Cheaper Palm Oil Imports Weigh on Presco, Okomu Profits as Industry Warns of Policy Risks

By Dorcas Francis Koji

Nigeria’s two largest listed palm oil producers, Presco Plc and Okomu Oil Palm Plc, are facing mounting pressure on earnings as cheaper imported palm oil drives down domestic prices and narrows profit margins.

Financial results for the first half of 2026 indicate that while both companies remained profitable, slowing revenue growth and declining earnings reflect growing challenges within Nigeria’s oil palm industry.

Combined financial statements show the companies generated ₦323.9 billion in revenue and ₦121.9 billion in profit after tax during the six-month period. However, both firms recorded weaker profitability compared to the corresponding period in 2025.

Presco reported revenue of ₦198.7 billion, virtually unchanged from the previous year, while its profit after tax declined by 7.3 per cent to ₦82.2 billion.

Okomu Oil Palm posted a more pronounced slowdown, with revenue falling 3.5 per cent to ₦125.2 billion, while profit after tax dropped 16.4 per cent to ₦39.7 billion.

The moderation in earnings follows several years of rapid expansion that saw both companies benefit from higher palm oil prices and increased production capacity. Between the first half of 2022 and the same period in 2026, their combined revenue nearly quadrupled from ₦82.4 billion to ₦323.9 billion, while combined profit after tax increased from ₦30.2 billion to ₦121.9 billion.

Industry stakeholders attribute the changing market conditions partly to the Federal Government’s decision in April to reduce import tariffs on crude palm oil from 35 per cent to 28.75 per cent as part of broader efforts to moderate food inflation.

While the policy was introduced to lower food prices, plantation operators argue that it has made imported palm oil significantly more competitive, placing local producers under increasing pressure despite ongoing investments in expanding domestic production.

Data from the National Bureau of Statistics show that Nigeria spent ₦23 billion importing crude palm oil during the first quarter of 2026, representing a 30.26 per cent increase compared to the same period last year.

Chairman of the Plantation Owners Forum of Nigeria (POFON), Emmanuel Ibru, warned that the industry faces a critical period, saying increased imports could undermine years of investment by local and international operators.

According to him, imported palm oil should complement domestic production by filling supply gaps rather than competing directly with locally produced products.

Industry figures indicate that fresh fruit bunch prices have fallen by approximately 43 per cent, dropping from about ₦2.8 million per tonne to ₦1.6 million per tonne as imported products and alleged smuggled vegetable oils increase competition in the domestic market.

Stakeholders say Nigeria’s backward integration policy, introduced in 2011 to encourage local plantation development through tariff protection, helped stimulate significant growth in domestic production.

According to data from the Food and Agriculture Organisation (FAO), Nigeria’s oil palm fruit production increased from 8 million metric tonnes in 2013 to 11.6 million metric tonnes in 2024, representing a 45 per cent increase over 11 years.

Industry leaders warn that inconsistent trade policies could discourage long-term investment in plantations, which typically require several years before becoming commercially productive.

Managing Director of Foremost Development Services Limited, Fatai Afolabi, said unpredictable policy changes weaken investor confidence and slow expansion plans.

Similarly, President of the Soybean Association of Nigeria, Christopher Uwala, cautioned that rising import pressure is placing farmers under financial strain, while the Manufacturers Association of Nigeria said several vegetable oil processors are operating below installed capacity because imported products are undercutting locally produced oils.

Manufacturers argue that strengthening domestic production remains essential to Nigeria’s long-term food security and reducing vulnerability to external market disruptions.

Despite current market challenges, Presco has announced plans to invest approximately $100 million in a new plantation and processing operation in Ogun State, expanding beyond its existing operations in Edo and Delta states.

Group Chief Executive Officer, Adewale Arikawe, said the investment is expected to boost domestic palm oil production, reduce dependence on imports and create employment opportunities across farming, processing and logistics.

Industry analysts continue to point to Malaysia as an example of how policy consistency, research investment and infrastructure development transformed the country into one of the world’s leading palm oil exporters.

Although Nigeria possesses favourable climatic conditions for oil palm cultivation, experts say challenges including fragmented smallholder farming, limited mechanisation, inadequate financing and inconsistent policies continue to limit the sector’s full potential.

They argue that maintaining stable policies while encouraging domestic investment will be critical if Nigeria is to rebuild its oil palm industry and reduce reliance on imported palm oil.