HOW TO START A PALM OIL PROCESSING BUSINESS IN NIGERIA
How To Start A Palm Oil Processing Business in Nigeria
Palm oil is the most consumed edible oil worldwide. It is especially in high demand in West Africa, where it is used in almost every home for cooking and few other purposes. Presently, the global Palm Oil market is worth hundreds of millions of dollars. There are so many opportunities in Palm oil production for interested entrepreneurs. You can make a lot of money by tapping into the lucrative market that this business has to offer. And guess what; the market is still vastly unsaturated, as evident in the fact that World Palm Oil producers such as Indonesia and Malaysia are still currently exporting to West Africa. Meaning that we are yet to fill the market demand for the product in West Africa.
How To Start A Palm Oil Processing Business in Nigeria
So, back to the question: how can you start a profitable Palm Oil processing business? The following steps should help put you through.
- Conduct market survey
This first step is deliberate. It is crucial that you first run a detailed market analysis to help guide you on how to go about your marketing strategy. It is always better to have a ready market in place than to go looking for buyers after the business is launched. So keep that in mind.
- Get a good location
Your ideal location should be easily accessible to your target market. Although, since you won’t be selling directly to consumers, it may be needless for you to be situated near a market.
In this case, your ideal location will be around palm oil farms and plantations or even areas with an abundance of palm trees. You want your factory to be located remote from human and animal movements.
- Acquiring equipment
There are a lot of sophisticated machines and equipment available in the market for palm oil processing. For ease and smoother running of your business, you need to purchase the following equipment;
- Boiler
- Palm fruit stripper
- Nut fiber separator
- Pounding machine
- Mechanical screw press
- Barrels/surface tanks
- Setting up the plant
The next stage is to set up your processing plant and have certain machines installed efficiently. Usually, you have to seek out professionals to help construct all the needed infrastructure and help you in setting up and installations.
How much does it cost to set up a palm oil processing mill in Nigeria?
Generally, the total cost of setting up a palm oil processing mill plant will be determined by a combination of different factors. This includes the palm oil processing capacity, the quality, and quantity of palm oil processing machines and equipment, the palm oil suppliers, and more. Therefore the exact cost of setting up a palm oil processing mill plant in Nigeria will vary according to the different requirements and specific situations. A complete palm oil processing mill plant with a capacity of 50 tons is about $60,000. However, the price may vary otherwise, as the price is always variable.
- Hire trained workers
Hiring workers doesn’t have to be a big deal. If you can’t afford it; simply outsource jobs to contractors. Just make sure that your workers are experienced in the job or at least they should have been trained on how to operate the specific set of machines available in your processing mill. You need among your staff; professional engineers, chemical engineers who will be carrying out testings and evaluation of the oil.
How To Start A Palm Oil Processing Business in Nigeria
- Marketing! Marketing! Marketing!
Your ability to sell is what will determine your business’s success at the end of the day. Seek ways to reach more and more customers every day. While focusing on networking among your target market. Approach prospective marketers and encourage them to buy from your company. Focus on effectively growing your customer base and on establishing repeat customers for your business. You need to be proactive as far as implementing marketing strategies are concerned. This is the lifeline of your business, so treat it as such.
Profitability of the business
As earlier stated, palm oil processing business is highly profitable. For instance, a tonne of palm oil goes for about $500 which is about N170,000. And only just about 25% of the oil is extracted from a fruit bunch. This means that if a good machine is used, you will need about 40 tonnes of fresh fruit bunches to produce 10 tonnes of Palm Oil.
So if you work the mill 3-4 times a week, that means that for each month you can produce 12×10 tonnes = 120 tonnes or say 100 tonnes at the very worst. And so if 1 tonne goes for about N170,000, it means you can make up to N17,000,000 per month.
If you take out the rest of your expenditures like staff payment, transportation, diesel fuel and maintenance, and others which could roughly add up to nothing less than N10,000,000, at the end of every month you will be left with a profit of N7,000,000.
Challenges involved in palm oil processing business in Nigeria
Below are some likely challenges you may encounter with the business;
- It is both capital and management intensive
- Getting all the necessary equipment and sourcing for a good location could sometimes pose a problem
- There might be transportation difficulties during moving the palm fruits from the farms to the processing plant
- Inconsistent supply of raw materials (palm fruits)
Snippets on how to process palm oil in Nigeria
The processes involved during palm oil production is outlined below;
How To Start A Palm Oil Processing Business
- Palm fruit reception. Harvest the palm fruits from the plantation
- Sterilization. Sterilize the palm fruits using water or steam
- Palm oil threshing. Separate the palm fruitlets from the bunches by vibration or rotation
- Digestion. Crush the palm fruits
- Palm pulp pressing. Extract the palm oil using palm oil processing machine
- Clarification. Remove all impurities from the mixture to get the crude palm oil
- Storage. The final crude palm oil is then stored in specialized tanks or drums for further selling or transportation.
Examples of Nigerian oil processing companies
The following companies are top oil processing companies in Nigeria
- Presco PLC. Presco specializes in the cultivation of oil palm and in the extraction. Presco-plc.com
- Zionbim Farminex Nig. Ltd.
Sure this post was helpful, if you need more information or would like to book a consulting session with us, you can call us on 08105636015 or 08076359735. Alternatively, you can send a mail to dayohub@gmail.com
(B.Agric, MBA)
08105636015, 08076359735
Serial Entrepreneur - International Business Planning Consultant - Speaker - Trainer - Author - Blogger - Network Marketing professional.
- 2018 SME Business Trainer and Coaching Advisor at GIZ for SME Loop.
- 2018 YALI RLC Online Cohort 9
- 2017 Fellow, Inspire Africa Train-the-Trainer Entrepreneurship programme sponsored by US Consulate Lagos and the Dickey Center, U.S.A.
- 2016 Fellow, Tony Elumelu Foundation Entrepreneurship Programme
- 2015 Top 50 Innovative Entrepreneurs, BET5 by Diamond Bank and EDC, PAU.
He is an alumnus of Enterprise Development Centre (EDC) of the Lagos Business School (LBS), Pan-Atlantic University (PAU). Through his training, mentoring, speaking and coaching programmes, he has empowered many young people over the years to start and grow their own business, build wealth, create multiple streams of income and achieve financial independence.
- He is a Certified Trainer in Design Thinking by the U.S Consulate, Lagos and the inspire Africa Entrepreneurship Institute.
- Katumu Adasi: How to survive in Nigeria without a job - February 11, 2021
- Top 5 business and services with the highest demands in Nigeria - January 4, 2021
- How to Become a Millionaire doing Rice Farming in Nigeria - January 4, 2021