CHAPTER ONE

INTRODUCTION

1.1 Background Information

The oil palm (Elaeis guineensis) is a native of West Africa. It flourishes in the humid tropics in grooves of varying density, mainly in the coastal belt between 10 degrees North latitude and 10 degrees South latitude. It is also found up to 80 degrees South latitude in Central and East Africa and Madagascar in isolated localities with suitable rainfall. (Kenneth et al., 2007).
It grows on relatively open ground and therefore, originally spread along the banks of river and later on land cleared by humans for long- fallow cultivation (Hartley, 1998). Oil palm exists in wild, semi-wild and cultivated species in three areas of the equatorial tropics, in Africa, in south Asia and in America.

The palm fruit develops in dense bunches weighing 10 kilograms (kg) or more and containing more than a thousand individual fruits similar in size to a small plum. Palm oil is obtained from the flesh of the fruit and probably form part of the food supply of the indigenous population long before recorded history (Lynn, 1989).

A few written records of the local food use of oil palm (presumably from Elaeis guineensis) are available in account of European travelers to West Africa from the middle of the fifteenth century.

In Africa, palm oil remains a domestic plant, supplying the needs for oil and vitamin A in the diet and it was not until the end of the eighteenth and the beginning of the nineteenth centuries the oil palm which is a drupe, whose outer pulp provides the palm oil of commerce, the pulp or monocarp covers the hard- shelled nut which contains the palm kernel that provides two commercial products, palm kernel, oil and the residual livestock food, palm kernel cake (Agwu and Ikechi, 2004).

The oil palm is a perennial crop that originated in the tropical rain forest of West Africa. It spread to South America in the 16th century and to Asia in the 19th century. During the 1970s, Asia overtook Africa as the principal oil palm producing region in the world.

In recent decades, the domestic consumption of palm oil in West Africa has increased more rapidly than its production. After centuries as the leading producing and exporting region, West Africa has now become a net importer of palm oil.

Between 1961 and 1965 world oil palm production was 1.5 million tons, with Nigeria accounting for 43%. However, since then, oil palm production in Nigeria has virtually been stagnated. But today, world oil palm production amounts to 14.4 million tons, with Nigeria which is one of the largest producers in West Africa, accounting for only 7%. Kei et al., (1997) compared the characteristics of the Oil palm sectors in Malaysia and Nigeria and found out that Malaysia's success is built on plantation management together with processing in large modern mills.

The plantation mode of production is characterized by large scale monoculture under unified management. In Nigeria by contrast, 80% of production comes from dispersed small holders who harvest semi wild plants and use manual processing techniques. Several million smallholders are spread over an estimated area of 1.65 million hectares in the Southern part of Nigeria.

In addition, to the agro-climatic and structural (size and scale of production and processing sectors) there are other environmental and coordination factors like little use of modern inputs and extension service; previously controlled by monopoly marketing board; low provisions of market information, standards and quality control (Udom,1986)

Since independence in 1960, Nigeria's agricultural sector has experienced slow output growth that has not kept pace with population increases. This has resulted in declining agricultural exports and domestic food supplies and a growing reliance on imported food.

Nigeria has been particularly fortunate in having vast oil reserves but it has also been plagued by economic chaos and political instability over the past three decades while the decline in the agricultural sector can be partly explained by drought and serious pest and diseases infestations, there are other prominent reasons for its decline, including the neglect of the agricultural sector after the oil boom, and unfavourable government policies which greatly affected the technology generation capacity and technology environment, farm level production and marketing environment and production and coordination machinations between different stages of the oil palm sector in Nigeria (Hyman, 1990).

Because of the increased demand for palm oil resulting from an increase in population and income growth, relative to the low productivity of the oil palm sector, Nigeria has become a net importer of palm oil. At the same time, the rapid devaluation of the Naira combined with high transportation costs from ports to internal markets put imported oil in a competitively disadvantaged position.

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