How To Start Palm Oil Business In Nigeria
Palm Oil Business Trading Ideas
Palm oil has a wide range of uses and applications.
Spanning from cooking to cosmetic production to soap production.
Investing in the palm oil sector has become a booming source of wealth creation.
Here are a three brilliant ways you can join this gas growing and rewarding business.
Business Idea #1 – Grow an oil palm plantation
Most parts of Africa lie in the worlds oil palm belt, this is a region with very favorable climatic and weather conditions for the optimum growth of oil palm.
Despite this fact, Africa produces much less oil palm trees on a commercial basis than it has the capacity to produce.
The factors which make Africa so favorable for the growth of palm trees are as follows:
1- All Round Hot Weather
The oil palm needs temperature of between 25-28 degrees centigrade for proper growth.
The hot temperature allows the trees to grow more leaves which subsequently lead to high front yield.
Another advantage of hot temperature in oil palm development is that it decreases the vulnerability of the plants to disease stacks.
2- Ample Sunshine
Oil palms just like any other plant needs a lot of sunshine for proper development.
Nigeria, and Africa as a whole is gifted with a lot of sunshine providing the perfect location for a palm oil plantation.
Oil palms are likely to do very well in areas of high yearly rainfall, with this in mind, southern Nigeria is the ideal location for a palm oil plantation.
3-Rich, Deep, Flat and Permeable Soil
The oil palm requires good soil with a lot of nutrients available in them.
It should also be well drained to allow water to easily penetrate through.
It should be deep enough to allow the tap root of the palm tree go deep enough to reach the nutrients.
When there are not any available natural nutrients artificial fertilizers can be used in their stead.
In recent times, hybrid seeds have been developed which can yield a lot more than the local varieties.
While considering to start up a palm plantation, planting he right variety is crucial to the success of your business.
The higher percentage of the oil palms in Nigeria are of the Dura variety which are easily recognized by their thick shell and a small pulp.
On modern oil palm plantations, this variety is crossbred with the Pisifera variety to produce a hybrid (Tenera).
The Tenera variety is the dream variety of all plantation owners favorite because it has a large amount of pulp, thin shell and large kernel.
The thin shell makes it easier to process while the large kernel and pulp make for larger yield than the Dura and Pisifera variety.
Palm oil – Types of Palm Fruits: Palm Oil Business Trading Ideas
Important things to consider before starting an oil palm plantation
The site for your plantation must be chosen carefully.
A flat landscape that is immune to erosion is the best choice.
Apart from preventing erosion, a flat landscape has the advantage of easier in-farm transportation which can reduce costs of transport.
Starting an oil palm plantation will usually require a significant initial capital investment .
After cultivation, it usually takes about 3-5 years before the trees start to yield any fruit that can be harvested.
During this gestation period, money will be spent on fertilisers, improvement of seedlings and labour for workmen who will be employed to keep the site free of weeds.
So before embarking on this project, careful planning must have been put in place to ensure that enough funds are available to sustain this period.
Oil palms can be a source of long term income.
Once the initial ground work is well done, and the palm seedlings are properly cared for in their early years, oil palms can live for up to 80 years!
It is advices not to cultivate an area of land that is too large to avoid mistakes, instead cultivate a small area of land properly and gradually expand in the coming years.
A small plantation that is well cultivated and cared for will be more profitable than a large plantation that is badly looked after.
Business Idea #2 – Start a palm oil milling and processing plant
Traditional and crude methods of palm oil processing are one of the leading causes of poor palm oil production in Africa.
Due to the poor and ineffective methods of squeezing out palm oil from the pulp of the palm fruit, a lot of oil still remains in the pulp and a lot is lost through this wasteful process.
Modern technology has provided mills which process harvested palm fruits into final grade palm oil with very little or no waste and minimal use of human power.
With the use of machines, the process typically involves sterilizing and threshing the harvested bunches to free the palm fruit.
Then mashing the fruit and pressing out the crude palm oil.
The next step after collecting the crude palm oil is to purify and dry.
It is then put for storage and sale in both local and international markets.
An investment in a milling plant is a great source of income especially when it is located close to palm oil producing sources or palm oil producing communities.
The two major ways to make money from this venture are: Palm Oil Business Trading Ideas
1)Charge a service fee to mill/process harvested palm fruits for customers.
This can be done either per kilogram or per hour.
The value you offer to customers is a quick, easy and labour-free way to get their palm fruits milled and processed to palm oil as opposed to the stressful and crude traditional method.
2) Buying off harvested palm fruits directly from small-scale farmers, produce the palm oil and then sell directly to both local and international markets.
This strategy has the potential to create huge profit because you can buy the unprocessed palm fruits from the local producers at relatively low prices and sell the processed oil at higher prices.
For this strategy to be successful, there are a couple of things you will need to watch out for: Palm Oil Business Trading Ideas
Operating a palm oil mill requires a lot of electric power.
With high fuel prices and poor electricity supply in many parts of Nigeria, this is likely to be the single most influential and challenging factor in determining the profitability of this venture.
Another important factor that should be considered is the quality of palm fruits you buy from farmers.
You should ensure that you only purchase those of the high yield variety (preferably Tenera).
A failure in this area will likely lead to low palm oil production volumes and poor profits.
Although the loss wouldn’t be as much as if you were producing the palm fruits yourself.
Other factors to consider before starting an oil mill are skilled labour to operate and maintain the machinery, quality control in processing the palm oil and easy access to markets.
Palm oil processing machinery can be purchased locally or imported from Alibaba.com which is a trustworthy online business community.
Business Idea #3 – Become a bulk trader
The idea behind bulk trading is to buy processed palm oil in large quantity and stock them for sale internationally or in local markets.
During harvest, usually between March and May of every year, the prices of palm oil becomes very cheap because of it’s abundance in the market.
However, during the non-harvest periods, when palm oil becomes scarce, the prices expectedly sky rocket to become very expensive.
This period of scarcity usually occurs between September and December and can see palm oil prices rise by as much as 100 percent.
This cycle of scarcity and abundance exists because of lack of adequate storage facilities to ensure an all year round supply of palm oil.
A bulk trader’s strategy is to set up a system that enables him/her to buy cheaply during the abundance periods and sell them at high prices during scarcity periods.
This strategy obviously requires good storage, holding and transport provisions.
Most bulk traders buy palm oil from local producers in the hinterland and countryside during the harvest periods. Palm Oil Business Trading Ideas
Store them away in huge containers and barrels until the scarcity periods when they can sell them in towns and cities (or export) for a very tidy profit.
Palm oil’s ability to retain its natural consistency, even at high temperatures, allows it to withstand long storage periods (usually up to one year).
This period allows the bulk trader enough time to gradually sell off the product and make good profits in the process.
The palm oil business in Africa will continue to remain one of the most lucrative because of the numerous uses of palm oil.
The inability to completely reach consumer demand. Palm Oil Business Trading Ideas
As Africa’s population explodes and economic growth accelerates, the demand for palm oil is expected to rise.
This demand will largely be driven by human consumption and the diverse applications of palm oil in the manufacture of several household and industrial products.
This will be a rewarding venture for anyone bold and patient enough to invest.