Illegal shipments, weaker consumer income affecting sales

Company says there isn’t enough demand to absorb current glut

Okomu Oil Palm Plc, Nigeria’s second-largest producer of palm oil, expects its sales will probably slow for the rest of the year due to a supply glut and weak consumer demand.

There’s a surge of illegal shipments from neighbouring West African countries in recent months contributing to the oversupply of the domestic market, Okomu Chief Executive Officer Graham Hefer said in a Feb. 12 telephone interview. There are fears the situation may get worse if the government gives import waivers “to some people for political reasons” ahead of 2019 general elections, as happened in the past, he said.

Nigeria’s central bank in 2015 stopped importers of 41 items, including palm oil, from getting the foreign exchange from official channels. That helped to support local producers and conserve dollars after the price of crude, the nation’s major revenue earner, plunged in mid-2014. The measure was a boon to Okomu as its revenue surged 47 percent and profit rose 85 percent in 2016.

While the restriction remains, palm-oil shipments increased last year as importers gained more access to foreign exchange following a new trading window introduced by the central bank for investors. There hasn’t been enough demand to absorb all that supply as Nigeria recovers from its worst economic slump in 25 years, Hefer said.

“We hope that the bottom line will be more or less in line with what we had before because we are closely monitoring our costs,” Hefer said. “We make sure we find the cheapest supplier in the market and that which can give us the best quality and the best returns on input.”

Okomu, which currently mills 30 metric tons of palm oil per hour, plans to double its capacity by 2020 on the completion of a $50 million plant, he said. The company operates 33,000 hectares (82,000 acres) of oil palm and rubber trees, according to its website.

With a drop in demand for rubber from China, Okomu is seeking new markets in other countries, Hefer said, without identifying the targeted markets. The company sells palm oil locally and exports rubber.

SOURCE: https://brandspurng.com/okomu-nigeria-sees-subdued-2018-for-palm-oil-on-market-woes/

interesting

"Illegal shipments, weaker consumer income affecting sales

Company says there isn’t enough demand to absorb current glut"

This is not good...

every business Don cast for nigeria

Bb

Our government are not always consistent with their policies, that's why it's risky doing business in this part of the world

Okomu Oil Company should invest in secondary palm oil products.

If cassava tuber demand is reducing, you look into production of garri, packaged fufu flour, tapioca, cassava chips, cassava pellets, starch and other secondary cassava products.

Anyways, what do I know?

I pray things get better in the country,things are really not favourable at the moment.

calberian:

Okomu Oil Company should invest in secondary palm oil products.

If cassava tuber demand is reducing, you look into production of garri, packaged fufu flour, tapioca, cassava chips, cassava pellets, starch and other secondary cassava products.

Anyways, what do I know?

in my life i havent met someone as senseles as you

So we should start monitoring the drop of Okomuoil and other palm oil companies on NSE. Buy when they drop lower.

postbox:

There’s a surge of illegal shipments from neighbouring West African countries in recent months contributing to the oversupply of the domestic market, Okomu Chief Executive Officer Graham Hefer said in a Feb. 12 telephone interview. There are fears the situation may get worse if the government gives import waivers “to some people for political reasons” ahead of 2019 general elections, as happened in the past, he said.

Weak borders as a result of corrupt borders patrol officials & the failure of quality political leadership has brought all this mess. Yet, government make lip service of promoting diversification into agriculture.

Edoloaded:
in my life i haven't met someone as senseles as you

You should have even ignored the kid. All they know is run to comment without reading.

calberian:

Okomu Oil Company should invest in secondary palm oil products.

If cassava tuber demand is reducing, you look into production of garri, packaged fufu flour, tapioca, cassava chips, cassava pellets, starch and other secondary cassava products.

Anyways, what do I know?

Lol, you really don't know much. You think Okomu is a small factory that can quickly switch products to suit market, that's very funny. You should look at the size of an acre of land and try wrapping your mind around the scale of a company that utilizes 82,000 acres.

What is happening in the palm oil
& agric sector in Nigeria is simple.

Nonsense economic policies (like
weak currency, doubling energy costs
increased to costs etc) by an
incompetent, irresponsible govt have
resulted in high production costs in the
agric sector.

The producers have no choice than to
bring their produce to market at also high
costs to cover the production costs.

This high costs of goods in Nigeria have
attracted the attention of neighboring countries
who do not have similar high costs of
production & can thus make serious profits
by bringing their goods to the Nigerian market.

That is why every manner of agro goods are
forcing their way into Nigeria.

Gari & palm oil from as faraway India & Malaysia
& neighboring Ghana & other West African countries.
Local rice costs as much as foreign.

PMB, kachikwu & Audu ogbe are just a bunch
of economic clowns causing all these
economic distortions....

Shows the economy is in a poor state. If we are recovering as alleged then demand should be rising despite imports. And these are the real indicators, not those coming from government offices.

Nigeria my country! The Nigerian business environment is too volatile.

The government should take the blame for this. They placed embargo on imported palm oil without genuine reason and an opportunity was created for investors. After one has invested so much you hear the embargo has been lifted.

Jethrolite:
Lol, you really don't know much. You think Okomu is a small factory that can quickly switch products to suit market, that's very funny. You should look at the size of an acre of land and try wrapping your mind around the scale of a company that utilizes 82,000 acres.

Yes, I agree with you on my not knowing much. I only know about a few subjects actually but I try to know as much as I can on those subjects so when I meet folks like you I either learn or wonder why I wasted time at that meeting.

From your position, if I'd said the company should invest $100m instead of $50m, you'd interprete it to mean I'm suggesting that they put a call through to their financiers right away.

I know your type.

However, in the raw materials production sector, when planning operationally vis-à-vis strategically, it is common place to accommodate contingencies so as to account for plans that go boom and those that go bust. And to keep the bottomline well pampered and manage investor confidence.

I never so much as hinted that Okomu must quickly " switch " as you claimed. I mean, the post says that the company intends to invest $50m in production capacity at a time when revenue is dwindling. This means the expansion plans had been underway probably before even 2017.

West African (especially Ivorian) cocoa processing companies came to a similar consensus a few years ago when the cocoa prices were dropping faster than they could comprehend. It was a buyer's market so the only reasonable way out was secondary processing. It was either that or the buyers continue price dictation.

The comment really is a no-brainer.

Read my post again and correct yourself.

okomu is not a reliable company, this ppl ship 95% of their products to Brussels refine to vegetable oil bring it back to sell to us, with the rate they produce palm oil in Nigeria how come the product is still very expensive to buy, mean while countries near sell at a cheap rate

What makes him senseless?

Edoloaded:
in my life i havent met someone as senseles as you

What affect the high price of palm oil is the exchange rate ,every body capitalize on it to raise price of good's and material now that the naira stabilized there is bound to be fall in price , our people are not ready to accommodate that, if the price is high Okomu will not complain when they are selling a 20 litre keg for #21-23000 nobody complain of imported palm oil, note that cocoa price has dropped drastically too which is also dependent on exchange rate .Did international price change NO

calberian:

Okomu Oil Company should invest in secondary palm oil products.

If cassava tuber demand is reducing, you look into production of garri, packaged fufu flour, tapioca, cassava chips, cassava pellets, starch and other secondary cassava products.

Anyways, what do I know?

don't mind those quoting you. You have i big point. They should consider refining the oil to vegetable oil, margarine, soap etc. . In business, when your core mission is no longer working, its not working well as presumed, you use your existing platform to pivot into something better. Even today we are clamouring that oil firms in nigeria should start refinery, while can't Okomu start refining and making their oil into something of more value?

calberian:

Okomu Oil Company should invest in secondary palm oil products.

If cassava tuber demand is reducing, you look into production of garri, packaged fufu flour, tapioca, cassava chips, cassava pellets, starch and other secondary cassava products.

Anyways, what do I know?

Of course, you knew nothing. A company that invested a lot of money (including shareholders money because the company is listed on the NSE floor) into oil palm plantation and processing machinery would just wake up one morning and move into cassava farming and production of cassava related products?
May be you're confusing large scale cash crop farming and processing with importation of phones accessories from China. In a situation when phones accessories business is not lucrative again, you just switch to importation of rechargeable lights.

maasoap:

Of course, you knew nothing. A company that invested a lot of money (including shareholders money because the company is listed on the NSE floor) into oil palm plantation and processing machinery would just wake up one morning and move into cassava farming and production of cassava related products?
May be you're confusing large scale cash crop farming and processing with importation of phones accessories from China. In a situation when phones accessories business is not lucrative again, you just switch to importation of rechargeable lights.

you got the message totally wrong. He used cassava as a an example. He is asking them to look for other secondary stuffs, preferably consumer goods, they can use the palm oil to produce.

Reference:
Shows the economy is in a poor state. If we are recovering as alleged then demand should be rising despite imports. And these are the real indicators, not those coming from government offices.

May be you don't know the kind of large scale importation they're talking about. Palm oil is not water that everybody drinks now and then. The rate of importation is so bad that northerners have stopped coming to the south for palm oil that is being produced in the south.

iHart:
you got the message totally wrong. He used cassava as a an example. He is asking them to look for other secondary stuffs, preferably consumer goods, they can use the palm oil to produce.

I got the message right. My point is that it is not that simple. Most especially when you're talking about the long term investment like that of Okomun Oil.
Besides, the up and down has always been there. You see their sales and profit for 2016? Their current situation is not that bad. The problem here is government policy somersaults. If they diversify today (which is almost impossible) into something else and tomorrow, another policy reversal hits them, they won't survive. In production, you don't just start jumping from one thing to another.
I remember Obasanjo's policy on cassava production. He left government and every cassava farmers started making loss because of lack of markets caused by changes in policy.

maasoap:

Of course, you knew nothing. A company that invested a lot of money (including shareholders money because the company is listed on the NSE floor) into oil palm plantation and processing machinery would just wake up one morning and move into cassava farming and production of cassava related products?
May be you're confusing large scale cash crop farming and processing with importation of phones accessories from China. In a situation when phones accessories business is not lucrative again, you just switch to importation of rechargeable lights.

Dude, watch your blood pressure.

The gist on cassava was an analogy.

Education is clearly something to worry about in Nigeria. (Please, I'm literally begging you to not interprete this as me saying I suggested that Okomu should diversify into the educational sector)

maasoap:

I got the message right. My point is that it is not that simple. Most especially when you're talking about the long term investment like that of Okomun Oil.
Besides, the up and down has always been there. You see their sales and profit for 2016? The current situation is not that bad.

it is not that bad but the are complaining because they are foreseeing a an even worst future if nothing is done. This is Nigeria, nothing will be done just for Okomu, remember the case of Erico. Govt policies are highly dynamic and they are affecting businesses badly. So businesses should prepare for the worst and get ready to diversify. For business in Nigeria to survive, they must be ready to change with changing business environment.

calberian:


Dude, watch your blood pressure.

The gist on cassava was an analogy.

Education is clearly something to worry about in Nigeria. (Please, I'm literally begging you to not interprete this as me saying I suggested that Okomu should diversify into the educational sector)

lol

calberian:


Dude, watch your blood pressure.

The gist on cassava was an analogy.

Education is clearly something to worry about in Nigeria. (Please, I'm literally begging you to not interprete this as me saying I suggested that Okomu should diversify into the educational sector)

Hahaha... I haf died

iHart:
it is not that bad but the are complaining because they are foreseeing a an even worst future if nothing is done. This is Nigeria, nothing will be done just for Okomu, remember the case of Erico. Govt policies are highly dynamic and they are affecting businesses badly. So businesses should prepare for the worst and get ready to diversify. For business in Nigeria to survive, they must be ready to change with changing business environment.

Believe, the complaints is not that deep but it was just as a result of the interview. Just to make the government aware that importation is affecting them.
Now read me: I'm into the palm oil business. Up till May 2016, we bought Nigeria palm oil as low as N4700 per 25 litres. The price catapulted to as high as N24,000 by January 2017. Up till that May 2016, producers were making profits with that price. Today, the price is between N8000 and N10,000. Even when you factor the increase in production cost into it, are producers still not making decent profits today?
But, you know, as with capitalists, the profits would never be enough.
My only concern is that the government should do something about porous borders. Unchecked rampant importation of items kills every damn business anywhere in the world. It is only in Nigeria we don't care. What is affecting you in your current business also awaits you in the one you are jumping into.

calberian:


Dude, watch your blood pressure.

The gist on cassava was an analogy.

Education is clearly something to worry about in Nigeria. (Please, I'm literally begging you to not interprete this as me saying I suggested that Okomu should diversify into the educational sector)

Whatever the gist is on.
And yeah, he should clear 82,000 acres of oil palm and plant rubber trees or cassava.