Palm oil in Nigeria is used as a native oil for cooking. With its high production rate, it has become one of the most popular oil crops across the world.
Palm oil business in Nigeria has become one of the most lucrative businesses, and as time passes, more people are venturing into this gold mine. It will however yield the desired results only when ventured into appropriately.
For SMEs in Nigeria on the lookout for business opportunities to venture into, palm oil business is worth giving a try.
How Profitable Is Palm Oil Business?
According to The Business Alert, “The palm oil yield per hectare is estimated at 8 tons per year at most. On average, most farmers record a profit per hectare of around 3.4 tons per year.” This implies how profitable the palm oil business is.
However, the profitability of palm oil business is hinged on some other factors especially the effects of pests and diseases. These factors should be taken into consideration as they have an impact on the profitability of your business.
All things being equal, the business of palm oil is very profitable and SMEs in Nigeria looking to venture into this business have high tendencies of making huge profits on the long run.
Steps To Starting A Palm Oil business in Nigeria
For SMEs in Nigeria looking to venture into the palm oil business, there are a couple of things to put in place to guarantee success. These include:
- Carry out market research
Adequate market research is necessary to go into any business, the palm oil business not being an exception. Market research comes with an understanding of the nature of the palm oil business and how it is being run in Nigeria.
While conducting market research, SMEs in Nigeria should be able to answer the questions of: where can cheap palm oil be gotten in the country? How do you preserve palm oil for a long time while maintaining its taste? How much time is required to run a palm oil business in Nigeria?
Having answered these questions, it sets the pace for every other thing that comes ahead. Your market research should also include a proper study of your competitors.
- Source for Capital
Market research sets the pace for figuring out how much capital will be needed to run a palm oil business in Nigeria. Your capital should cover expenses such as:
- Building: Your business requires a physical space that will serve as a warehouse for storing the palm oil.
- Storage and security: Palm oil need to be stored in conducive containers such as kegs or jerry cans. In addition, there is the need for tight security to safeguard your warehouse.
- Purchase: If you are purchasing palm oil from farmers at wholesale value, then you will be needing capital to sort that out.
- Sort out your mode of transportation
Running a palm oil business in Nigeria will require good and stable transportation services to move your product across locations. In a situation where you can afford to buy your vehicles, that’s a great start.
However, not everyone can afford this luxury. If this isn’t you, then you will have to source for competent drivers to get the job done.
- Hire skilled labor
Employing the services of trained and experienced hands to run your business is vital in starting a successful palm oil business in Nigeria. While employing, ensure you hire workers who have undergone all necessary training with respect to operating machines in your plant.
In addition to hiring skilled workers, you also need the services of professionals such as engineers. Their expertise is required in carrying out maintenance when needed.
- Source for contacts
For SMEs in Nigeria, the importance of having contacts in strategic places cannot be overemphasized. Different suppliers exist across different states and you need the contacts of these suppliers for the purpose of your business.
Getting these suppliers contacts isn’t enough, you also need to ascertain they are reliable. Furthermore, you should be able to vouch for the quality of palm oil they supply.
- Get a suitable location
Starting a palm oil business requires a vast area of land. The number of acres then depends on how large or little the scope of your business is.
Getting a suitable land to start up will mean sourcing for one with soil fertile enough to accommodate the palm oil plantation. It is advisable to hire the services of soil experts to carry out proper examination of the soil.
In addition, your land should be situated in a place easily accessible by prospective customers.
- Adequate water supply
For a palm oil business to thrive in Nigeria, uninterrupted water supply is vital. In a case where your land is situated far away from civilization, digging a borehole right on the site is your best bet.
Water is required for the processing stage; washing and steaming of the palm fruits. It is highly important and a resource that is needed to get things running smoothly.
- Get all necessary equipment
The machines needed to successfully run a palm oil business in Nigeria will vary based on the capacity of your mill. Some of the machines commonly found in a mill include the presser, thresher, clarifier, boiler, amongst others.
The necessary tech support needed to keep the equipment running can be provided by the suppliers of the machine. In addition, all information that has to do with setting up the mill alongside its maintenance should also be provided. This will keep the equipment running and in good shape.
Starting a palm oil business in Nigeria is one of the most profitable businesses to engage in. It has a huge demand and can also be ventured into without going through the hassles that come with running some other businesses in Nigeria.
With palm oil business, the demand will always be on the rise in proportion to the population of the nation as a whole. This means guaranteed return on investment for SMEs venturing into it.