Investing in Palm Oil & PKO Production for Export

One of the important areas the Government promised to pay much attention is manufacturing. In fact the important sectors to pay attention apart from manufacturing are Agriculture and Technology. There is urgent need to boost local production for export to increase the non-oil export values.

Although Nigeria depends heavily on the oil industry for its budgetary revenues, Nigeria is predominantly still an agricultural society. Approximately 70 percent of the population engages in agricultural production at a subsistence level. Agricultural holdings are generally small and scattered. Agriculture provided 41 percent of Nigeria’s total Gross Domestic Product(GDP) in 1999. This percentage represented a normal decrease of 24.7 percent from its contribution of 65.7 percent to the GDP in 1957. Today Agriculture contributes less than 30% of total GDP. The decrease will continue because, as economic development occurs, the relative size of the agricultural sector usually decreases. This is one of the reasons why there is huge increase in unemployment rate in Nigeria. Large increase in unemployment rate has increased the rate of kidnapping, terrorism and other types of crimes in the country.

Agriculture remains the only way out. The production of agricultural produce is one aspect; another most important way globally is the addition of value to primary agricultural produce. The value chain of oil palm is discussed below;-

Following the fluctuation in oil prices, which impacted on various African oil producing nations, the Federal Government has intensified its effort towards diversifying the economy and has laid out a road map to enhancing public infrastructure and support high-growth sectors in the country such as manufacturing, ICT, agriculture, among others.

Palm oil is known to be an excellent source of bio available calcium and least allergic of all edible oil available. The total demand of edible oil is 16,570,000 tones (per head 1120 ml) and supply is 13,326,000tonnes including the imported edible oil). The demand-supply gap thereby opens up an opportunity for investors in this sector.

After thorough research in to the market, we found out that the demand for palm kernel oil, for commercial, home and even industrial purposes will continue to increase as the year progresses and this is the same for other by-products making it a lucrative business with rewarding incomes. The demand for various products of oil palm is very high and the demand will continue to increase in many years to come. Some of the industries that will not do without oil palm produce are Cosmetics, Food, Animal Feed, Soap Manufacturing, Confectioneries, and Bio-diesel among others.

Production and packaging Plan

Two different types of production processes could be employed. We will give you details. The processes consist of different sections including; procurement and storage (i.e. raw material stores), production, processing and storage sections and packaging.

The finished products could be distributed by the help of local distributors. There are many exporters that are available to purchase the products in bulk.

The necessary equipment that will be used for this business includes; bunch thresher, boiler, nuts and fiber separator, screw press, oil storage tanks and storage drums, gallons, scoopers, bowls, basins among others.

The product packing line comprises of oil which will be packaged into 4-litre keg and 1litre, 5liters, 10liters, 20liters and 25liters kegs for both palm oil and kernel oil. There is plan to package in drums of 200liters.

The business will require full time labor. The services of project manager, purchasing officers, drivers, warehouse officers, store officers, sales representatives, security personnel, and accountant will be needed.

The cost of production will be low because 70% of the staff required to work in the factory will be recruited from the community. The source of the raw materials (palm nuts & palm kernel nuts) for the mill will be gotten from the natural endowment within the environment. The end products (value chain) that will be obtained from the proposed project will include

  • Refined palm oil
  • Crude palm oil
  • Refined palm kernel oil
  • Crude palm kernel oil
  • Palm kernel cake for animal feed production
  • Palm kernel sludge
  • Crushed palm kernel shell for bio-fuel

The plants and machinery for setting up of the project, both producing and packaging plants for each of the products both locally and export markets that will be of internationally acceptable standards are locally available.  However, arrangements can be made for foreign machines on request. There are foreign machines from China South Korea, Japan, and India etc. Prospective investors would be given the details and would be comprehensively worked out in the bankable feasibility studies report.

The opportunities derivable from the proposed project are unlimited. Palm oil is an economic product that is in high demand both for domestic and industrial use as well as palm kernel oil alongside with other by-products which are highly needed in the industries as a raw material for the production for different products. With the numerous untapped opportunities that lie behind palm kernel processing, our consultancy services will necessarily be required by upcoming investors also. The location of the factory also is a good one as it has a large land mass and readily available raw material.

Marketing Strategies

The numerous processing industries as well as local dealers are the first targeted customers. All industries in the areas of cosmetics, food, animal feed, Soap Manufacturing, Confectioneries, and Bio-diesel among others are target markets

Promoters can increase the production and sales of palm produce outside the country expanding across West Africa, Africa, Europe and America. We will give details of the buyers within the country and outside the country to prospective investors. For the few competitors in palm oil processing and distribution companies, strategic plans are on ground to surmount any pressure that might arise.

Sales Forecast

A sales forecast is very important for the growth of any business as it helps to have right predictions about the sales of products. From the result we gathered from our studies based on the opportunities of the in the industry, the sales forecast have shown that palm fruit processing business commands large sales volume in Nigeria for a start and sales outside Nigeria is very huge as well

Palm fruit processing in Nigeria has peak and off-peak seasons and so to account for its availability throughout the year, 50% of the product will be stored in the ware house, and 50% will be distributed to satisfy the immediate market while the product in the warehouse will be sold during off-peak seasons. Details will be given to prospective investors.

Marketing Plans

There are strategic plans on ground to ensure the best distribution network for easy access of the product by the final consumer. A team of proficient marketing professionals and sales forces will be recruited to create public awareness of the products and to facilitate integrated marketing communication between the proposed mill and its target markets. Communication to the public will be through advertisement, public relations, sale promotion and publicity as well as both online and offline advertisement to enhance sales among others.

Again the industry will make use of customer based pricing strategy. It will also emphasize on quantity discount as a pricing strategy. Other relevant information in the areas of local sales and export information will be given to prospective investors

Financial implications and Projections

The cost of establishing this project varies depending on some factors like capacity, the types of products that investors intend to go into, proposed location and other related factors. The estimated cost will be given to prospective investors

Part of the financing and funding of the project will come from stakeholders of the company and counterpart funding from some recommended financial institutions. Revenue from the industry will be re-invested into the business while making its loan repayment a top priority.

Investment Analysis

The proposed project is always very lucrative.

ProductsCrude/Refined palm oilCrude/refined Palm kernel oilPalm Kernel Cake for animal feed productionOthers-(Palm kernel sludge Crushed palm kernel shell for bio-fuel
Payback periodWithin 1 yearWithin 1 yearWithin 1 yearWithin 1 year
Return on investment152%185%120%87%

For the funding, the Central Bank of Nigeria (CBN) has earmarked funds to fund and encourage investors in this sector. Prospective investors would be given the details on how to establish and run the project profitably

All other essential details including accommodation, manpower, production technology, packaging and marketing (both local and international) will be embodied in a bankable and comprehensive feasibility report for prospective investors.

Important information

A minimum of 15 people are required to ensure a smooth take-off. The promoter is advised to ensure that it is sited where bamboo or wood can easily be obtained at least cost. This will help reduce the cost of transporting the raw materials. He should put up the needed building, prepare a comprehensive feasibility report to act not only as a guide for him to implement and monitor the project but also as a handy requirement to facilitate fund attraction from co-promoters or finance organizations, in-stall the plant and machinery and buy the start-off raw materials. The importance of good quality products and management and of keeping proper and timely records of the projects operations cannot be over emphasized. Prospective investors can start very small and gradually grow.


For details on comprehensive & Bankable feasibility studies, Business Plan; procurement & installations of strong and durable machines, internationally acceptable packaging methods, Export markets and funding arrangements and Recruitment & Training of manpower please contact the writer. We assist in reviving of death projects. We observed that some prospective investors would prefer to go to internet and copy pre-feasibility reports done in India or other parts of the world. That type of report can never lead you to success in terms of knowledge and sourcing of your funds. The reports are not in the business environment with Nigeria, so it could be misleading. For details contact us

Uba, Godwin

Global Trust Consulting,


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