HOW TO START PALM OIL PROCESSING COMPANY IN NiGERIA 2022 BEGAN GUIDE
BUSINESS PLAN ON PALM OIL PROCESSING COMPANY
Though very lucrative, the palm oil business is commonly overlooked. Palm oil is the most consumed edible oil worldwide, as it is a popular food ingredient in Africa and some parts of Asia (such as in Malaysia and Indonesia).
Palm oil is in greatest demand in West Africa, where it is used in almost every home for cooking and few other purposes. But in spite of this, the region produces less than 5% of the palm oil produced worldwide. Malaysia and Indonesia are the world’s largest producers and exporters of the commodity.
And West Africa is one of their biggest export markets because countries in the region are not producing enough palm oil to meet the demands of their local markets.
Presently, the global palm oil market is worth hundreds of millions of dollars, and it only keeps growing. You can make a lot of money by tapping into this lucrative market. There are many opportunities in palm oil production for interested entrepreneurs.
But before I go into further details, I would like to tell you more about this commodity and why it is highly preferred for cooking and other uses. (I am assuming that you didn’t know anything about palm oil before now. I’m sorry if you already did).
Palm oil is a red viscous oil extracted from the outer covering of the palm kernel fruit. It has its origin in West Africa and has been produced and consumed in the region for centuries. It didn’t become popular in Malaysia, Indonesia, and few other countries in the Far East until a couple a decade back.
Why do many people prefer palm oil to other oils? Here are the reasons:
Palm oil has relatively long shelf life when compared to other edible oils. With good storage facilities in place, palm oil can be stored for up to one year without its quality dwindling down.
Palm oil is a very good source of Vitamin E, which promotes skin health and improves its immunity to infections. It also enhances vision and prevents eye-related diseases.
Palm oil is totally free of cholesterol and low-density lipoproteins. These are the culprits behind many cases of hypertension and other health problems, and they are present in some other edible oils.
Palm oil is relatively cheap when compared to other edible oils.
In addition to the above, palm oil is used for a number of industrial purposes such as in the production of ice cream, margarine, creams, soaps, vitamin supplements, and so on. With the above in mind, let’s now discuss the various business opportunities in palm oil production.
There are many ways to make money from palm oil, depending on how much capital you have. If you have little capital, you can buy and sell palm oil in bulk quantities. But if you have huge capital, you can start a palm oil processing company or a palm kernel extraction plant, which is by far the most lucrative palm oil business. If you are interested in setting up a palm oil processing company, the following are the steps you need to take.
How to Start a Palm Oil Processing Company – Business Plan
1. Find a good location
Since you won’t be selling to consumers directly, it won’t be necessary to site your processing plant near a nearby market. You should be more concerned with being closer to palm plantations or areas with an abundance of palm trees.
However, if you can be situated closer to both the plantations and marketplace; it will be an added advantage for you. Secondly, your location should be free of unnecessary human and animal movements; yet very accessible for vehicles. This is best because there should be high level of hygiene around your plant.
2. Get the necessary equipment
In the past, palm oil was processed in “oil pots” made in the ground. The processing then involved rubbing and squeezing the palm kernel fruits until the oil was extracted. However, this old method is very wasteful, as it leaves some significant amount of oil left on the kernel fruits that could have been converted into more palm oil.
But nowadays, machines are used to process palm oil. This modern method is more hygienic, and it helps to extract all the palm oil on kernel fruits without leaving any quantity to waste. You should also know that most machines for processing palm oil can be imported or fabricated locally at a cheaper rate. Examples of equipments necessary for palm oil processing business
Palm Fruit Stripper
Boiler
Nut Fiber Separator
Pounding Machine
Mechanical Screw Press
Barrels or surface tanks for storage purposes
3. Setup your processing plant
You may need to seek the services of professionals to help construct the needed infrastructure and also install the processing machines.
4. Hire people to work with you
You will need to hire someone who would operate the palm oil processing machine. If you are planning to have more than one machine, then you would need to hire an operator for each machine. You would also need to hire other employees, such as a security personnel, administrative staff, and so on.
5. Create market awareness
Approach prospective marketers and encourage them to buy from your company. One smart way to retain them for a long term is to offer high quality palm oil at discounted prices. You should also encourage your customers to tell others about your business.
In addition, you can also establish a retail outlet to sell your palm oil. If you decide to go this route, you can create a competitive advantage by branding your gallons and fortifying your palm oil with vitamin A.
Six Challenges of starting a palm oil processing business
It is capital intensive
It is also management intensive
Getting an optimal location with all the needed amenities is quite difficult.
There is every possibility that your palm oil processing will be situated in a remote area, so as to be close to the source of supply (plantation farms). So you should expect some difficulties transporting the bunches of palm fruits from the farm to the processing plant. The same problem may also be faced when transporting the processed palm oil from the plan to the marketplace.
Because of your remote location, there is every possibility that you won’t have access to power supply. So you would have to provide your own power supply using generators. This will invariably increase your operating cost.
For you to be in steady operation, you will need a consistent supply of raw materials (palm fruits) and this can prove quite a challenge especially during the scarcity period. A good way to tackle this problem is to have your own plantation farm or better still, increase your storage capacity. This will enable have a steady supply of palm oil to sell to your customer during the scarcity period.
Palm kernel oil is used domestically for cooking, and it is used in almost every African home for this purpose. It is also used industrially as a major ingredient in the manufacture of soap, cosmetics, processed foods, and so on. Its industrial demand is derived from its varied and broad use in the food and chemical industries.
If you live in a country like Nigeria, Malaysia, etc where palm kernel oil is in huge demand both domestically and industrially, then you can consider venturing into the palm kernel oil production business. All this business requires is basic education and training in the process technology, which you can easily obtain by consulting a veteran in the business or searching online for helpful resources that can guide you.
This article is a brief guide that explains all you need to know about starting a palm kernel oil extraction business. If you seem to be interested in the business, then read on to find out more about what it entails.
How to Start a Palm Kernel Oil Extraction Company –
1. Start by writing your business plan
Writing a good business plan is an important part of starting a business. It helps you know upfront, if you are capable of starting the business or you don’t have the requirements yet; since it highlights all the startup requirements in terms of cash.
It also includes the market analysis, financial summary, and other details that help you plan your business perfectly from the start. Even after starting the business, your business plan will help you stay focused to achieve your goals. Although having and following a business plan will not guarantee that your business will succeed, not having one usually results in a fiasco.
2. Source for funds
Well, truth be told; this business is capital intensive. A palm kernel production business will require between N5,000,000 and N10,000,000 (between $30,000 and $60,000) depending on the size of your business, your chosen location, and many other factors.
You will need about N750,000 (about $5,000) to cover startup expenses, which include the rent for at least 3 years, business registration and agency fees, insurance, and others.
Startup assets usually make up the rest of the needed capital. These include the cash needed for recurrent expenses (one year forecast), startup inventory and stock (for six months), and the cost of other assets required at startup, such as office furniture, processing equipment and machinery, office fittings, and so on.
If you can afford all the required funds, then you can run the business as a sole proprietorship. However, if you would need more funds from third parties, then you should consider involving one or more other individuals and going into a partnership. Better yet, you can source for either equity funding (by approaching angel investors), debt funding (by taking bank loans) or by taking small business grants, if available.
3. Find a good location
Before choosing a location for your palm kernel oil production business, you will need to consider the availability of raw materials as well as the target market. An ideal location will be very close to the market, as well as the source of raw materials.
4. Acquire the needed equipment
Palm kernel production involves cleaning, breaking, flaking, steam condition, screw pressing, and filter pressing stages. And most of these processes require the use of machines for faster production. So, you will need to acquire the machines needed for each process.
However, you must bear in mind that high quality machines will be more productive and will save you huge repair and maintenance costs in the long term. So, it’s very important that you choose your machines carefully.
5. Hire the required staff
For the effective day-to-day running of your palm kernel oil production business, you will need to hire competent individuals to man certain positions. Aside the manager (which may be you, the owner), you will need to hire a technical assistant, a storekeeper, about 5 production staff members, a quality control staff, security officers, as sales and administrative staff. In all, you will need between 10 to 15 staff members to run your palm kernel oil production business effectively.
6. Start production and market your business
Once you have everything in place, you can start production. Since your business is still very new, you will need to adopt marketing strategies in order to spread word about it and attract customers.
Your customers include households, restaurants, food industries, soap and cosmetics industries, and so on. If you have a good number of them around you, then you can easily approach them and convince them to buy from you.
In conclusion, the time of developing your business plan to the time you will start operation typically spans between 3-4 months. It could take shorter or longer, depending on your enthusiasm, availability of capital, and other factors.
7. Challenges of Starting a Palm Kernel Oil Extraction Business
a. It is a capital intensive project, as you will need to erect a production structure (factory) and the machines doesn’t come cheap either.
b. It is management intensive, as you will need several people to man the various production stages.
This article was cull from a primary site .
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