business plan on palm oil processing mill

Business Plan for Setting Up a Palm Oil Processing Mill

Palm oil is pressed from the fresh fruit of this tree. Today, palm oil remains an important ingredient in African and Brazilian cuisines . Many processed foods also contain palm oil, such as cookies, margarine and chocolate.

Factory-Price Palm Oil Industry Business Plant

In addition, palm oil is moderately unsaturated, free of linolenic acid, and rich in natural vitamin E, a natural antioxidant, which makes palm oil more suitable for frying and grilling foods than other oils. Due to this, it is considered a popular cooking oil and it ranks on top of other edible oils. (Read more about Palm Oil Processing Technology >>)

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A Business Strategy for Palm Oil Production

Establishing a palm oil processing plant for commercial purposes might be a financially rewarding option for those who plan to start a business in the edible oil production line industry . Here, a complete business plan for a small-scale palm oil processing plant is available. It will be very useful to consider these guidelines when starting out. Hence,  it's a good idea to keep these tips in mind. (You may also interested in the medium-sized palm oil processing plant setup cost )

 1.Summarize the Market

As income and population rise, so does the demand for palm oil. In fact, it is more influenced by one's net worth.To begin, look into the already-established manufacturers in the market. When you work on your project report and business plan,  this information will be extremely beneficial to you.((Similar Project: Set Up Edible Oil Plant In Pakistan for Great Market Potential >>)

 2.Choose the Location to Set Up Equipment

Now,  you'll require a moderate covered area for the operation of the palm oil plant. lt is dependent on the production volume and the unit size on how much floor space is required. Small-scale palm oil processing plants , for example, need an area of about 100 square meters for oil processing, packing of the oil, raw materials storage, and so on . By the way, water and electricity supply must be available at the chosen site. In order to set up a palm oil production unit, you can also get a long-term lease in any industrial location.

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3.Selection of Palm Oil Extraction Machine

After defining the location, the next step is to select a palm oil extraction machine, which is quite important in this industry. There are a variety of oil milling machines available on the global market. Compare the prices and feedback from the industry before making a final decision. High-quality palm oil may be produced with the most suitable equipment for palm oil pressing and refining.(Related article: Cost-effective Palm Oil Extraction Production Line )

4.Installation and Commissioning of Machines for Palm Oil Processing 

After deciding on a location and purchasing a palm oil processing machine, it is time to get the equipment up and running properly. 

50TPD Palm Oil Pressing Production Line Installation

5.Distribution Network

For palm oil mill production business, even on a small-scale palm oil mill operation, there is a lot of potential to have a strong distribution network. As a result, you could ensure that your palm oil is delivered to consumers via the finest possible channels.

Arrange Finance for Your Palm Oil Processing Plant

Palm Oil Production Processing Flow Chart

After preparing the foundational elements, such as raw materials and a project report, it's time to secure funding. The cost of starting a small-scale palm oil processing business is relatively modest. As long as you have enough money to start the business on your own, that's fine; if not, other capital firms or banks may be able to help you out. For example, if you require funds to purchase machinery or to set up a business investment in an edible oil production plant, the bank will provide you with funds based on your specific demands.Here are some expenses you might need to be aware of before you start your palm oil extraction business plant.

  • 1.Cost of Necessary and Reliable Equipment

The kneading and pressing procedures were used to obtain palm oil in the past. Howerver, it results in a huge amount of palm oil wasted after using this procedure.  Today, advanced palm oil processing plants can extract the majority of  the oil from the palm fruit.  Furthermore, most palm oil production processing and manufacturing can be installed locally, cutting costs and enhancing efficiency for palm oil producers.

  • 2.Cost of Setting Up a Mill

Professionals may be required to set up the infrastructure and put it in processing devices. In most cases, the palm oil processing machine supplier or manufacturer will have engineers on hand to help you design the plant layout, install and commission the equipment.

  • 3.Cost of Hiring and Training Workers

The palm oil production plant should have professional workers who can be hired or specially trained to operate all the equipment. For large palm oil processing plants, additional personnel may be required, such as security personnel, administrative staff, and so on.

Processing Palm Oil on a Smaller Scale Means Lower Costs

For palm oil processing operations, the small-scale type is ideal to start with because it offers incomparable advantages.

  •  With a low input and high output. A small-scale palm oil processing plant requires a simple combination of equipment , therefore, it won't cost a lot of money. However, due to its high oil production, the income is also significant.
  • Occupy little space. This small palm oil production equipment takes up little space.
  • Less maintenance and easy to operate. To ensure long-term success, we use a proven palm oil processing method and a top-quality oil production machine that are both well-known in the industry.

Palm Oil Production Processing Video

business plan on palm oil processing mill

Optimal Business plan of Palm oil processing mill in Nigeria

Offer 1~20TPD Palm Oil Processing Machine and Turnkey Project

Palm oil is the common ingredient in many foods like peanut butter, ice cream, and chocolate. Many palm oil production facilities plant a lot of palm oil trees to facilitate the development of the oil. It is absolutely a lucrative endeavor to Start Palm Oil Processing Business in Nigeria due to the huge demand locally and globally. ABC Machinery can offer customized Palm Oil Processing Business Plan that includes factory layout, process design, equipment selection, invest cost, production cost, etc, to help you make you from this profitable business.

small palm oil processing mill machine for sales

How to Make Millions by Starting Palm Oil Processing Mill in Nigeria?

The primary reason for low yield of palm oil in Nigeria is that it still uses the traditional palm oil processing method. The traditional palm oil squeezing process can't extract the most oil from the palm fruits and there are a great deal of oil still remained in the pulp, which causes ineffective and great waster for Nigeria palm oil processing industry. Therefore, for Nigeria palm oil processing companies and manufacturers, the direct and cost effective way to increase palm oil production is to adopts advanced palm oil processing technology, equipment and efficiency.

advanced palm oil processing plant

Modern Palm Oil Processing Plant that utilize the updated techniques and advanced designs will ensure little or no waster during the process, and greatly increase palm oil production. Advanced palm oil processing machine and technology can not only maximize the oil production efficiency, but also can minimize the investment and running cost. If you are planning to start palm oil production business in Nigeria, starting up a palm oil processing mill with advanced machinery would lead you a way to wealth. ( Related Post: Palm Oil Mill Processing Cost >> )

how to start your own production line with best business plan

Some investor may worry that it would be cost a lot to setup a complete palm oil processing plant. In order to help many small scale businessman or farmers, we develop and design a relatively Small Scale Palm Oil Mill Plant for Nigeria Market. Compared to large scale palm oil mill plant, Small Scale Palm Oil Processing Equipment requires less investment cost, has full sections of palm oil extraction.

Small Scale Palm Oil Extraction Section

Typically, Palm Oil Production Process includes fresh fruit bunches (FFBs) reception, sterilization, threshing and stripping of fruit, oil extraction, clarification and oil storage, and more . The general process of a small scale palm oil mill plant is that palm fruits are harvested from palm oil trees, the fruits are processed to extract the oil, and the oil is cleaned and purifies. Here is an in depth description of how palm oil is extracted and processed in a small scale palm oil processing mill.

mini palm oil processing machines for Nigeria market

  • Fresh Fruit Bunches Reception

palm oil processing mill for producing high quality palm oil in Nigeria

  • Sterilization

Next is sterilization process in palm oil mill . The fruits go through a process where the fruits are roasted or boiled.

The next step must be done is thresher palm oil mill . Threshing is where each individual piece of fruit is separated from each other. Many palm oil processing plant prefer to use rotary drums to do this process. But, it also can be done by manual.

The next step that must be done to the fruits is that the oil must be separated from the skin and pulp of the fruit. This is done by putting the individual fruits in a rotating drum that breaks down and releases oil from the fruit.

  • Oil Extraction

Then, the fruit is placed in a Palm Oil Press Machine that uses large and heavy metal plates to mechanically squeeze all of the oil out of the fruits. Many batches of fruit can be placed into the presser at once because of the vast power that it has. ( Related Equipment: Palm Oil Processing Machine for Sale in Nigeria >> )

  • Clarification & Purification

After the palm oil extraction, the leftover debris and impurities in the oil are filtered out by diluting the oil with water and proceeding to filter the mixture through a screen.

Small Scale Palm Oil Refining and Fractionation Section

After going through this process, the palm oil is ready to be sold as low quality palm oil for a cheap price. However, for a higher quality palm oil, much more processing is needed. Two more processes are needed, a refining process and a fractionation process.

small palm oil refining machine

  • Palm Oil Refining Process further gets rid of debris and impurities to ensure that the palm oil is quality and to perfection. This is done through both physical and chemical methods.
  • Palm Oil Fractionation Process is much different. During fractionation, the triglycerides contained inside the oil are separated by being heated. By doing this process, the palm oil gets more essential fatty acids and loses a lot of the saturated fat in it. This is what makes it a higher quality palm oil than just selling it after putting it through the presser. Higher quality palm oil sells for a lot higher price than low quality due to the extra amount of work that is required.

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BEST Palm Oil Processing Equipmen Supplier - ABC Machinery

ABC machinery, the world’s leading palm oil milling plant supplier, will be your best choice to fulfill your palm oil processing business in Nigeria. Every year, our engieers will go to Nigeria to help our customers solve their problems about palm oil production. (Related Post: Palm Oil Business in Nigeria 2018 )

ABC Machinery visit Nigeria

We strive to provide customers the most cost effective project plan with factory design, equipment selection and configuration, project cost details and more. We will try our best to meet your demands, you are welcomed to get in touch with us and get free service on estimating project cost .



business plan on palm oil processing mill

The findings show that the average cost of procuring equipment and its installations for a small-scale palm oil processing mill were estimated at N623,650.00. The gross margin return from this study was N44,000.00 while net return was N14,000.00. The gross ratio reveals that for every N1.00 return to the mill 68.00 kobo was spent on the production processes. The small-scale palm oil venture is dominated by elderly people from 50 years and above (30%). About 34% and 32% of the processors have WASC and Primary School Leaving Certificates respectively as the educational qualification. About 50% of the processors have 16-20 years experience in oil palm processing. The study concludes that small-scale oil palm processing is profitable and can also be a source of employment. Keywords: feasibility, Nigeria, Palm oil, processing equipment, profitability, small scale palm oil processing.

INTRODUCTION Palm oil has been an important ingredient in the diet of many Nigerians. Palm oil is the world’s largest source of edible oil, accounting for 38.5 million tonnes or 25% of the global edible oil and fat production (MPOC, 2007). Palm oil is a product extracted from the fleshy mescarp of the palm fruit (Elaeis guineensis). The global demand for palm oil is growing thus, the crop cultivation serves as a means of livelihood for many rural families, and indeed it is in the farming culture of millions of people in the country. Hence, oil palm is often referred to as a crop of multiple values, which underscores its economic importance (Akangbe et al., 2011). The demand for domestic and industrial application of palm oil have continued to increase (Omereji, 2005). It is estimated that for every Nigerian household of five, about two liters of palm oil are consumed weekly for cooking.

business plan on palm oil processing mill

The drop in ranking is caused by the neglect of agriculture sector for petroleum products. There is a serious need for the encouragement of small-scale oil palm production in Nigeria to increase the domestic demand of palm oil since it has the ability of creating jobs for the teaming unemployed in the country. Commercial large-scale oil palm plantation farming is a relatively new phenomenon in West African where oil palm cultivation is basically subsistent and small-scale covering less than 7.5 hectares (FAO, 2005). In Nigeria, 80% of production comes from dispersed smallholders who harvest semi-wild plants and use manual processing techniques (Carrere, 2001; Olagunju, 2008). According to Carrere (2001) and Olagunju (2008), several million smallholders are spread over an estimated area of 1.67 million hectares in the southern part of the country. Among the small- scale producers, traditional or semi-mechanized methods are used for oil extraction from the fresh fruit bunch (Omereji, 2005; Olagunju, 2008). In addition, during processing, outdated equipment is mostly used. This method of oil palm processing is arduous, time consuming and oil yield is usually low. Often, about 25% - 75% of potential palm oil is lost during processing (Ekine and Onu, 2008).

Elevated cost of procuring equipment is a serious problem in Nigeria (Orewa, 1998). High equipment costs have discouraged intending processors from establishing and investing in oil palm venture. Consequently, significant proportion of the processors resort to hiring of processing equipment and this had resulted to delay in processing of the palm fruits (Ekine and Onu, 2008). Oil palm cultivation originated in West Africa (Poku, 2002). Some 5,000 years ago, it was said to have been domesticated in Nigeria (Sridhar and Ade-Oluwa, 2009). Production was for subsistence within the region. Currently, Nigeria oil palm sector is under reactivation after it collapsed during the discovery of crude oil. The other factors that led to the decline of Nigeria oil palm industry include civil war (1967 – 1970), lack of modern farm mechanization, over dependency on smallholder/traditional processors, land tenure problem, inadequate infrastructure, poor funding, campaign by environmentalist for environmental protection etc. Also, Kei et al. (1997) highlights that the stagnation in the oil palm sector in Nigeria is influenced by the overall agricultural policies.

They also observed in their study that because of the increasing demand of oil palm products resulting from an increase in population and income growth, relative to the low productivity from the oil palm sector, Nigeria has become a net importer of palm oil. According to United State Department of Agriculture, the crude palm oil production in Nigeria is 920,000 metric tones (MT) (2012), which is far below 1,315 MMT domestic demand in 2012, within the period a deficit of 470,000 were imported the same year to supplement the domestic production. However, Soyebo et al. (2005) reports that land is the major factor limiting oil palm cultivation. Their report recognized that majority of the farmers in Nigeria (81%) are confronted with land problem, 34.2% with fund problem while 53.2% complained of inadequate information and cultivation knowledge about oil palm. The authors also enumerated the way forward towards palm oil self sufficiency in Nigeria by suggesting that the planting materials should be improved and that government should support the processors with funds. So for Nigeria to compete with countries like Malaysia, Indonesia, Columbia and Thailand, the country must return to agriculture. In assessing the profitability and economic stability of a business like smallholder palm oil processing, a feasibility study need to be considered. A feasibility study helps identify the long term basis, financial implications of the oil palm enterprise through analysis. Feasibility study determines whether the business plan has the necessary resources for it to be practicable (Marino, 2012), so that the entrepreneur will not invest more to correct flaws, remove limitations (Lohrey, 2014) than to make profit.

A feasibility study of oil palm processing brings to knowledge the possibilities, opportunities that abound in oil palm processing. Oil palm processing requires economic, technological/operational and financial feasibility. The economic feasibility studies of oil smallholder oil palm processing could be geared to employment generation and use to solve the current unemployment situation currently demoralizing Nigeria in the recent years. The operational feasibility shows that no special skill is required before venturing into smallholder oil palm processing. On the other hand, the financial feasibility shows that profit is the key gauge of feasibility of any business. In oil palm economics, profitability determinants model such as Gross Margin (GR), Benefit-Cost Ratio (BCR) and Expense Structure Ratio (ESR) (Olagunju, 2008) level is determined by cost of palm fruits, cost of hiring/purchase of equipment, transportation of the palm bunches, availability of labor, price of palm oil among others (Ekine and Onu, 2008). This model level determinant is essential for the continuity of the smallholder oil palm processing enterprise. Therefore, this study investigates the feasibility studies of small-scale palm oil production in Nigeria.


FIELD VISIT AND SURVEY A preliminary survey was conducted randomly to ascertain the communities that process oil palm in large quantity using manual/rudimentary equipment. The survey result shows that ovia south west local government area of edo State has several smallholder palm oil mills with numerous customers majorly from the southern Nigeria. Observations indicates that the palm oil mills is located in all part of the community and iguobazuwa of oil farm was perceived even at increased distance which is not so in other oil palm processing communities.

Though Edo state oil palm processing is difficult to quantify. Hence, this feasibility study on small- scale palm oil processing were conducted in iguobazuwa in ovia south west local government area of edo state,Nigeria from 10th – 24th of march 2018. Eight(6) oil palm processing mills were visited and data were elicited through interviews and observation. The mill owners (6 respondents) provided the information such as cost of setting up small-scale palm oil processing business due to their knowledge on the equipment procurement and overall management of the palm oil mills. While the socioeconomics characteristics were provided by the mill workers and owners (30 respondents). The information from the respondents served as a basis for comparison, for the purpose of triangulation.

DATA ANALYSIS The profitability determinants such as cost of palm fruits, cost of hiring/purchase of equipment, transportation of the palm bunches, availability of labor, price of palm oil etc is vital for the continuity of the oil palm enterprise .The data were analyzed using descriptive statistics (mode, frequencies and corresponding percentages and gross margin model) and profitability techniques (i.e Gross ratio, Expense Structure Ratio, rate of return and Benefit-Cost Ratio). The model specification is as follows Net income in Naira (N ) = Total Revenue (TR) – Total cost (TC) of processing of oil palm Where: Total revenue in Naira (N ) = sales of palm oil + sales of cracked palm Kernel + sales of cracked kernel shell. Total cost = cost of Fresh Fruit Bunch (FFB) + cost of hiring or purchase of equipment + cost of transportation + cost of labor + depreciation on equipment + building. Total variable cost = cost of labor + FFB + transportation + fuel + water. Fixed cost = cost of building + equipment. Gross margin = Total sales – Total variable cost (TVC). Profitability determinant model (Olagunju, 2008) Benefit-Cost Ratio (BCR) = TR/TC. Expense Structure Ratio (ESR) = Fixed cost (FC)/Total cost (TC). Gross ratio (GR) = TC/TR. Rate of return = Net Return / TC

RESULTS AND DISCUSSION Table 1 presents the cost for the procurement of small-scale palm oil mill equipment. Mills that do not include kernel cracking in their process did not purchase kernel cracking equipment such mills include B, C, H and J. The total cost of procurement of the different equipment listed ranged from N 94,400 - N 341,400.00. But in mill C the total cost is N54, 400.00. This is because most of the equipment where hired, hence their prices were not stated. However, the cost of hiring the equipment represents 5 – 10% the cost of procuring the equipment. This translates to # 1,550 -#3,100 for both presser and digester and # 500 - #1000 for lister engine. The low price in mills B, H, and J is due to the fact that they do not crack kernel, hence they do not have the cracker and the cracker engine. Also, in mill C, H,and J they do not use shaker. Lack of this equipment may reduce the quality of crude palm oil processed. On the average, the sum of N156, 655.00 can be used for the procurement of equipment in a typical small- scale processing mill. The price differences in each of the equipment procured in the various mills is associated with the year, place of purchase, model and the bargaining power of the purchaser. Generally, the cost of lister engine is significantly higher than the price the responded stated. This is attributed to other uses of the engine in Nigeria including electricity generation when connected to alternator, garri production among others in Nigeria presently.

Cost (₦) for the procurement of palm oil mill Equipment for small-scale processing site presser Lister engine Cracker engine cracker Separating knife Shacker Boiler (drum) Boiler(tank) Filter Digester Total(₦) A 50,000 10,000 37,000 45,000 400 1,500 10,000 50,000-60,000 1,000 50,000 254,900-264,900 B 35,000 15,000 - - 400 1,500 10,000-12,000 50,000-55,000 1,000 35,000 147,900-154,900 C Hired Hired - - 400 - 8,000-10,000 45,000 1,000 Hired 54,400-56,400 D 25,000-30,000 10,000 35,000 40,000 400 1,500 9,000 40,000 1,000 25,000-30,000 186,900-196,900 E 40,000 95,000 35,000 35,000 500 1,500 43,000 50,000 1,000 40,000 341,000 F 10,000 12,000 35,000 35,000 400 1,200 8,000 35,000-50,000 1,000 10,000 147,600-149,100 G 15,000 10,000 37,000 40,000 400 1,500 10,000 45,000 1,000 15,000 174,900 H 12,000 14,000 - - 400 - 10,000 45,000 1,000 12,000 94,400 I 12,000 15,000 35,000 40,000 400 1,500 12,000 55,000 1,000 12,000 183,900 J 40,000-50,000 150,000 - - 400 - 10,000 50,000 1,000 50,000 301,400-311,400

Table 2 presents the average cost of procuring the different equipment required in setting up a small-scale palm oil processing mill. N 623,650.00 is required to procure and produce palm oil from one hectare of land. The low price of land and building is associated with the rural settings of the study area. In urban settings, it may be significantly higher.

Table 3 provides job description in a small- scale palm oil processing mill and0 their wages for the production of 100 bunches of FFB. It is observed that the highest cost were obtained from offloading of FFB from trucks (N5,000.00), followed by kernel cracking (N1200.00), while the least rates is recorded for boiling (N 200.00). The high cost of labor was likely due to the obsolete manual machines which require a lot of human effort and the short supply of manpower. Table 2: Average cost of procurement/setting up of a small-scale palm oil processing mill.

S/N Equipment Quantity Average Cost(₦) 1 Presser 1 27,500.00 2 Digester 1 36,500.00 3 Lister engine 1 37,000.00 4 Cracker engine 1 36,000.00 5 Cracker 1 40,000.00 6 Separating knife 1 400.00 7 Shackers 1 1,500.00 8 Boiler drum 1 13,200.00 9 Boiler tank/barrel 1 48,750.00 10 Filter 1 1,000.00 11 Head pan 1 500.00 12 Wheel barrow 1 3,000.00 13 Hand glove 5 1,000.00 14 Bucket 6 1,500.00 15 Shovel 2 1,600.00 16 Cutlass 3 4,200.00 SUB-TOTAL 253,650.00 Others 17 Land and building 1 Hectare 350,000.00 18 Miscellaneous expenses 20,000.00 TOTAL COST 623,650.00

Table 3: Job description in a small scale palm oil mill and their wages S/N Job description Rates in naira(₦) Cost of production for 100 bunches(₦) 1 Offloading from truck 50 per bunch 5,000.00 2 Slicing 10 per bunch 1,000.00 3 Threshing 7 per bunch 700.00 4 Filtration and sieving 10 per bunch 1,000.00 5 Boiling 200 for small tank 200.00 6 Digestion/pressing 120 per press 840.00 8 Separation of fiber 100 per press 700.00 9 Repressing/re-milling 120 per press 840.00 10 Kernel cracking 1200 per press 1,200.00 Total 10,400.00

The total cost of processing 100 FFB and its returns is presented in Table 4. The money realized from sales of the palm oil gotten from the 100 FFB is N32, 000.00, the palm kernel (cracked) is N7,000.00, while the cracked palm kernel shell is N5, 000.00. The cost of processing 100 FFB into palm oil is N30, 000.00. Out of which N15,000.00 (50%), is used to purchase palm fruit, N10, 400.00 (34.6%) is spent on labor, while N2,000.00 representing 6.7%. were spent on transportation, water and energy. The total fixed cost which was N2,600.00 representing 8.7% and the total variable cost which is N27,400.00 representing 91.3% of total cost. The variable cost such as energy is high because the processing mills are not connected to nation grid. Therefore, the mill uses fossil powered generator to supply on the electrical/mechanical energy requirement. The roads leading to the mills from plantation are deployable and in bad condition leading to wear and tear of transportation system parts. Water is also a major challenge because mills buy water from commercial water distributors. The high cost of palm fruit bunches is an indication of insufficient oil palm plantation in the study area despite being a major oil palm producing province in Nigeria. Though, most of the palm oil processors do not have their own oil palm plantation. However, the gross margin return is N44,000.00 while net return is N14,000.00 representing 32% return per naira. The profitability analysis of small-scale oil palm oil is presented in Table 5. The rate of return (net return/TC) is 0.32. This value is slightly higher than previous report. Olagunju (2008) reports a rate of return of 0.29 in oil palm processing in southern Nigeria. From the value of gross ratio (GR=TC/TR), it shows clearly that for every N1.00 return from the mill, 68.00 kobo is spent. Chukwu et al. (2011) shows the profitability of oil palm processing enterprise by stating that for every N 1.00 invested in processing of one tonne of FFB has N 1.10 in return. The net return varies in palm oil processing (revenue and cost) due to maintenance of equipment and depreciation of assets which is causal factor in cost (Simeh, 2002).

Table 4: cost and returns in palm oil processing for 100 fresh fruits palm bunch Items to total cost Value(₦) Percentage contribution Returns Palm oil 32,000.00 Palm kernel(cracked) 7,000.00 Cracked palm kernel shell 5,000.00 Total Gross Return 44,000.00 Variable Cost Palm fruits 15,000.00 50% Labor cost 10,400.00 34.6% Other expenses(transport, water, energy) 2,000.00 6.7% Total variable cost 27,400.00 91.3% Fixed cost Depreciation on assets 1,700.00 5.7% Depreciation on building 900.00 3% Total fixed cost 2,600.00 8.7% Total cost(TVC+TFC) 30,000.00 100% Net return 14,000.00 Return per naira 32%

Table 5: Profitability of palm oil processing Model Computation Ratios Benefit cost ratio TR/TC 1.47 Rate of return Net return/TC 0.32 Gross ratio TC/TR 0.68 Expenses structure ratio FC/TC 0.087

However, the Benefit-Cost Ratio (BCR = TR/TC) is high (1.47). This study findings is higher than Olagunju (2008) report that shows a benefit cost of 1.29. But lower Ibitoye and Onje (2013) findings that shows that for every #1 spent in oil palm processing #4.16 is generated in return. This shows an increase in returns indicating that the venture is profitable and feasible. However, the BCR can be boosted by increased capital, improved technology (sophisticated equipment and method of processing) and skilled labor (Olagunju, 2008). The profit margin of a processing mill is dependent on the processing toll (Simeh, 2002; Oladipo, 2008; Orewa et al., 2009), the type of bunch being processed (Orewa et al., 2009) and the ripeness of the FFB at the time of harvest and processing (Ilechie et al., 1986). Expense Structure Ratio (ESR=FC/TC) is 0.087 representing 8.7 % of the total cost of production , which comprises of fixed cost components (i.e depreciation of assets and buildings). The ESR is far lesser that previous report. Olagunju (2008) reports that expense structure ratio is 0.423 representing 42.3% of total cost of production including cost of plantation rentage (25.6%), interest on borrowed capital (9.2%) and assets depreciation (1.62%). The low expense structure ratio in this study is attributable to no cost of plantation maintenance and or rentage of oil palm estate. We also assumed that the initial capital that will be used to start the business were not borrowed. Hence no interest will be paid which can increase the cost of production. Generally, when the source of FFB have to be paid for, the expense structure ratio can increase to 0.30 – 0.45 representing 30 – 45% of total cost of production. The expense structure ratio shows that palm oil business is a profitable enterprise and it worth investing.. Table 6 presents the social economics characteristics of oil palm processors in the study area. The results show that 31-40 age bracket representing 31% dominated the palm oil processing mill, while 21-30, 41-50 and 50 years and above representing 14, 25 and 30% respectively are involved in palm oil production in the study area. This results agree with Ekine and Onu (2008) that presented 14.4, 31.3, 29.9 and 31.3%, which fell within the age brackets of 21-30, 31-40, 41-50 and 50 years and above respectively in Ikwerre Local Government Area of Rivers State. Ajayi and Solomon (2010) presents that 33, 20, 23, and 24% of oil palm processors fell within the age brackets of <30, 31-40, 41-50 and 50 years and above respectively. Also, Obinne and Anyanwu (1991) reports that the mean age of males and females in their study area was 45 and 40 respectively. Akangbe et al. (2011) indicate that (46.9%) the palm oil extractors were 60 and above years of age, while 16.9% fell within the agile youthful age bracket of between 20-40 years. From the mean result of the different age brackets, it shows that palm oil is processed by matured and responsible adults. The educational qualification shows that a significant proportion of palm oil processor had WASC (34%), while 18%, 32%, 7% and 9% had educational qualification of below primary six (i.e. no formal education), primary six, Diploma and Tertiary degree respectively. The findings is in consonance with that of Ekine and Onu (2008) shows that presented 20.0%, 11.1%, 51.1%, 0% and 17.6% had educational qualification of below primary six, primary six, WASC, diploma and tertiary degree respectively in Etche Local Government Area of Rivers State. Akangbe et al. (2011) shows that 55.0% of oil palm extractors had no formal education and only 21.3% had at least the basic primary school education while 11.2% had post primary education. Olagunju (2008) study reveals that 50%, 44%, 1% and 4% had primary, secondary, tertiary, and no education respectively. The results also show that 84% of the processors had WASC and below primary six, which indicates that the processors level of education is quite low (Ajayi and Solomon, 2010). This shows that educational qualification may have affected the method the venture is being managed in the study area of the venture. Though, the proportion of the processors having tertiary degree is low, but it shows that the small- scale oil palm industry is actually a promising venture, not just for the peasant farmers or the typical uneducated village adults, but also for graduates. Education plays an important role in palm oil processing operations since it will facilitate the adoption of innovations that will improve palm oil processing (Olagunju, 2008).

Results also showed that 10%, 18%, 14%, 50% and 8% had the following years of experience in oil palm processing; 1-5, 6-10, 11-15, 16-20 and 21-25 years respectively. Ajayi and Solomon (2010) reports that 8%, 15%, 11% and 66% have experience for <5, 6-10, 11-15 and 16 and above years. Akangbe et al. (2011) reports that 30%, 52.5% and 17.5% have experience for 1-25, 26 – 50 and 51-75 years respectively. The high experience level of 1115 years shows that palm oil processing is the major occupation of residents at the study area.

21-30 1 1 2 2 2 2 1 1 1 1 14 14 31-40 4 3 1 0 4 6 4 2 3 4 31 31 41-50 1 3 0 4 2 5 2 2 3 3 25 25 50 & above 3 4 1 2 4 6 3 0 3 4 30 30 Educational Qualification Below primary six 2 3 2 2 0 0 2 1 4 2 18 18 Primary six 3 3 1 5 6 3 3 2 2 4 32 32 WASC 3 3 1 3 4 7 4 3 4 3 34 34 Diploma 1 1 0 0 1 2 0 0 0 2 7 7 Tertiary degree 0 1 0 0 2 4 1 0 0 1 9 9 Gender Male 7 8 3 6 10 16 8 3 6 9 73 73 Female 2 3 1 2 2 3 2 2 4 3 27 27 Years of oil palm processing experience/individual 1-5 2 0 1 1 1 2 1 1 0 1 10 10 6-10 2 3 0 1 3 4 2 0 2 1 18 18 11-15 0 0 1 2 2 2 1 2 1 3 14 14 16-20 5 4 2 4 6 10 5 2 5 7 50 50 21-25 0 2 0 0 0 1 1 0 2 0 8 8 Size of household 1-5 4 5 2 3 6 11 5 1 4 4 45 45 6-10 4 5 1 4 4 8 5 1 4 7 43 43 11-15 0 1 1 1 1 0 0 1 2 1 7 7 16-20 1 0 0 0 1 0 0 2 0 1 5 5 Association membership Member of mill owners association 9 11 4 8 12 19 10 5 10 12 100 100 Member of mill workers association 0 0 0 0 0 0 0 0 0 0 0 0

Table 6: social economics characteristics of smallholder palm oil processors in Iguobazuwa

In terms of household size of the processors, our study revealed that 45%, 43%, 7% and 5% have a household size of 1-5, 6-10, 11-15 and 16-20 persons respectively. The reports shows that 35.4%, 58.3%, 2.1% and 4.2% had a household size of 1-5, 6-10, 11-15 and 16-20 persons respectively at Iguobazuwa Local Government Area, and 46.7%, 42.2%, 6.7% and 4.4% had 0-5, 6-10, 11-15 and 16-20 persons respectively at Ovia south west Local Government Area of Edo state. This findings show that majority of palm oil processors have household of 110 persons. Only the mill owners belong to associations, while the workers in the mill do not belong to any association. The worker inability to form association like the mill owner is attributed to the seasonality of oil palm. During oil palm peak period the workers could be high and less during off peak period. Basically, in attempt to make profit the mill owners were unable to hold the workers if there is no major processing, thereby reducing cost of labour. Therefore having a mill can be a better means of generating profit than working fluctuating period (i.e peak and off peak). From Table 6 the age of the processors, educational background, household size, net farm income, net income size and mechanization level are the critical determinants of profit efficiency in oil palm venture.

CONCLUSION This study revealed that small-scale palm oil processing is a profitable venture while factors such as land and building, cost of FFB, educational background and mechanization level were the most critical factors influencing profitability of the venture. On the average, about N 623, 650.00 are required to establish a small-scale palm oil processing mill. The cost of production could be higher or lower depending on the location of the enterprise which can be largely influenced by the price or cost of fixed assets such as land and other processing equipment and labour.

However, the future of palm oil processing and supply is dependent on yield and rate of expansion of oil palm plantations. Due to profitability of the oil palm enterprise, the sector if adequately managed could be a source of relied to the unemployment challenges that the country is currently facing. The sector could employ several people depending on the size of the enterprise. In order to speed up the net return of palm oil processing in Nigeria, the government should sensitize her populace on the profitability of the business while providing loans to individual that are interested in the enterprise. Due to the locality of the mills, the government should also improve the condition of feeder roads which will ease transportation problems. Social amenities like electricity should be regularly supplied while pipe borne water should be provided in areas where oil is processed to facilitate palm oil production.



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Palm oil processing plant business plan in Ghana

Industry news / Chat on line / Give me a price / Date: 2022-08-17

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Located in west Africa, Ghana's economy is dominated by agriculture. But palm oil is in short supply in Ghana and has been relying on imports to meet domestic consumption for several years. For example, Ghana imported nearly 250, 000 tons of palm oil from southeast Asia in 2014, worth more than $175 million. It can be seen from this that palm oil has a huge market in Ghana. In real life, quite a few people intend to set up palm oil processing plant in Ghana, but they don’t know how to set up a palm oil mill and its costs. The article introduces palm oil processing plant business plan in Ghana ---what factors to consider for palm oil processing industry.

Factor 1: Find a suitable location

It is better to have convenient transportation, so that the palm oil plant can receive fresh palm fruit from other places. Besides, you should consider the scale of a palm oil factory to choose a suitable land to built it.

HENAN GLORY is a professional company that not only manufactures palm oil processing machines but also can provide factory building designs and equipment layouts. So if you want to get factory building designs, welcome to consult more from Henan Glory company.

palm oil processing plant

Factor 2: Set the budget

The budget includes the rent of land, the cost of palm oil processing machine and the salary of employees. According to your budget, choose your palm oil processing machine and the scale of palm oil processing plant.

Factor 3: Advanced palm oil processing machine

HENAN GLORY can provide a complete set of palm oil processing machines.

• Palm fruit sterilizer

• Palm fruit thresher---simple type thresher/drum type thresher

• Palm fruit digester

• Double screw palm oil press

• Crude palm oil filter machine---vibrating screen+clarification machine+ plate filter machine

• Palm oil drying machine

• Palm oil tank

palm oil processing machine

The palm oil processing machine ‘s price in Henan Glory company is varied according to the scale of palm oil plant. The 1-5 tph palm oil production line costs 10000-30000USD. The large scale costs 150000USD above.

The palm oil processing machine in Henan Glory company has been tested for many times to realize the low residual oil rate--5%, and the machine owns high quality steel and long service life.

As far, the Henan Glory palm oil processing machine has exported 90 countries and received many good feedback. [ Related reading: A customer from Ghana purchased a 500kg/h diesel type palm oil press from Henan Glory Company ]

Factor 4: Source for customers

After you know how to set up palm oil plant in Ghana, you also need to find a solid palm oil market. You can find retailers among market sellers, cosmetologists, housewives, etc. To attract many clients, you can try other modes of marketing such as:

• Online marketing (social media, google ad, etc)

• Referral marketing

• Newspaper marketing

• Word of mouth

• Collaboration/Partnership

palm oil market

Factor 5: Get familiar with Ghanaian government policies

Samuel Avarra, President of Ghana palm oil development association, called on the government to strengthen planning and policy support for the development of the palm oil industry. Government in Ghana also paid much attention to palm oil processing plant and supplied some policy convenience for palm oil producers. So if you plan to set up palm oil mill plant in Ghana, you need to get familiar with local government policies, or you may get some subsidies and help.

As a professional palm oil and palm kernel oil processing machine manufacturer, we have a professional research and development team and the most advanced palm oil production equipment. If you are interested in them, contact us to learn more.

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Utibe Etim – Business Plans, Funds, and Opportunities

Step by Step on How to Start Palm Oil Supply Business

Palm oil trading and supply blueprint

The palm oil business is one of the most profitable ones that a business owner can get into and make a lot of money from. The youth of today want white-collar jobs in the oil and gas sector but fail to tap into the income potential in the agricultural sector. Those who are wise enough to go into the palm oil business always make crazy profits. So if you’re looking for a step-by-step guide to succeeding in the palm oil business, then you should continue reading this guide.

Apart from using palm oil for cooking, it is also medicinal and is used as a pain reliever for stomach upsets. It contains vitamin A, which is good for eyesight. However, studies have shown that palm oil contains cholesterol, a disease that prevents the free flow of blood in the body.

Palm oil is also used in soap production, body creams, margarine, and cosmetics in general. Other uses of palm oil include:

  • Production of dog and other domestic animal food
  • Production of canned seafood
  • Water treatment chemicals and lots more

Table of Contents

Steps to Start Palm Oil Business

The palm oil business is very lucrative if done properly. The demand for palm oil is very high, and there are consumers who are willing to buy it. There are basically three types of Palm Oil Businesses, namely:

Palm Tree Plantation

This aspect of the palm oil business requires huge capital investments. It also needs a large area of land. However, the profits of this business are huge, and you’ll make it big once you’re able to acquire at least 4 acres of land.

So, you have to decide what area of land to buy. This business isn’t really ideal for startups because the capital needed runs into millions of naira. Again, the incubation period for palm oil trees can take between 5 and 10 years. So, as a farmer, you have to be patient to make good profits from the business

Once the palm oil tree is due for harvest, you can decide to set up a mill to extract the oil or just sell it out to those who are into full-time palm oil kernel processing.

Palm Oil Mill

This is another lucrative aspect of the palm oil business. It requires a huge capital investment to purchase the milling machines. You can decide to fabricate one locally or simply import one from China’s foremost online retailer, Alibaba. Generally, there are two ways of processing palm kernel seeds and they include:

Commercial Processing: This involves processing other people’s palm kernel seeds for money. It is a lucrative business, as the cost of getting a palm oil milling machine is expensive. It is a good business because you’ll make a huge ROI after a few months. The only expense you’ll have to pay is the constant servicing of the milling machine. During the palm oil season, which is between January and May, customers are always available to process their palm kernel seeds. But during the offseason, the business is fairly stable.

Personal Use: As the name implies, this involves the owner of the milling machine buying palm kernel seeds from different farmers in very large quantities and processing them in order to sell them to end users. In this category of the palm oil business, you need to set up your milling machine in a location that is easily accessible to farmers and close to the target market.

Bulk Trading of Palm Oil

This involves investing a huge amount of money in buying and selling palm oil. In this business, investors buy palm oil in bulk, store it in large quantities, and sell it off when the supply of palm oil has reduced. During this period, traders bring out their stocks, sell them, and make a reasonable profit. If you have the capital, this business is ideal for you. However, you need to be patient to make a good profit from this business. Let’s do a quick profit analysis of this business. Imagine buying 20 kegs of palm oil for N500,000 at N25,000 per keg and selling them off to retailers for N30,000 within 3 days, depending on your customer base. Depending on the source and quality of the palm oil, you can get it at a much cheaper rate.

The necessary steps you need to take before starting this business

Market research

Proper research into the palm oil business is necessary if you are to succeed in it. Apart from market research, it is also important to understand the nature of the business. The nature of the business should answer questions such as, “Is it time-consuming?” Where can I source cheap palm oil? Can I store palm oil for at least a year without it losing its taste? Once you’re able to provide answers to these questions, you’re halfway done. You also need to know your competitors and the existing price of palm oil before delving into the business.

Capital Investment

After carrying out market research, the report you have made will point out the right amount of capital to start the business. The amount of capital should be enough to cover the following expenses:

  • Working Capital: this is the amount of money needed to buy wholesale palm oil from farmers. This working capital also includes transportation costs.
  • Building Capital: this is the capital needed to rent or build a warehouse to store the already purchased palm oil
  • Storage Capital: it is the capital needed for the proper storage of palm oil. You need to invest in the security of your warehouse and also purchase jerry cans or kegs to store your palm oil.

Note: You can get a business plan on palm oil processing by visiting here

Get Contacts

If you must succeed in this business, you need to get the contacts of suppliers from different states. You can compile a list of suppliers in a spreadsheet (using Microsoft Excel). It is necessary to know how reliable these suppliers are, the quality of palm oil they need, and the prices they offer.

Mode of Transportation

This is another important investment you have to make. If you have the money to get your own vehicle, then that’s alright; otherwise, you’ll need trusted drivers to deliver palm oil to your customers all over the country.

Exporting Palm Oil

If you’re planning to export palm oil to other countries, then you should consider searching online. Alibaba is a great site to list your palm oil for sale, or you can use Vconnect to search for reliable exporters online. You should do a proper background check before giving your palm oil out for export.

Palm Oil Supply and Trading Guide

If you’ve found this step-by-step guide helpful and you’re serious about taking your knowledge to the next level, you won’t want to miss our comprehensive eBook, “Palm Oil Supply and Trading Guide”. This in-depth resource provides even more valuable insights, expert tips, and practical advice to help you succeed in the palm oil business.

The “Palm Oil Supply and Trading Guide” is the essential tool you need to navigate the intricacies of the palm oil industry and kickstart your journey towards becoming a successful palm oil trader. It covers everything from sourcing and storage to regulations, market trends, and strategies for overcoming common challenges in business.

Don’t wait to take the next step in your palm oil business journey. Click here to order the guide the “ Palm Oil Supply and Trading Guide ” today for just N2,000 and turn your palm oil business dreams into a reality! >>>>>>> Click here to order the guide for just N2000 now! <<<<<<<<<<

The palm oil business remains a juicy business opportunity that anyone can start without a huge investment. As Africa’s population continues to rise, the demand for palm oil will also continue to rise. It is an opportunity for you to start this business and make a huge profit from it.

To raise funds for your palm oil business, you need a business plan, and I you to check out this standard palm oil business plan with 3 years financial analysis

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