Okomu Oil, Presco, PZ Wilmar defy agric sector’s woes

• Record massive boom amidst perennial challenges 

Nigeria’s oil palm production subsector is defying all odds to emerge as an outlier in the nation’s underwhelming agricultural sector by delivering value and good return on investments to shareholders, Business Hallmark can report.

Buoyed by sustained investments, enhanced production practices, technological advancements, and an attractive return on investments, the oil palm agric sub-sector is witnessing a renaissance, as investors appetite for the liquid gold keep rising.

According to available data, individual farmers and companies involved in oil palm business are flourishing, unlike their counterparts in the grains and livestock business, who are passing through difficult times.

In 2024, the oil palm sector  demonstrated positive momentum with palm oil prices rising by 56.8 per cent year-on-year to N420,906 per metric tonne as a result of the interplay of global market dynamics, imported input inflation, and the devaluation of the naira.

These factors contributed to a 90.2 per cent increase in industry revenue, which reached a record N337.7 billion, with two leading players in the oil palm sector that are listed on the Nigerian Exchange Limited (NGX), Okomu Oil Palm Plc and Presco Plc contributing N207.5 billion and Okomu N130.2 billion respectively.

Rising Profitability

A report by Afrinvest West Africa released in January projects the two companies will earn a combined profit before tax (PBT) of N231.5 billion and combined profit after tax (PAT) of N161 billion in 2025.

Afrinvest predicated its projection on expectations that global CPO prices will reach $1,200 per metric tonne by the close of 2025, an increase of $300 from the $900/metric tonne recorded in 2024.

“With global supply tightening as Indonesia and Malaysia ramp up domestic biofuel mandates, Nigeria stands to benefit from elevated international prices, and widening domestic supply gaps”, Afrinvest said in its 2025 Oil Palm Sector Update.

BH checks showed that Palm Oil price in the international market at exactly 07:24am on Friday, August 15, 2025, stood at $1,028.82 (N1.6 million) per metric tonne. Locally, a metric tonne of palm oil currently sells for between N1.3million and N1.5million.

The revenues of other big industry players like PZ Wilmar Limited, previously owned by PZ Cusson and Wilmar International Limited, are not known to the public as the companies are privately owned, and are not legally bound to make public their financial reports.

Established in Nigeria in 2010, PZ Wilmar was set up as a joint venture between PZ Cussons Plc (UK) and Wilmar International Limited. Apart from its partnership with PZ Cussons, Wilmar also owns minority stakes in two oil palm plantations in Nigeria.

Meanwhile, PZ Wilmar has now transformed into one of Nigeria’s largest oil palm firms, controlling a large chunk of the market with its popular edible cooking oils brands, Mamador and Devon King’s.

Oasis of Growth

Business Hallmark reliably gathered from industry players that oil palm business in Nigeria is thriving unlike other agro-foods businesses, excluding cash crop production like cocoa, due to several factors.

The major reason the oil palm sector is thriving, BH learnt, is that products from palm oil trees like red oil and pure vegetable oil are international commodities traded in U.S dollars.

According to a palm produce merchant, Chief Jonathan Olowokere, the prices of palm products are not determined locally, but by brokers and traders in international commodities markets.

“It will surprise you that all the major firms operating in the country today are largely owned and controlled by foreign entities. Apart from servicing local demands, these companies also export palm products to earn foreign exchange.

“Even when they are not exporting, oil palm products are internationally priced. So, even when we produce them right here in the country, Nigerians pay international prices for it as they normally pay for refined petroleum products.

“That’s why prices of oil palm products are relatively high in the market despite us producing them locally,” Chief Olowokere explained.

The agro-produce merchant also disclosed that virtually every part of a palm tree is a raw material used in the production of one product or the other.

“For example, the fibres (EFB or Empty Fruit Bunches) that hold the palm fruits when they grow on the tree are useful bio-masses formed during extraction process of palm oil.

Multiple Utility

“Generally known in Nigeria as Ògùsò (lighter or burner), EFBs  can serve as an efficient form of fuel with sufficient combustion temperature.

“These bunches can be recycled to power steam boilers and to produce steam that can in turn run turbines to produce electricity.

“In advanced climes with the  technical abilities to convert it into fuel, EFBs have increasingly been used as a valuable source of renewable energy.”

Olowokere added that like EFB, another by-product from palm nuts, Palm Kernel Shell (PKS), is also used  to produce biomass fuel.

“These fibres are usually  pressed to form solid fuels to power steam boilers, just like the EFB, to generate electricity.

“With these sources of fuel (from the EFB and the PKS), palm oil production mills are often self-sufficient and able to produce the energy they require to power the machines using only these by-product biomass fuels from their own production chain.

“These fuels are also cleaner and preferred over coal because it emits less dark smoke that exacerbate the issue of global climate change.

“We also derive what is know as Mesocarp Fibres (MF) from crushed palm seeds. After the palm oil fruits are pressed, the remaining dry cake that is formed is made up of mesocarp fibres.

“These cakes have several uses ranging from being turned into soil fertiliser, being used to make fibre boards and blackboards, to making fatty-acid based animal feed.

“Even the trunks are strong fibres used in the construction industry for roofing or reinforcement.

“You can see why investors in the sector hardly go bankrupt as every part of a palm tree is money”, Olowokere noted.

Another reason why the oil palm sector is soaring above other sectors in the agricultural value chain is geography.

Investment Advantage

According to BH findings, most oil palm plantations are located in the rain forests of Ondo, Delta, and Edo States in the South West and South South regions largely insulated from the murderous activities of Boko Haram insurgents, bandits, and Fulani herdsmen, who often terrorize farmers in the food belt regions of the North-Central, North West, and the North East.

Apart from the advantages of oil palm plantations been protected from attacks by the largely impenetrable rain forests, as well as its products being an international commodities priced in dollars, the sector has access to massive funds from international investors.

In June 2025, Wilmar International Limited acquired  PZ Cussons Plc’s 50 per cent equity in PZ Wilmar for $70 million, about N107.5 billion at the current exchange rate of N1,535 per dollar.

With the completion of the transaction, Wilmar now holds 100 per cent of the equity in PZ Wilmar. The transaction, experts argued, confirms the viability of the oil palm business.

“What this means is that PZ Wilmar Limited is worth around $140million (N215 billion). Apart from Olam Nigeria, a Singapore headquartered agro-allied company operating in Nigeria, I don’t think there is any other agric-based firm that is worth that much in the country.

“And you can see where Olam is coming from. Apart from internationally priced grains like rice and wheat, which the company grows and process, it is also involved in the business of farming cash crops like cashew, cotton, cocoa, and shea-nuts for export.

“What this suggest is that only farmers and companies involved in large scale planting and processing of cash crops, grains and other exportable products are largely protected from the deluge of problems haunting the nation’s agric sector,” declared Dr. Biyi Ademiju, a crop scientist based in Lagos.

Ademiju advised the government to pay more attention to well structured and flourishing agric businesses that are resilient to shocks.

“Unlike other sectors of the economy like banking and telecoms that suffered from forex losses, Presco and Okomu were able to widen their profit margins in 2024 in spite a 46.2 per cent depreciation in the value of the naira, and other elevated energy expenses.

“Their resilience is largely due to higher production volumes, strategic capacity optimization, and enhanced operational efficiency.

“Rather than wasting billions of dollars on farmers to produce rice for the nation, which we never get, we should rather import rice and other grains from countries better equipped to produce the products, and focus on where we have  comparative advantages.

“You can imagine government investing the funds in firms like Olam, Presco, Okomu, and PZ Wilmar? The country will be reaping massively from the investments.

“Look at Olam, a company founded by Kewalram Chanrai Group in Nigeria in 1989. It is currently valued at over $32.060 billion Singaporean dollars, which is about $28billion, when converted to American dollars.

“You can imagine the return on investments Nigeria will be getting if we own just 10 to 20 percent of Olam? But our economic managers won’t ever think along that line. They will rather prefer investing in unprofitable ventures like the failed Anchore Borrowers Scheme for parochial and political reasons”, Dr. Ademiju lamented.