In the 1960s, Nigeria was the world’s leading producer of palm oil. Though the country still remains one of the largest producers, it now meets domestic demand through imports. There are two primary types of palm oil – Technical Palm Oil (TPO) and Special Palm Oil (SPO). The Niger Delta’s 9 states account for roughly 57% of Nigerian palm oil production.

Palm oil is primarily produced in three ways – through the collection of palm fruit (fresh fruit bunches) from wild groves, private plantations managed by individual farmers, and large coproate or government owned plantations. Demand is primarily driven by household consumers who use TPO for cooking and prefer it to SPO because of its tangy flavor due to a higher concentration of fatty acids. Over the years however there has been an increasing demand for SPO to meet the needs of industrial processors that, after refining the oil, sell it to manufacturing industries for use in products such as soaps, candles, pharmaceuticals, lubrications, agrochemicals, paints, and biodiesel.

Data collected in some of the analysis showed that production of palm oil is largely dominated by wild groves which are low yielding compared to large plantations. The ownership structure of the wild groves fail to incentivize investment in their maintenance and upgrading inefficient processing technologies are used. Challenges in managing large estate operations create inefficiencies with lack of coordination between value chain actors.