employing more than 30,000 workers directly or indirectly and contribute to the revenue base of the state to the tune of about N5billion annually.”