International palm oil prices are publicly available.
Feyi Fawehinmi

Interesting perspective Feyi. But I agree with Amina’s point. Yes, the ban was a key driver of price increases, but it was not the no 1 driver — the currency devaluation was the no 1 driver. Palm is an internationally traded commodity, and local prices will one way or the other try to mirror that. With an FX environment that saw the USD appreciate by anywhere between a 100 to 300% depending on which benchmark market you are using, you can’t blame these companies for increasing prices. In fact, their management teams would have had some serious queries from shareholders if they did not optimize their pricing strategy to take advantage of the uncertainty in the market. Same thing happened with other internationally traded commodities like maize where farmers (yes, smallholder farmers) increased prices by more than a 100% to take advantage of limited supply and the fact that they deserved more naira for their maize just because of the higher exchange rate. The only reason why Presco and Okomu where able to attain much higher profit margins is because they control their raw material source and as such are able to optimize their cost mix. Case in point is Dang Sugar where output stayed the same (778,518MT in 2016 vs 778,000MT in 2015) but yet revenues in 2016 increased by 68% driven primarily by significant price increases…but what happened to profitability (i.e. EBITDA margins)…they dropped (13% in 2016 vs 21% in 2015). Summary really is that in capitalist societies, economic entities want to maximize profit, even smallholder farmers understand that.

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