Nigeria Braces for Palm Oil Price Surge as Indonesia Raises Export Tax, Boosts Local Production Plan

• Indonesia, the world’s largest palm oil producer, has raised its crude palm oil export tax from 7.5% to 10%, which could lead to a global price surge, including in Nigeria.

• Nigeria, despite being the fifth-largest producer, imports nearly 50% of its palm oil, making it highly vulnerable to global price changes.

Palm oil prices are projected to climb globally following Indonesia’s decision to raise its export levy on crude palm oil (CPO) from 7.5% to 10% as of May 17, 2025.

The move, announced by the country’s Ministry of Finance, is aimed at funding its biofuel program and supporting replanting schemes.

Indonesia, which supplies 60% of the world’s palm oil, has been under pressure to balance domestic needs with international demand. The higher taxes also apply to other palm oil derivatives, with proceeds directed toward smallholder programs, biodiesel expansion, and rejuvenating aging plantations. The government recently mandated an increase in the palm content of biodiesel from 35% to 40%, with a 50% target set for 2026.

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Nigeria, Africa’s largest economy and the fifth-largest palm oil producer, could feel the heat.

The country currently imports nearly half of the two million metric tons it consumes annually. This dependence leaves it exposed to external price shocks, particularly amid tightening global supply from major producers like Malaysia and Indonesia.

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In response, the Oil Palm Growers Association of Nigeria (OPGAN) has launched an ambitious five-year Oil Palm Development Strategy (2024–2029). The plan aims to replant 1.5 million hectares and move Nigeria up the global ranking from fifth to third in production. It also focuses on sustainable ecological practices, modern technology, and inclusive growth.

Edo State remains the hub of Nigeria’s palm oil industry, home to market leaders Okomu Oil and Presco, both of which recorded record profits in 2024. Experts believe that with strategic investment and proper implementation of the national plan, Nigeria can significantly reduce imports and stabilize local prices despite global market volatility.