The palm oil business in Nigeria is a great business idea that can make a large profit, regardless of how small or large your investment. This article will show you how to start a palm oil business and profit from it.
The native oil of Nigeria is palm oil. It is used mainly for cooking. It has a reddish color and can thicken if kept in a cool area for a prolonged period. Although it is not very inflammable, it can become inflammable when heated to boiling point.
Palm oil is not only used to cook but it can also be used medicinally and as a source of vitamin A. However, cholesterol, which restricts blood flow, has been proven to be a side effect of palm oil.
Palm oil is used for cooking and also in the production of many other products such as soap, margarine (body cream), toilet soap, and body soap. These are just a few of the many uses for palm oil:
- Production of drugs
- Fluids for drilling
- Water treatment chemical
- Canning of food like sardine.
- Production of domestic dog food and other animal food.
- Preservation of raw and cooked food
How to start a palm oil business in Nigeria
If managed well, the palm oil business in Nigeria can be very lucrative. Palm oil is an essential commodity that affects all of life, young and old, rich and poor. The market for it is booming. You won’t regret starting a palm oil business as the demand is high.
There are three main ways you can run palm oil business in Nigeria:
#1. Plantation of palm trees
This is a very capital-intensive aspect of the palm oil business in Nigeria. This requires large areas of land, and preferably acres. Because the quality of palm oil is dependent on the soil used for plantation, it must be tested.
You will need to decide the area and location of your land for easy access to the market and production plants. After planting the palm trees, it can take five to ten years for them to mature before they are harvested. You must be patient as a farmer. Harvesting is a tedious task once it begins. Different palm trees produce different ripe palm oil seeds and they must all be harvested at the same time.
A palm tree plantation owner must decide whether to establish a mill to extract palm oil or sell the palm kernel seeds to others who process the oil. This type of project requires a large capital investment.
In summary, it is possible to plant a Palm oil tree.
- Buy a piece of land, or use the family land.
- To determine if the soil is suitable for planting, test it. Some soils are not suitable for planting.
- You must ensure that you have access to the land where your palms can be moved
- Plant the palm tree
- You can wait for 5-10 years
- Harvest your palm produce
#2. Establishment of a palm oil mill
Another aspect of the palm oil business in Nigeira is establishing a palm oil mill; this is the industrialized part of the business. It requires the installation and operation of palm oil milling machines to process the palm oil kernel seeds. It is a capital-intensive venture. There are two methods to process palm oil kernels.
- Commercial processing: This is where the milling machine are rented to process other people’s palm oil kernels. The hire fee covers the cost of the machines. The machines can be used up to their full capacity throughout the year, especially during the palm oil kernel harvesting season (January through May). The processing business is stable during the off-season, from July to December.
- For personal use, installation, and usage of the milling machines. The second type of palm oil business involves the processing of the palm kernel and selling the oil to customers. The investor sets up the milling machines and then arranges to purchase the palm oil kernels from various farmers. The palm kernel seeds purchased are then processed and the oil is sold to resellers or end-users.
It is important to choose a suitable location for your Pal oil milling machine. It should be near a farm, and close to major roads for easy transport.
#3. Trading on palm oil
This is the easiest way to start the palm oil business in Nigeria. As it does not require you to plant the trees or have a palm oil mill. It is where most palm oil investors invest because you can make quick money by buying and selling. This involves buying large quantities of palm oil, keeping them in large quantities for months, and then selling the oil during the off-peak, when there is less supply. The traders will sell their stock and make a reasonable profit during this time. It is assumed that you have a good understanding of each aspect of the business.
These are the steps to follow before you start your palm oil business in Nigeria.
1. Research. You can use formal and informal market research to determine the nature of your business, its volume, and who the buyers and sellers are. Also, you need to know where the main producers of palm oil are located. It is also important to determine the current prices for buying and selling palm oil, and which states can supply it at a lower price and of the correct quality.
2. Investment capital. The research report will help you assess the capital needs of your business and determine where to get it. You must have the ability to pay all the following:
- Working capital: This is the minimum amount required to purchase palm oil for sale. You will also need enough cash to transport the palm oil from the place they were purchased to the warehouse.
- The cost of purchasing the warehouse where palm oil will be kept during low sales periods until the peak period.
- Storage costs – Kegs of mostly twenty-five litres. The level of investment required to run the business will determine the quantity that can be bought.
3. Storage. It is important to understand how to preserve palm oils. You need to know how to arrange storage space and methods of storage. The storage area (warehouse) must have sufficient space, security and access roads to allow oil storage. The kegs used to store the oil must also be set up. A storage room can be rented.
4. Contact suppliers. You need to find out where palm oil sellers (or suppliers) are located and which states produce the highest quality palm oil at affordable prices. It is important to compile a list of suppliers. You should also research their reliability, the quality of oil they sell, and whether they offer credit facilities.
5. Transportaion. Choose the best way to transport your purchased palm oil. There are many commercial carriers that you can choose from. You can compare their transport rates, reliability, security of goods in transit, and ability to keep the oil at its destination. It is best to purchase your own vehicle for transporting palm oil. This will ensure that you have the highest level of reliability and continence.
6. Market your products. It is crucial to reach out to potential buyers (retailers) of your products. Let them know that you will be a reliable supplier of palm oil in the off-season and the season. Keep a list of them and get in touch with them often.
Find Palm Oil Exporters and Market Your Palm Oil Business
You can export palm oil if you plan to do so. You can search for palm oil traders.
Alibaba.com is a great place to sell your palm oil business online and find international buyers. Alibaba.com connects buyers, suppliers, and manufacturers. So you can go to Alibaba and promote your product.
VConnect is another place where you can find local palm oil dealers.
Before you enter into any business relationship with anyone, make sure that you have done a thorough background check.
The palm oil business in Nigeria is one that anyone can get into. The demand for palm oil is high and it’s easy to start the business after a good feasibility study. It is possible for anyone to do it. However, it doesn’t require any special protocol like registration with NAFDAC and Corporate Affairs Commission unless the business is large or medium scale.