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How a small agritech start-up is taking on Nigeria’s adulterated palm oil cabals

The plastic bottles have a tamper-proof seal and a unique QR code that can be used by consumers to confirm its authenticity...


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Bottles of KR Foods palm oil

In 2017, the Nigeria Security and Civil Defence Corps, NCDSC arrested some palm oil suppliers in Potiskum, Yobe State and in Jos, Plateau State.

The palm oil suppliers were arrested for allegedly adulterating their product with a certain chemical. Their arrests led to the confiscation of samples, which after lab tests conducted by the National Agency for Food Drug Administration and Control, NAFDAC, showed traces of high acid, high saponification and high relative density.

The state’s coordinator of NAFDAC, Lawal Musa Dadingelma, would later confirm that the adulterated palm oil samples contained dye, which can cause cancer when ingested by humans.

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adulterated-palm-oil

Adulterated palm oil has taken over some Nigerian market

News also made the rounds in October this year when the Swiss authorities issued a warning and a recall of ‘Zomi’ and ‘Polifuds’ brand of palm oil from Ghana due to the presence of ‘Sudan IV [scarlet Red]’.

Sudan IV, according to experts, is an artificial dye that is known to cause cancer.

In the same period, Nigeria’s anti-graft agency, the Economic and Financial Crimes Commission nabbed no fewer than 26 people in Gombe State, for selling adulterated palm oil.

President of the National Palm Oil Produce Association of Nigeria also told the Guardian recently that more than half of palm oil eaten in Lagos are adulterated.

The adulterated palm oil market is estimated at over 1 billion dollars annually, posing an increased risk of cancer and heart-related diseases to consumers.

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With an estimated population of over 200 million people, Nigeria consumes roughly 3 million metric tonnes, MT of fats and oils annually with palm oil accounting for approximately 45% of total consumption in 2018, according to a report by professional services firm, PricewaterhouseCoopers, PwC.

This demand has created a thriving market for an unscrupulous importer cabals cashing out by adulterating the palm oil products to maximise profits at the expense of the health of the society.

This challenge has inspired a small start-up in Uzuaku, Abia State Nigeria, KR Foods palm oil to create a solution leveraging technology to tackle palm oil adulteration.

The start-up started operations in 2017 but became fully operational in 2018 on a one-ton per day integrated palm oil processing mill.

KR Foods leases palm plantation to grow its own palm fruits, processes the palm oil in a customised mill, where the products are carefully treated before packaging the unadulterated trans-fat-free palm oil in small and big size plastic bottles for distribution.

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Palm plantation leased by KR Foods for its palm oil

The plastic bottles have tamper-proof seal and a unique QR code that can be used by consumers to confirm its authenticity – a method that can come handy in the fight against adulteration in the largely fragmented and unregulated palm oil industry.

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“The market is unregulated and allows the proliferation of adulterated product that is injurious to health and the leading cause of cancer. We are solving the problem of adulteration,” founder and Chief Executive Officer of KR Foods, Ikechukwu Amajuoyi told Nigeria Today in an interview.

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kr-foods-palm-oil-processing-mill

KR Foods palm oil processing machine

A graduate of the Federal University of Technology, Owerri, where he studied Industrial Chemistry, Amajuoyi had wanted to pursue a career in the oil and gas sector and looked forward to returning to Chevron where he had interned during his undergraduate studies; but after he lost his father to cancer in 2016, he changed his mind and joined the fight against palm oil adulteration with his start-up.

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Founder/CEO of KR Foods, Ikechukwu Amajuoyi

He told Nigeria Today that the response to his product has been impressive. Since debuting at the shelves in May 2019, the start-up has produced over 45,000 litres of palm oil, sold over 5,300 bottles in 140 retail stores across 3 major cities in Nigeria, and processes an average of 1 million naira in a monthly transaction from the sales of palm oil and kernel nuts.

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“Palm oil adulteration is commonplace across Nigeria. The initial reactions motivated us and validated the idea. To most of our early customers, we are solving a big problem for them and they have stayed with us ever since then,” he said.

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A KR Foods bottled palm oil

He added: “Beyond adding value to the palm oil, we are also researching ways of enhancing the value chain by harnessing resources inherent in our waste for bio-gas generation and organic fertiliser for farming.”

The impressive growth being recorded by this start-up demonstrates the boundless opportunities that still exist in the neglected palm oil industry in Nigeria.

According to a report by India-based Zion Market Research, the global palm oil market was valued at $65.73 billion in 2015 and is expected to reach $92.84 billion in 2021.

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In the last five years (2014 – 2018), Nigeria consumed 6.6 million metric tonnes, MT of crude palm oil, CPO. Out of the total consumption, local production represented 75% or 4.93 million MT thereby causing reliance on importation for the shortfall of 25% or 1.67 million MT, according to a PwC report on palm oil in 2018.

In the early 1960s, Nigeria was the world's largest palm oil producer with a global market share of 43%. Today, it is the 5th largest producer with less than 2% of total global market production of 74.08 million MT.

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palm-fruits

Nigeria used to be the world's largest producer of palm oil

The descent started for Nigeria in 1966 when Malaysia and Indonesia surpassed it as the world's largest palm oil producers. Since then, both countries combined produce approximately 80% of total global output, with Indonesia alone responsible for over half i.e. 53.3% of global output, the PwC report further noted.

According to the Central Bank of Nigeria, if Nigeria had maintained its market dominance in the palm oil industry, the country would have been earning approximately $20 billion annually from cultivation and processing of palm oil as at today.

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The emergence of start-ups such as KR Foods is a sign that Nigeria could still push its way back up to the top of the ladder in the global palm oil industry. But for now, the start-up said is concentrating on its early wins.

Over the next year, Amajuoyi said the start-up plans “to sell an average of 15,000 bottles monthly”.

“Our vision is to be the palm oil brand of choice in every home in Nigeria”

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