- Nov 29, 2018
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How to Start a Medium Scale Palm Oil Processing Business in Nigeria.
The palm oil fruit is indigenous to the Giant of Africa, Nigeria as the fruit naturally grows especially in the south east and south west of the country. Thousands of tonnes of palm oil are processed on daily basis for consumption and use, yet we have to import from Asian countries and other foreigners that do not grow half as much as we do because barely enough is available locally.
We are obviously in need of more palm oil processing plants for the production of palm oil on both medium and large scale. On a medium scale, 3-50 tonnes of oil can be produced daily depending on size and sophistication of machinery.
In this article, we will focus on how to start a medium scale palm oil processing business in Nigeria.
Before we move any further, let's briefly go through the process of palm oil production. Are you ready? Leggo!!!
HOW TO MAKE PALM OIL
There are five major steps involved in the processing of the palm fruits the palm oil. These are:
- Weighing and Offloading from trucks: Weighing the palm fruits is important for easy calculation of the amount you are producing and calculation of the cost from sellers. Offloading from trucks, on the other hand, has to be done carefully because it may affect the overall quality of the product. If it is handled carelessly the acid content may rise and alter the taste and increase the processing hurdles as the acid content has to be reduced to a certain minimum.
- Threshing: This is the process where the fruit are cut off to separate them from their bunch. They are subjected to high temperature boiling in water to loosen the fruits in a process known as sterilization by pressurized cooking.
- Pressing/Extracting the Palm Oil: This is the peak of the processes involved in the processing of the palm oil, where the oil is being extracted from the fruit bunch.
- Filtering of the palm oil: The oil at this stage will contain unwanted remains of the fruit shells and water and some other dirt. So it is purified at this stage.
- Storage of the palm oil: After the whole work is done, they are stored in gallons or barrels, to be transported later to the market or for buying customers to come and pick up, as palm oil is often sold on-demand.
Now, let's face the business of the day. We are about to go through the steps involved in setting up a palm oil processing business in Nigeria. Legggo!
HOW TO SET A PALM OIL PROCESSING BUSINESS IN NIGERIA.
Are you ready to kick start this business? These steps you need to follow:
1. Get a Suitable Location.
When choosing the location, you need to consider some factors:
- First, you will need a decent amount of open space for the plant.
- The distance of the plant from the nearest farm that can supply you with the palm fruits known as Fresh Fruit Bunches (FFB).
- Is there enough space to accommodate a parking space for trucks for offloading the palm fruits?
- Will there be enough room for many workers to work and move about comfortably?
2. Water Supply
This is a very important aspect of planning. You need to ensure uninterrupted or reliable supply of water mainly for washing of the fruits and boiling/steaming of the palm fruits during processing. There is a high possibility of being located in a remote area where there is neither electricity nor treated water supply, so it is advisable to dig a borehole on site. This makes water cost effective and readily available.
3. Purchase the Needed Equipments.
A mill is setup for the processing of palm oil. The mill does almost everything in the palm oil processing operation such as the boiling, threshing, fermentation, fruit clarification etc. Depending on how much of the processing plant you wish to mechanize, the machines you need may vary. For example, if the threshing is left to manual laborers, you wouldn’t need a thresher. But of course there would be a wide gap when it comes to efficiency between the workers and the machine. Machines will perform faster and reduce waste significantly.
The most common machines found in a palm oil processing mill are the thresher, boiler, presser, and the clarifier. Each mill has a capacity rating, that is an amount of palm oil it can process daily. Small ones usually produce about 1 tonne every 24 hours and medium to large ones produce over 10-100 tonnes daily.
The suppliers of the machinery provide tech support, they should be able to provide you with any information you need regarding the setting up of the mill and its maintenance.
The equipments are shown below with their possible prices:
|10 Ton Capacity Mill||Production capacity = 10 tonnes, including boiler, thresher and all the other necessary machines.||3,800,000|
|Diesel Generator||16KVA power generator.||1,406,500|
|Borehole||For water supply. The full installation with electric pump connected to tanks for storage.||300,000|
|Plot of Land||1,000,000|
The table shows that this business is capital intensive and for a medium scale business you will need roughly 7million naira for equipments.
4. Hire Trained/Experienced Staff
Employ experienced hands to handle the processing and production for optimum results. They must have undergone training on how to operate the specific set of machines available in your processing plant.
You also need to employ professional engineers, chemical engineers for testing and evaluating of the oil product and mechanical engineer for the mill maintenance. You can hire on a contract ground.
You also need more hands for offloading the fruit bunches and other manual labours.
Once you follow the steps above, you are set to start production.
HOW PROFITABLE IS THIS BUSINESS?
A tonne of palm oil is sold for N173,000 or a little more so we will be having N17,300,000 for 100 tonnes.
About 40% of the initial expenditures is for the purchase of palm fruits, which is about 6.9 million Naira, while about 3.5 million naira covers transportation, staff payment, diesel fuel and maintenance costs.
17,300,000 – 6,900,00 = 10,400,000
10,400,000 – 3,500,000 = N6,900,000
Your expected profit when embarking on this business is almost 7 million naira.
So you see, this business is highly profitable.
To start a palm oil processing business in Nigeria, even on a medium scale, you need an intensive capital. However, the profit is exciting and encouraging.