Because so many people consume palm oil both personally and industrially, the palm oil business is immensely successful in Nigeria. People in Nigeria are looking for other ways to earn a living due to a shortage of job options. As a Nigerian, the palm oil business is an excellent method to make money. This is primarily due to the increased demand for palm oil, as many people use it to cook. Here, you will learn all you need to know about the palm oil business in Nigeria and how to start it.
What is Red Palm Oil?
Red palm oil is a natural oil derived from the fruit of the palm tree. Palm oil is a reddish-colored edible vegetable oil obtained from the fruit of palm trees. It is a native oil with abundant components that can be found in Nigeria and other parts of Africa. When stored in a cold environment for an extended period of time, palm oil can thicken.
Apart from being used for cooking, palm oil is also medical, being used to relieve stomach pain and being a good source of vitamin A for eyesight, yet it has been proven that palm oil can also induce cholesterol (a disease that inhibits the free flow of blood in the body).
Palm oil is used in a range of products, including soda soap, toilet soap, margarine, body cream, and cosmetics in addition to cooking. Other applications for palm oil include:
- Drug production
- Fluids for drilling
- Water treatment chemical
- Production of canned food such as sardines.
- Production of dog and other domestic animal food.
- Preservation of food, raw and cooked.
Why Trade On Red Palm Oil
Palm oil is a commodity that is always in great demand in Nigeria. It is always a popular cake in the market, and it is consumed at the same pace as rice and garri. Palm oil is currently marketed at N6,000 for 25 liters in Lagos and other major cities across the country, but if you go to the rural areas where it is produced in large quantities, you can obtain the same 25 liters for N4,000.
There are even times of the year when you may obtain this stuff for N2,500 – N3,000 per 25 liters. If you can acquire it in bulk at a surplus period and keep it for a few months, you will be able to sell it for a profit of 100%. It is normally in surplus from December to April and sells at its peak from July to September.
If you invest N500,000 and wait four months, you will make another N500,000 profit with little effort. By any metric, that is a good deal, and the more money you invest, the more profit you make.
Even better if you decide to swap over the season. All you have to do is find out where it is being processed in large quantities and buy at a low cost from there, transport it to the city and sell it at a high price, then repeat your journey as many times as you can to make money all year.
Types Of Palm Oils In Nigeria and Africa
Red palm oil and white palm oil are the two forms of palm oil produced in Nigeria and Africa.
#1. Red palm oil
This is the most prevalent sort of palm oil, and it is extracted from the pulp of the oil palm tree’s fruit. It has a strong flavor and scent and is crimson in color. Red palm oil is high in vitamins A and E and is widely used in cooking as well as the manufacturing of soap, cosmetics, and other items.
#2. White palm oil
This form of palm oil is derived from the kernel of the oil palm tree’s fruit. It is colorless and odorless and is also known as palm kernel oil. White palm oil is widely used in the manufacture of margarine, shortening, and other food goods, as well as soap and other industrial products.
Both red and white palm oil have several applications in the food and non-food industries, and they are significant sources of revenue for many smallholder farmers and agribusinesses in Nigeria and Africa.
Requirements Needed To Start Palm Oil Business
The following are the basic requirements for starting this business:
#1. Capital
Capital refers to the funds used to launch your palm oil business. Basically, you need this money to buy the equipment you’ll need to get started. You must purchase the planting land and pay labor to complete the planting operation. You’ll also need to make storage arrangements, which will cost money.
#2. Cost of Transportation.
Another important requirement for a palm oil business is the transportation facilities required. Essentially, this includes your equipment, palm oil, palm fruits, and so forth.
#3. Suppliers/Retailers
You must find dependable suppliers to give you the appropriate equipment, palm fruit seeds, and other items. You also need shops who will buy directly from you and supply consumers.
How to Start Palm Oil Business in Nigeria
The following are the stages of establishing a palm oil business in Nigeria.
#1. Write a Business Plan
The first step in launching a profitable palm oil business is to create a palm oil business plan. Palm oil planting and production might be part of the business. This is applicable if you inherited an oil palm plantation or purchased one.
If you do not own a plantation, your business plan can focus solely on the oil palm business (purchasing and selling palm oil). Writing a business strategy is critical in this industry, especially if you intend to go into it on a large basis. Finally, your oil palm business plan will advise you on how to earn from your palm oil business.
If you are seriously interested in the business plan and require the assistance of a professional, please contact me. If your palm oil business will not be on a huge scale, you can undertake a market survey instead of a business plan.
#2. Choose Palm Oil Business to start
In Nigeria, there are various types of palm oil businesses. You can start out as a farmer with an oil plantation, harvesting and producing your palm oil (palm oil production), or as a palm oil wholesaler, palm oil retailer, or palm oil supply business.
So you can select one of the business forms based on the money available to you and the type that is more convenient for you. You can also go into the palm oil export business.
#3. Get the Capital Needed
It is usually preferable to secure your funds before ever considering establishing this business, and you should avoid borrowing, whether from a bank or from family and friends. You can always save to have the funds you require. This saving could take six months, a year, or two years. It is determined by your income.
#4. Buy the Equipment Needed
To make your palm oil business lucrative, you will need some equipment. These pieces of equipment include various sizes of kegs, funnels, hoses, and other items. This equipment must be purchased, even if most palm oil is purchased in conjunction with kegs. You will, however, want more kegs to sell this palm oil to your customers.
#5. Get a Store or Shop to Sell Oil
You need a store as a wholesaler and a shop as a retailer for your palm oil business. There are numerous factors to consider while opening a shop or store for your lucrative palm oil business. You must think about the location of your shop. It would be easier to attract consumers if your shop is placed in an area where people can immediately see it.
You must also examine the size of your store, ensuring that it is large enough to accommodate your oil kegs. Finally, you must examine the shop’s rent. If you want to be a wholesaler of palm oil but cannot afford a business, you can store your palm oils at home and sell from there. It should be noted that palm oil products are sensitive.
It is important where and how you preserve them. You must keep them cool and avoid exposing them to heat or sunlight. To keep the quality of your palm oil kegs, place shipping crates on the floor of your shop or business.
#6. Buy Wholesale Palm Oil and Start Selling
When you’ve completed all of this. Then it’s time to stock up on palm oil and start selling it. Wholesale palm oil can be purchased from palm oil-producing states including Ondo, Imo, Enugu, Delta, Cross River, Ogun, Abia, Oyo, and Bayelsa.
However, Ondo state is the most popular state from which many palm oil sellers purchase their oil. You can buy your oil and have it delivered to your business or store. When the palm oil arrives, you can begin selling it. To begin, sell to relatives and friends, and then gradually expand to market women in your neighborhood.
#7. Profits in Palm Oil Business
There are numerous methods to profit from your red oil business in Nigeria; you are not limited to the patronage of family and friends.
- You can advertise and sell your red oil on major Nigerian e-commerce platforms. When clients place an order, you will be able to deliver these oils to their door.
- Market women will buy your red oil. When you make them higher offers, they will abandon their current purchasers and come to you.
- You may brand this palm oil and sell it to local supermarkets.
- Finally, agricultural products can be exported. Yes, there are countries that require palm oil to manufacture cosmetics. This option is mostly intended for distributors or manufacturers.
How Can I Process Palm Oil?
Processing palm oil is simple provided you have the correct equipment. Palm oil may be extracted from palm fruits using a unique extraction method. Essentially, you plant palm fruit seedlings and then pick the bunches when they are mature. After that, proceed as follows:
- First, threshed the palm fruit and then sterilize them to obtain the palm fruits from them.
- Next, crush the palm fruits to extract the crude palm oil.
- Thereafter, purify the raw palm oil and dry it before you can sell it off or use it at home, etc. Also, you can decide to export it to other nations.
Is Palm Oil Business Lucrative in Nigeria?
Because so many people consume palm oil both personally and industrially, the palm oil business is immensely successful in Nigeria. The oil palm (Elaeis guineensis) is a major economic crop in the tropics. It is a member of the Palmae family and the Cocoideae subfamily, of which it is the most important member.
How Much Do I Need to Startup Palm Oil Business?
Starting as a wholesaler will cost you more than starting as a merchant. Starting a palm oil business as a wholesaler requires a capital of N500,000 while starting as a retailer requires a capital of N200,000.
What Month Is Palm Oil Cheap in Nigeria?
Palm oil has two seasons: now is the time to buy palm oil from a local market or from palm oil mills. This is between the end of February and the beginning of May. Palm oil is typically inexpensive and plentiful.
Which State Produces the Best Palm Oil in Nigeria?
Nigeria’s top palm oil production states are as follows:
- Edo State
- Delta State
- Ondo State
- Osun State
- Cross Rivers
- Rivers State
- Akwa Ibom State
- Imo State.
How Much is 1 Tonne of Palm Oil in Nigeria?
A tonne of palm oil costs roughly N173,000. In that situation, N17,300,000 will be paid for 100 tonnes. Let us now compute the expenses you will incur throughout the earliest stages of the mill’s operation. Your estimated profit of N5,500,000 demonstrates the viability of the palm oil production business.
Conclusion
Palm oil is a profitable business. You simply need to look at what other sellers aren’t doing and fill in the gaps. Customers will always approach you if your red oil is good. You could also work in branding. This will set you apart from the other red oil sellers in Nigeria. Special packaging, brand name, and other things you do can make a big difference.
Related Articles
- 19+ Most Profitable Businesses to Start With Low Capital in Nigeria
- List Of Top 20+ Most Lucrative Business In Nigeria
- 24+ Profitable Daily Income Business in Nigeria 2023
- BEST BUSINESS TO START WITH 10K in Nigeria 2022: The Top 20 (+free guide)
References
