Palm oil business in Nigeria is wide and almost all aspects of it is profitable. Palm oil is extracted from oil palm fruits. It is an edible liquid extract gotten from palm fruits of a palm tree using an extraction process. Palm oil is used for many things and generally, in the Nigeria food industry, Palm oil is commonly used to prepare traditional soups in Nigeria. Almost all tribes in Nigeria consume palm oil which makes it a “must have” agricultural product in every home.
Palm oil is used to prepare almost all the traditional soups that we have in Nigeria like Egusi, efo riro, ugwu soup, bitter leaf soup, edika nkong and so on. The product is highly recommended by nutritionist due to its nutritional benefits; it contains vitamins, minerals and low in cholesterol which is makes it good for the heart. Besides its usefulness in food, Palm oil is used for many other things like the ones listed below.
Other Benefits/Uses of Palm Oil:
- It is commonly used to prepare soap for bathing and washing.
- It serves as an antidote for poison.
- It is used to produce animal diets.
- It serves as food preservatives.
- It is used to prepare some local cosmetics.
- It is used in the treatment of skin allergy, boil, cough, etc.
Palm Oil Business In Nigeria – An Overview
Oil palm business in Nigeria started as far back as 1900 in the Niger delta region of the country. It is regarded as one of the major products besides cocoa for exportation in Nigeria and hence served as a source of foreign exchange until 1999 when there was sudden decrease in oil palm production business in Nigeria. This was due to abandonment of the agriculture industry in Nigeria.
In 2003, an increase in oil palm production business was observed across the country due to a restructuring of the agriculture industry in Nigeria by the then government. This brought back the popularity of oil palm business in the country. In Nigeria, oil palm business is considered lucrative because of its wide both either domestically in homes and in several industries across the country. Till date, a substantial quantity of the product is still being exported from the country to many parts of the world.
How To Start Palm Oil Business In Nigeria
Starting palm oil business in Nigeria is quite simple but also tasking. This is because it requires a proper and comprehensive market survey to be done before embarking on the business. This article shares extensively how to start a palm oil business in Nigeria.
Steps Involved In Starting Palm Oil Business In Nigeria
1) Get A Working Business Plan
A good business plan is required for a palm oil business which will include total budget for the business and market survey report. A good market survey is compulsory and important in this business. This involves many things but basically it involved consulting an experienced palm oil entrepreneur to know the ins and outs of the business.
For example, as a potential palm oil entrepreneur, you must know the different types and breeds of palm trees and the quality of palm oil that they produce. Also, it is required that you have an idea of palm oil nursery, nursery practices, and planting practices especially if you wish to go into the oil palm raising business and not just the sales/distribution of palm oil. You must also know the storage practices, palm oil processing, palm oil market trend, prices, competitors, available customers, regulatory bodies and taxes.
You will not be able to know these without adequate market research. So, ensure that you carry out subatsntive market research/survey on palm oil business and document the report in you palm oil business plan.
2) Get The Required Start Up Capital
A startup capital can be sourced from personal savings, cooperative loans, Bank of Industry in Nigeria (BIN), Bank of Agriculture in Nigeria (BoA), and other government empowerment programs. Feel free to write the banks involved, if your proposal is well structured; it can yield a positive result.
Generally, your startup capital must cover the following cost:
i) A Land (Purchased or rented):
A land will be needed for the oil palm plantation. So, you must get the required capital to get the size of the land you need for this business. Of course, the size of land would depend on the number of palm trees you want to start with, that is if you want to go into oil palm plantation business and not palm oil marketing.
ii) Palm Tree Seedlings:
Again, you need this if you are not interested in just buying and selling of palm oil but rather oil palm plantation. In this case, you will have to first consult an agriculturist, a crop scientist or an experienced oil palm farmer to give you the best seedlings to plant. This is very important because a technical know-how is required when choosing a seedling for oil palm plantation else you mess the whole business up! It is advisable to start with hybrid palm tree seedlings because they mature faster and produce fruits earlier than the local palm trees. In fact, some species of the hybrid palm trees start fruiting within 3 months of planting.
iii) Get The Machines For Processing:
This includes milling and extracting equipment. Aside from using it to mill and process oil for your business, it can help to generate income for the business. In addition, people can come to mill and extract palm oil using your machine and you will make extra money from this.
iv) Get A Good Water Source:
A good water source is important and this would be either a borehole or well. Yes, if sinking a borehole is costly, you can simply dig a well; it will serve the same purpose as a borehole. Water is used during milling and extraction of palm oil. Again, you need this process if you want to go into oil palm plantation business.
You will definitely need to hire people to help out during each stage of the oil palm business, from land cultivation to sales of products. You can start with contract staff where they work for a certain period, when needed at different stages and they get paid for the work they do and leave.
4) Products Packaging:
This depends on how you want your product to be packaged either in sealed disposable nylon bags or kegs (different liters). However you choose to package your product, don’t forget to label them properly using your company/business logo and emblems which will include your business name, address and other necessary information. This serves the purpose of identification and marketing.
5) Business Registration:
Any business that wants to be trusted in Nigeria and stand the test of time must be registered, hence, you must register your business. The Cooperate Affairs Commission (CAS) in Nigeria is the body set aside by the government to register businesses, companies, and allied bodies in Nigeria. For you to become a certified business owner in Nigeria, you must register your palm oil business with the CAC. Recently, the processes only take few weeks.
6) Means Of Storage:
Palm oil is generally stored in drums or tight containers. Make sure the place for storage is cool and dry; don’t store where it is exposed to sunlight.
7) Means Of Transportation:
As a startup entrepreneur, you can register with small scale logistics companies and they will help with the delivery of the business. Using them makes delivery to customers safer, and faster and best of all is relatively cheap and reliable.
8) Advertise And Digitalize:
In this era of digital and hybrid advertisements, make yourself available online, post online about your business, speak to people, and display your products online. Also, to make purchases easier, take your digitalization game to another level by using an online payment processor like Paystack, Flutterwave, etc. to receive payments.
You might also consider registering with online listing platforms and e-shopping stores like, JiJi, Jumia, Shopify, Oberlo, and so on to sell your product. This will go a long way in broadcasting your business and bringing a lot of returns in the short and long term.
Peradventure you don’t have enough capital to start an oil palm plantation, which is not a good reason not to start with what you have. It’s simple! Just research and speak to oil palm suppliers closer to you. Buy from them, repackage into more attractive containers and sell.
Conclusively, doing oil palm business in Nigeria is one of the best decisions you will ever make, if well planned. This article will serve as a template for any aspiring/potential oil palm entrepreneur. Remember all businesses require hard work, perseverance, dedication and optimism. In all, I wish you the best of luck!