Palm Oil Price in Nigeria To Get More Expensive, Reasons Emerge

• Indonesia, the world’s largest palm oil producer, has announced plans to increase its export tax to 10%
• The move is expected to affect prices in Nigeria due to reliance on imports despite being the fifth-largest producer
• Local producers like Okomu Oil and Presco, in their 2024 financial results, recorded massive profits

Dave Ibemere, a journalist at Legit.ng, has been reporting on business for over ten years. He has deep knowledge of the Nigerian economy, stock market, and general market trends.

Indonesia, the world’s top palm oil producer, has raised its export tax on crude palm oil (CPO) from 7.5% to 10%, effective May 17, 2025.

The policy, the Indonesian government said, aimed at bolstering its domestic biofuel program and supporting smallholder replanting schemes.

The Indonesian Ministry of Finance said additional taxes on a range of palm oil products would help finance replanting activities and fund the production of both biodiesel and palm oil, a key commodity that contributes 4.5% to the country’s GDP and employs about 3 million people.

The new levy comes as Indonesia pushes ahead with an ambitious plan to raise the palm content in its biodiesel from 35% to 40% this year, with a target of 50% by 2026.

A 3% jet fuel blend is also under consideration for 2026.

Indonesia supplies around 60% of the world’s palm oil, a staple ingredient found in roughly half of all packaged food items globally, according to UNDP data.

However, Reuters reports that the Indonesian Palm Oil Association, GAPKI, urged the government to delay a planned hike in the palm oil export levy, warning it could harm competitiveness amid global trade uncertainties due to the U.S. tariffs and geopolitical tension.

GAPKI said in a letter addressed to Finance Minister Sri Mulyani Indrawati:

"The situation is full of uncertainties and it is a big risk to launch a policy that will impact competitiveness of Indonesia's palm oil exports."

Nigeria to be affected by palm oil price hike

Although Nigeria is the world’s fifth-largest producer of palm oil, if the new changes are fully implemented, they will affect the local market.

Nigeria still relies on imports for nearly half of the two million metric tons consumed locally each year.

Traders who spoke to Legit.ng revealed that the price of a 5-litre container of palm oil has been steadily increasing

Chinedu Eze, a palm oil seller at Ikotun market, said:

"It depends on the type of palm oil you’re buying. I sell branded palm oil for N36,000 per 5 litres, while the unbranded one costs N10,000 for the same quantity.

"A 25kg container of palm oil goes for N55,000, while some unadulterated ones of the same size can go as high as N60,000."

These prices could change if global palm oil prices rise further.

Palm oil producers in Nigeria record profit

In Edo State, widely regarded as Nigeria’s palm oil heartland, listed companies Okomu Oil and Presco posted record after-tax profits in 2024, buoyed by strong global prices despite challenges from inflation and naira devaluation.

Okomu Oil’s after-tax profit rose to N34.3 billion in 2024, up from N21.2 billion in 2023, while Presco’s after-tax profit surged to N104.3 billion from N32.9 billion.

Nigerian billionaire to build palm oil refinery

Earlier, Legit.ng reported that Abdulsamad Rabiu, the founder of BUA Group, one of Africa’s largest food, mining, manufacturing, and industrial conglomerates, signed a series of industrial and agro-processing agreements in Dubai.

Among the deals is an agreement to construct a 1,000 metric tonnes-per-day palm oil refinery. There are also plans for a gas power plant.

Proofreading by James Ojo, copy editor at Legit.ng.

Source: Legit.ng