ECONOMICS OF OIL PALM SEEDLING PRODUCTION

Project Abstract

Oil palm seedling production is a crucial aspect of the palm oil industry, as it serves as the foundation for palm oil plantations. This research project aims to analyze the economics of oil palm seedling production, focusing on the costs involved and the potential profitability for seedling producers. The study utilizes a combination of primary data gathered from interviews with seedling producers and secondary data from existing literature on oil palm cultivation. The findings of the research reveal that the costs of oil palm seedling production are influenced by various factors such as the cost of inputs, labor, land, and technology. Additionally, the study highlights the importance of economies of scale in seedling production, with larger producers benefiting from lower average costs per seedling. The analysis also considers the impact of market fluctuations, government policies, and environmental factors on the economics of seedling production. Furthermore, the study evaluates the potential profitability of oil palm seedling production by comparing the costs of production with the selling price of seedlings. The research indicates that while there are significant upfront costs involved in establishing a seedling nursery, the long-term returns can be lucrative for efficient producers. The study also identifies opportunities for cost savings through improved production practices, technology adoption, and strategic marketing. Overall, the research contributes to the understanding of the economics of oil palm seedling production and provides valuable insights for seedling producers, investors, policymakers, and other stakeholders in the palm oil industry. By identifying key cost drivers and profit potential, the study aims to inform decision-making processes and support sustainable development in the oil palm sector.

Project Overview

<p>The African Oil Palm, Elaeis guineensi jacq (Jacquin, 1963), is placed in the Arecaceae family which contains about 225 genera with over 2600 species along with coconut and date palms cultivars. There are 3 naturally occurring forms of the oil palm fruit, termed dura, tenera and pisifera. The selection of dura female and pisifera male parents is carried out to obtain tenera offspring that produce large oil yield (Breure et al, 1986, Breure, 2003).<br>The African oil palm is native to tropical Africa, from Sierra Leone in the West through the Democratic Republic of Congo in the East, it was domesticated in its native range, probably in Nigeria, and moved throughout tropical Africa by humans who practiced shifting agriculture at least 5,000 years ago (Hartley, 1988). European explorers discovered the palm in the late 1400’s, and distributed it throughout the world during the slave trade period (Corner, 1966). In the early 1800’s, the slave trade ended but British began trading with West Africans in Ivory, lumber and palm oil.<br>The oil palm was introduced to the Americans hundred years ago, where it became naturalized and associated with slave plantations, but did not become an industry of its own until the 1960s (Lereka, 1998). The first plantations were established on Sumatra in 1911, and in 1917 in Malaysia (Raymond, 1961). Oil plantations were established in tropical America and West Africa about this time, and in 2003, palm oil production equaled that of soybean, which had been the number one oil crop for many years.<br>Elaeis guineeasis is characterized by its vertical trunk and feathery nature of its leaves every year 20 – 25 new leaves called “frondâ€Â develop in continuous whorle at the apex of the trunk (Devendra, 1984). The fruit bunches develop between the trunk and the base on the new fronds and the plant can reach 60 – 80ft in height in nature, but is rarely more than 20 or 30ft in cultivation. Although new plantation starts to bear fruit at 3 years, generally, the first commercial crop require between five and six years and continuous to produce for 25 – 30 years, or until the palm grow too high to be harvested. Once a plantation reaches full production, a new inflorescence is produced every 15 days. It weights between 15 and 20kg and can conking up to 1500 individual palm fruit of between 8 and 10 grams each (Chavaliar, 1937). The individual fruits consist of the following four parts, a pericarp, a thin outer skin which upon ripening changes from brown to red or orange, a mesocarp, a large of fibrous material which surrounds the nut, an endocarp or hard inner shell (nut) to protect the seed or kernel and the seed (kernel) (Aighologa, 1995). The female inflorescence contains 200 – 300 fruits, and fruit set is 50 – 70% fruit riped about 5 – 6 months after pollination (Ergo, 1977).<br>Vegetable and edible oil producer of Nigeria (VEOPAN) claims that, it provided job opportunities for not less than 1.8 million farmer family involved in this production of oil seeds and related crops. Nigeria with a National 1.3 million tones of palm oil and a population. Of over 140 million that means each family produces less than 700kg per year, i.e. an average of less than 2kg/day (Eshalomi, 2008).<br>Last year, the vegetable oil sub-sector of Manufacturers Association of Nigeria reported that the market has been very unstable because of high cost of input, excessive smuggling of vegetable oil and faking. Recently, the group lamented the shortage of palm oil plantation production which is the major raw material for vegetable oil production because it condemned the Federal Government of Nigeria for signing a contract to supply palm oil to Ghana, whose local demand has not been met (Eshlomi, 2008).<br>In Edo State, effort has been made to encourage the establishment of oil palm plantation. These has yielded some positive result such as establishment of multinational oil palm plantation companies, whose production has follow Presco Industry Limited 22,000 tonnes/year and an indigenous oil palm farm Nosakeri Farm (Vanguard, 2007).<br><br>STATEMENT OF PROBLEM<br><br>The production of oil palm seedling is currently the only source of planting materials for oil palm production in Edo State senatorial district. The entire seedling produced in the world is of the tenera type obtained from fertilizing dura tree with pollen form pisifera tree (Griseb, 2007).<br>The oil palm seedling production is handled directly by organizations such as the Ministry of Agriculture and NIFOR (Wikipedia, 2008).<br>However, it is observe that a number of business oriented persons are not investing in oil palm seedlings production. What would be responsible for this?<br>The equation therefore is whether investment in oil palm seedling production is not profitable or there are some other problems that are preventing investment in oil palm seedling production.<br>It is necessary to carry out an economic analysis to determine the profitability and viability of oil palm seedling production in Edo South Senatorial district.<br>1.3      OBJECTIVE OF THE STUDY<br>The broad objective of the study is the economic analysis of oil palm seedlings production in Edo South senatorial district.<br>The specific objectives are:<br><br>To examine the soicio-economic characteristics of the producers of oil palm seedlings in the study area.<br>To identify the methods adopted in raising the oil palm seedlings in the study area.<br>To estimate the cost and returns in oil palm seedlings production and access its profitability and viability.<br>To identify the factors affecting the level of income generated in the production of oil palm seedlings in the study area.<br>To identify constraints militating/facing against oil palm seedlings production<br></p>