MARKET DEVELOPMENT
Make Lots Of Money From Owning And Running A Small Scale Palm Oil Mill
Make Lots Of Money From Owning And Running A Small Scale Palm Oil Mill
28/09/2013 (The Guardian Nigeria) - In the 50’s and the 60’s, Nigeria used to be the leading world producer and exporter of palm oil, otherwise known as the red gold, but today is a net importer as a result of neglect of the sub-sector. In those days, palm produce contributed a lot of foreign exchange to the country and helped to finance substantially most of the development plans of the then Eastern Nigerian Government. But today the story is different.
And so with the supply glut in the industry a good opportunity to make good profit from milling the red gold awaits any enterprising investor who ventures into the business.
Product Uses:
Palm oil is used domestically for cooking and frying and industrially in the manufacture of margarine, ice cream, drugs, soaps, detergents, body creams, confectionery, refining deodorized vegetable oil etc. Palm kernels, its by-product, produce the palm kernel oil which is a major raw material input for the production of cosmetics, soaps, confectionery, refined vegetable oil, etc while the cake is an important input in the compounding of animal feeds. The others like palm kernel shells, palm fibre, palm oil slurry, potash, etc are of immense industrial use. All attract great commercial value. Thus, virtually everything from the palm oil extraction process has one important domestic and industrial use or the other.
The Market Potential
The annual growth rate in demand for palm oil has been rising at the rate of between 2.5% and 5% while that of supply is 1%. In the recent past, it was widely reported in the dailies that a major consumer products manufacturing company had to relocate its soap and margarine plant that uses a lot of palm oil as a raw material to a neighbouring country as it was unable to meet its palm oil needs from local sources on a continuing basis and this had left its manufacturing capacity constrained. Thus, what became our loss became that country’s gain with all the other multiplier effects that went with it.
And yet everywhere in the oil palm belt of this country, wasting fresh fruit bunches are awaiting exploitation and milling. For not doing this, we are paying dearly for it. A tin of palm oil sells now for between N4, 500 and N5, 500 depending on the company that produces it or the locality from which it is sourced and the quality of the milled product . Therein lies the investment opportunity for visionary entrepreneurs to turn the adverse situation into an opportunity by going into palm oil milling both for local and international markets.
However, the market prospects are bright even though the supply situation appears not to have improved substantially. Both individuals and governments are now looking inwards. That partly accounts for the resurgent interest in the sub-sector of the economy through the development of new plantations, replacement of the old low-yielding dura palms with the fast maturing, stunted and high-yielding tenera variety. For this reason, some state governments that have taken the bold step of investing in the sub-sector deserve commendation.
The great potential in this agro-processing sector of the economy cannot be over-emphasised because this business is a steady cash generator waiting to be tapped. Because of the high demand for palm oil, output is very quickly bought up by the palm produce dealers. Thus, for anyone venturing into palm oil extraction, the sky is the stepping stone rather than the limit. The market is there and he will be producing not only for domestic and industrial consumption but also for export to earn foreign exchange.
Raw Materials
The major raw materials for the extraction of palm oil is the harvested fresh fruit bunches (ffb), which will easily be obtained from wild palm groves growing naturally in not less than 30 states of this country especially in the rain forest belt. The ffb can also be obtained from the numerous existing palm estates and the new ones being developed presently. It is necessary to site the oil mill where the ffb are abundantly available as it is uneconomical to transport these over a long distance.
For the smallscale mill being highlighted here, it can be established anywhere in the palm belt zone. Its palm fruit requirement may not warrant the entrepreneur having his own palm tree plantation since he can purchase ffb requirements from many out-growers.
As a backward integration strategy, anyone contemplating establishing an oil mill with very high throughput should consider very seriously of incorporating palm kernel cracking and palm kernel oil extraction in the total package in order to avoid the mid-stream disadvantage of having a mill in his hands without adding value to the kernels before sale.
Adding a palm plantation or helping to develop one around your mill site will not be a bad idea as this will make the venture’s operation more profitable. These days, backward integration is the in-thing.
The Plant
There are excellent local fabricators of palm oil mill of any capacity and one is at liberty to choose which one he can afford. With the exception of the engine for the mill and the water pump to supply water, all the necessary machinery and equipment required to establish this project are manufactured locally. The mill consists of the stripper, boiler, digester, clarifier, water pump, tank, an 8-HP diesel engine and spares.
The Project Cost
The total estimated minimum amount to establish the small scale palm oil mill using locally fabricated machinery and equipment will be roughly be N5,000,000 and is made up of:
N
Machinery and equipment 2,779,500
Pre-investment 450,000
Leased accommodation 600,000
Furniture and equipment 135,000
Working capital 500,000
Contingency 450,000
Total N4,914,500
The detailed costing of each of these will be contained in a bankable feasibility study, which will be needed by the entrepreneur to implement this project. The life span of the mill is between 20 and 30 years. The spare parts can be easily sourced locally from any of the many fabricators around. The technology involved has been proved while the process has been with us for ages. Most importantly, the raw material needed for the mill (fresh fruit bunches or palm nuts) is abundantly available in about thirty states of the Federation. Luckily not much water is required and the quantity can easily be met while the drums and jerry cans needed to store the oil before sale will be obtained cheaply and locally.
Given the abundant availability of fresh fruit bunches and the ease of operation of the mill, there is no reason why it will not operate at 85% capacity within two years. The mill will be powered by an 8-HP engine which takes away the drudgery inherent in the uneconomic traditional method of pal oil extration.
And so with the supply glut in the industry a good opportunity to make good profit from milling the red gold awaits any enterprising investor who ventures into the business.
Product Uses:
Palm oil is used domestically for cooking and frying and industrially in the manufacture of margarine, ice cream, drugs, soaps, detergents, body creams, confectionery, refining deodorized vegetable oil etc. Palm kernels, its by-product, produce the palm kernel oil which is a major raw material input for the production of cosmetics, soaps, confectionery, refined vegetable oil, etc while the cake is an important input in the compounding of animal feeds. The others like palm kernel shells, palm fibre, palm oil slurry, potash, etc are of immense industrial use. All attract great commercial value. Thus, virtually everything from the palm oil extraction process has one important domestic and industrial use or the other.
The Market Potential
The annual growth rate in demand for palm oil has been rising at the rate of between 2.5% and 5% while that of supply is 1%. In the recent past, it was widely reported in the dailies that a major consumer products manufacturing company had to relocate its soap and margarine plant that uses a lot of palm oil as a raw material to a neighbouring country as it was unable to meet its palm oil needs from local sources on a continuing basis and this had left its manufacturing capacity constrained. Thus, what became our loss became that country’s gain with all the other multiplier effects that went with it.
And yet everywhere in the oil palm belt of this country, wasting fresh fruit bunches are awaiting exploitation and milling. For not doing this, we are paying dearly for it. A tin of palm oil sells now for between N4, 500 and N5, 500 depending on the company that produces it or the locality from which it is sourced and the quality of the milled product . Therein lies the investment opportunity for visionary entrepreneurs to turn the adverse situation into an opportunity by going into palm oil milling both for local and international markets.
However, the market prospects are bright even though the supply situation appears not to have improved substantially. Both individuals and governments are now looking inwards. That partly accounts for the resurgent interest in the sub-sector of the economy through the development of new plantations, replacement of the old low-yielding dura palms with the fast maturing, stunted and high-yielding tenera variety. For this reason, some state governments that have taken the bold step of investing in the sub-sector deserve commendation.
The great potential in this agro-processing sector of the economy cannot be over-emphasised because this business is a steady cash generator waiting to be tapped. Because of the high demand for palm oil, output is very quickly bought up by the palm produce dealers. Thus, for anyone venturing into palm oil extraction, the sky is the stepping stone rather than the limit. The market is there and he will be producing not only for domestic and industrial consumption but also for export to earn foreign exchange.
Raw Materials
The major raw materials for the extraction of palm oil is the harvested fresh fruit bunches (ffb), which will easily be obtained from wild palm groves growing naturally in not less than 30 states of this country especially in the rain forest belt. The ffb can also be obtained from the numerous existing palm estates and the new ones being developed presently. It is necessary to site the oil mill where the ffb are abundantly available as it is uneconomical to transport these over a long distance.
For the smallscale mill being highlighted here, it can be established anywhere in the palm belt zone. Its palm fruit requirement may not warrant the entrepreneur having his own palm tree plantation since he can purchase ffb requirements from many out-growers.
As a backward integration strategy, anyone contemplating establishing an oil mill with very high throughput should consider very seriously of incorporating palm kernel cracking and palm kernel oil extraction in the total package in order to avoid the mid-stream disadvantage of having a mill in his hands without adding value to the kernels before sale.
Adding a palm plantation or helping to develop one around your mill site will not be a bad idea as this will make the venture’s operation more profitable. These days, backward integration is the in-thing.
The Plant
There are excellent local fabricators of palm oil mill of any capacity and one is at liberty to choose which one he can afford. With the exception of the engine for the mill and the water pump to supply water, all the necessary machinery and equipment required to establish this project are manufactured locally. The mill consists of the stripper, boiler, digester, clarifier, water pump, tank, an 8-HP diesel engine and spares.
The Project Cost
The total estimated minimum amount to establish the small scale palm oil mill using locally fabricated machinery and equipment will be roughly be N5,000,000 and is made up of:
N
Machinery and equipment 2,779,500
Pre-investment 450,000
Leased accommodation 600,000
Furniture and equipment 135,000
Working capital 500,000
Contingency 450,000
Total N4,914,500
The detailed costing of each of these will be contained in a bankable feasibility study, which will be needed by the entrepreneur to implement this project. The life span of the mill is between 20 and 30 years. The spare parts can be easily sourced locally from any of the many fabricators around. The technology involved has been proved while the process has been with us for ages. Most importantly, the raw material needed for the mill (fresh fruit bunches or palm nuts) is abundantly available in about thirty states of the Federation. Luckily not much water is required and the quantity can easily be met while the drums and jerry cans needed to store the oil before sale will be obtained cheaply and locally.
Given the abundant availability of fresh fruit bunches and the ease of operation of the mill, there is no reason why it will not operate at 85% capacity within two years. The mill will be powered by an 8-HP engine which takes away the drudgery inherent in the uneconomic traditional method of pal oil extration.