Chief Commercial Officer of the Ghana Oil Palm Development Company, Gangadhar Shetty, has urged government to come up with policies that will build the local crude palm oil industry’s capacity, as doing so will make the country become self-sufficient and an exporter of refined palm oil products.
He said the industry is happy government has reversed the 50 percent benchmark policy that brought it to near-collapse. However, he said, the discussion should now be focused on policies which will make the industry robust enough to produce sufficient amounts to satisfy local demand and export the excess, as this will end imports of refined palm oil products.
“We need to understand that the benchmark policy is not good for the manufacturing industry. The same way the refineries are looking at benchmark values as a threat to them, it is also a threat to crude palm oil manufacturers.
“So I would say the attention should be given more to crude palm oil production, because at this moment Ghana has a shortage of crude palm oil but we have adequate installed capacity for refineries. The main focus should be how to build and improve capacity of local crude palm oil manufacturers to become more productive.
“If we increase crude palm oil production we will not need to import refined oil, because it is from the crude oil that we get refined oil,” he said in an interview with the B&FT.
Mr. Shetty further stated that focusing on building the crude oil palm industry’s capacity will also create massive employment opportunities and make the currency stable; adding that if such help is not given to the sector, local refineries cannot produce to their maximum – and this will encourage imports of refined vegetable oils, thereby creating unfavourable competition and weakening the local currency.
“Refineries can be put up in just six months and will be ready for production. But if you want to produce 450,000 tonnes of crude oil you need 120,000 to 150,000 hectares of plantation, and that size of plantation can create direct and indirect employment for more than 600,000 people.
“If you look at the international price of crude palm oil, there is just about a US$70 to US$80 difference between the refined oil. So if you are producing the crude, you only need to add small value and you will stop imports of refined oil. It has the advantage of import substitution, and will save us a lot of FX while creating employment – especially for the rural folk,” he said.
He added that government must emulate the example of Nigeria, where its government has put in deliberate policies to protect and grow the oil palm industry by supporting manufacturers with soft-loans and slapping high duties on imported crude palm oil.
“Let’s try to compare ourselves to Nigeria. Nigeria is trying to give single-digit interest loans to the oil palm sector. Aside from that, Nigeria regulates the crude palm oil sector. You cannot just import crude palm oil; you need approval of the central bank of Nigeria, and they will not have access to forex from the central bank. They have to get it from the open market. So this means government is trying to give some level of protection to the sector.
“And if you look at duty on imported crude palm oil in Nigeria, it is 35 percent; but here in Ghana, it is 5 percent duty. So, it is important that the benchmark be removed and duty on imported crude increased,” he said.