Palm Oil Import Tariff Reduction Could Bankrupt Millions of Farmers —NPPAN President

The President of the National Palm Produce Association of Nigeria (NPPAN), Alphonsus Inyang, has reacted to the newly announced reduction in import tariffs on Crude Palm Oil (CPO), calling it a calculated attempt to send millions of smallholder farmers into bankruptcy and abandon the business.

He made this remark in an exclusive interview with this publication on Monday while reacting to the 17% reduction reduction in tariff on CPO import to Nigeria as part of the new 2026 Fiscal Monetary Policy (FMP) announced by the Federal Ministry of Finance.

Inyang explained how the new policy framework could undermine the local industry and erase the hard-earned gains of millions of smallholder farmers, who contribute the bulk of Nigeria's palm oil output volume with scarce means and under unfavourable conditions.

An Ill-Informed Policy, Lacking Stakeholders' Input

Mr Inyang expressed surprise at the government’s decision to reduce the tariff, explaining that the policy direction is ill-informed as none of the palm oil stakeholders agrees with it.

“As a critical stakeholder in this industry, I don't actually understand what informed the federal government of this decision,” he said.

The farmers' president noted how the policy contrasted with the views of the consulted stakeholders.

“I was not invited to a meeting by the Minister of Finance, but some critical stakeholders I reached out to over the weekend told me that they were invited to a meeting in early March. Everyone of them said they all spoke against this tariff reduction, but the government still went ahead to reduce it,” he stressed.

The NPPAN president further explained that this decision also went against the ongoing effort to revive the industry. For example, he mentioned the recently validated National Oil Palm Development Strategy, targeting up to 10 million metric tonnes annually and self-sufficiency by 2050.

“It was actually surprising to me because if we are targeting this kind of thing, it is expected that our strategy will involve reducing imports and encouraging more local production. So you now reduce tariffs for more imports to come in, to erase whatever efforts, whatever gains we have made through private effort, through the tears and the blood of smallholder farmers. It's quite unfortunate,” he lamented.

25 Years of Unpaid Levies Expose Sector Neglect

Chronicling the origin of the 35% import tariff on CPO, Mr Inyang noted that it has been in existence since 2001 during the President Olusegun Obasanjo administration. It had been decided that 10% of the tariff will go to the government, while the remaining 25% will be used to develop the domestic palm oil production industry.

“Alas, this 25% has not gotten to stakeholders, has not gone into the industry. Neither have I seen it, nor has it been used to improve any part of the value chain,” he stated.

“In other words, the tariff has by default been 35% because the development levy, what we call the CPO levy, has not gone into the sector,” Iyang further explained. 

He also claimed that the sub-sector's development has been neglected for over 25 years, including exclusion from the ministry's budget from year to year.

He noted that despite ongoing engagements with the government on the proposed 25% allocation for oil palm, the policy has yet to be implemented. He added that the recent reduction in tariffs from 35% to 28.5% comes at a time when stakeholders are trying to revitalise the industry, increase local production, and reduce dependence on imports.

He also criticised the lack of sustained government support for the oil palm sector over the years, describing it as one of the few agricultural value chains that has operated with minimal intervention from both federal and state authorities.

According to him, the tariff reduction could undermine the progress made by smallholder farmers, who account for about 80% of national production, potentially wiping out their gains. He warned that the policy may push many of these farmers, spread across all 36 states, towards financial distress and possible exit from the business.

Reduced Import Tariff Could Worsen Nigeria’s Food Production

He explained that the policy could significantly undermine Nigeria’s local palm oil production by allowing large volumes of cheaper imports into the market, which would likely disrupt pricing and weaken the earnings of domestic producers.

According to him, increased imports would put downward pressure on locally produced palm oil, further exposing a sector that has long operated with limited government support.

He warned that millions of smallholder farmers who depend on palm oil and palm kernel production for their livelihoods could face severe financial hardship, as cheaper imports may force them to sell below their cost of production. This, he said, could lead to widespread job losses and business closures across farming communities.

He attributed the price disadvantage to structural differences, noting that major exporting countries such as Malaysia and Indonesia benefit from government subsidies on inputs, financing, and infrastructure, advantages that Nigerian producers currently lack.

From Rice, to Grains and now Palm Oil

Mr Inyang also compared the situation to past policy shifts in Nigeria’s rice, grains, and other food production sectors, which he said had negatively impacted farmers. He argued that inconsistent government policies have pushed many farmers into debt, forced some out of business, and left others struggling to support their households.

He pointed to examples across multiple value chains, noting that rice, cassava, and ginger farmers have all faced significant setbacks in recent years.

"You are a reporter, you are aware that since the plight of 2023, ginger farmers have not received any single help to go back to the field. Maize farmers, who planted maize at a time when maize was selling at ₦500,000 or more per ton, are selling the same maize at less than ₦50,000 per ton, because of government policies,” he said with frustration visibly perceived from his voice.

“A whole lot of farmers are in debt. Cassava farmers are no longer farming. Ginger farmers have left Ginger. Many rice farmers have left the venture in the last year. So now, the only sector that was remaining, which is the oil sector, the government has come into it, to kill the industry,” he said.

Call for Policy Reversal

The NPPAN president, speaking on behalf of palm oil producers, urged the federal government to reverse the recent tariff reduction and return to the previous 35% rate. He also called for the implementation of a policy that would allocate 25% of the tariff specifically to the development of the local oil palm sector.

He appealed to the government to reconsider the decision, stressing that restoring the earlier framework and channelling dedicated funding into the industry would help support growth and protect local producers.