If an entrepreneur asks you what human basic needs are, chances are he is either trying to reveal a highly sought-after product or offer you could sell for profit or trying to get the same recipe from you
Palm oil turns out to be one of the highly sought-after agro products in Nigeria for its diverse purpose and daily usage among Nigerians
I don’t know of other geographic locations from around the world, but as far as Nigeria is concerned, we barely live a day without consuming this precious liquid in our meals, soap, snack, cosmetics, candles, biofuels, and lubricating greases
As of when crafting this article, Nigeria is the fifth-largest palm oil-producing country with over 3 million hectares under cultivation, which is an avenue to explore this income source with many business opportunities, hence falling into the bucket list of untapped businesses in Nigeria
Without further ado, let’s quickly discuss how to start this profitable palm oil business in Nigeria and also other unnoticed areas to scale up the business within the shortest period
Also Read: 10 untapped businesses to start with #50,000 in Nigeria
Table of contents
How Profitable Is Palm Oil Business In Nigeria?
Unarguably, the palm oil business is a million-dollar industry, allow me to make this more apparent that you may not hit this figure even in 20 years in this line of business, it’s just an analogy to justify how wide and lucrative the palm oil business is across the board, as the country record far more in the foreign market, even in the worst year
The maximum approximated yield of palm oil per acre is 8 tons per year, likewise, the profit farmers make per hectare is around 3.3 tons per year.
However, several unprecedented factors could set your oil palm business projected profit back a little bit, below are the few culprits
- If the palm tree age or existence elapses its prime, it could affect the output, as the peak production period of oil palm plantation lasts between seven 7 and 18 years
- Pest & Disease? You can’t fight them off easily without some losses unless you pay a close look at the oil palm plantation or hire someone to do that on your behalf
- There are still other factors that could throw a little dent in your profit margin, you just need to be on the lookout for them while hoping for the best
Also Read: 10 Highly Profitable Handworks To Learn In Nigeria To Make Money
Uses Of Palm Oil
Palm oil consumption goes beyond domestic usage [cooking], it cut across diverse applications from health to nutrition, and they are as follows
- Used for dog and domestic animals' food production
- Used in soap making, body cream, cosmetic, exfoliation cream
- Used as a preservative [food]
- Used for drugs production
- Used for malaria treatment, stabilize high blood pressure, dementia, high cholesterol, and more
- Used to increase the body’s metabolism and for weight loss
- Used as stomach pain relief
- Used for Water treatment
- Used to prevent cancer, vitamin A deficiency, ageing, and brain disease
Also Read: Starting A Supermarket business In Nigeria? 10 Things To Know
What You Need To Start A Profitable Palm Oil Business In Nigeria
You’d agree with me that there’s no business without a start-up cost, even lucrative online businesses you could start with zero capital still require an initial investment of an effective Smartphone, PC, and internet subscription package [weekly or monthly] to get off the ground, which are fund-driven business requirements, so as starting a successful palm oil business in Nigeria
Below are the essential factors that birth palm oil business for entrepreneurs like oil palm millers and suppliers
First, you need to indulge in market research to get the full summary of proposed expenses that will cover the below parameters
- Land acquisition or rental fund
- Labourer or employee cost
- Seedling acquisition cost
- Processing machine fund
- Storage facility
- Transport cost
- Machine and pest control maintenance cost
If you want to go big with the size of farm or plantation you get, I'd recommend a large portion of land as large as an acre or hectare to get reasonable returns on your investment. If you want to go big with the size of farm or plantation you get, you want to go big with the size of farm or plantation
This business requires you to hire workers at different levels from land clearing, planting, and harvesting
You don’t need to place them on permanent employment, hire for one-off service at every stage to save more money in the long run, oil palm tree could take care of themselves and doesn’t need constant attention, so long they are out of reach of rodents and placed under the favourable weather condition
Also Read: 7 business lessons from the richest drug dealer [Pablo Escobar]
Steps To Start A Profitable Palm Oil Business In Nigeria
Here is the roadmap to kick-start milking money off your palm oil business down here in Nigeria for the investment
There are 3 distinct niches or categories of the palm oil business that you have to be wary of before taking the plunge, and they are all uniquely profitable according to their respective sectors
Palm tree plantation: this very niche is obviously capital intensive, as you need a large area of land to cultivate on, alongside waiting for 5 to 10 years before getting your return on investment, so it requires patience
Also, you have to know you need to secure a little over 3 acres of land that you have to conduct a test on, to determine if the soil is suitable for palm tree development
An average seedling costs #250, and you will need around 1,200 which is #300,000 in total, to kick start the journey
Oil mill: here is another sector that requires you to have some machines around to process the harvested palm oil kernel seeds
It’s also capital demanding, but not like a palm tree plantation you have to wait years to start pulling your investment from
You can use these machines for either commercial or personal use, you should also know The busiest time of year is between January and May.
You might earn less outside this period and it’s still okay if you keep purchasing enough palm kernels from harvesters to process into oil for sales
Palm oil supply: here’s the most saturated palm oil sector, and I mean most saturated doesn’t mean you should take backward steps, as people often think when something is said to be saturated it means it’s not a good investment, meanwhile it simply means where the money is, as it’s high in demand
This part is the cheapest and easiest as you need to buy in large quantities and retail to consumers
Palm oil business owners often pull more profit by storing the palm oil in a suitable place for months, then selling off during pick season when palm oil supply has reduced with higher demand
Where do you see your palm oil business in a few years to come?
How do you intend to hit your revenue goals with the capital with you?
What are your liable challenges and how do you propose to annihilate or leverage them?
I know either the same or other similar questions are already running through your minds, which is okay as an entrepreneur
You should have plans to make every step ahead worthwhile, and the answers and approach to accomplishing the goals should fit right into your daily routine if you hate to see your oil palm business misfire before take-off
Even if you produce palm oil, chances are your production may be insufficient for existing bookings, what do you do?
You need to source palm oil from multiple vendors as a supplier who wants to stay above palm oil market current rates with abundant products that suit every customer's requests
If possible, board a transport if you don’t have one of yours, then head straight for Nigerian states with large palm oil production, you don’t have to be complacent about this, there is a huge amount of money exchanging hands in the palm oil business sector, be too hungry for your share
Below are the largest palm oil production hubs in Nigeria
- Cross-River State
- Imo State
- Bayelsa State
- Delta State
- Rivers State
- Ondo State
- Akwa-Ibom State
- Abia State
Pardon me for saying this directly like this, you have every reason to be scared if you have no personal vehicle of yours, as it will probably hurt your palm oil business revenue
Otherwise, inquire about the safest and cheapest mode of transportation from your supplier to lessen the cost
In marketing, you seriously need to have effective marketing strategies to constantly sell out your palm oil for re-investment
Reach out to retailers, palm oil-consuming factories, and more, you also need to implore other marketing strategies if you are hungry for more large customer base like the below channels
Referral marketing: you won’t realize how selfish people can be until you start gifting in exchange for recommending your palm oil to other consumers
For every customer that buys from you, there are at least 10 waiting in line from one potential customer, gratify their gesture to earn more with a referral marketing strategy
Word of mouth marketing: just source or produce top-notch palm oil with competitive pricing, this is enough for some people or customers to keep sharing the benefits of your vendor with their colleagues
Online marketing [Google, Facebook]: People buy almost everything on the internet today, and consumers are waiting for you to display their offer in their social media feed with little advert investment fund
Get a social media marketer to put you through or help you set up your palm oil business for more profits
If the entire above marketing channel still can’t run out of your abundant palm oil stock, then you need to consider exportation, and the popular marketplace for international manufacturers and suppliers is alibaba.com
Also Read: How to start ecommerce business in Nigeria: 7 simple steps
Conclusion
The palm oil business is just like every other buying and selling business out there, you just have to delve into the terrain to know what it has for you, when you go harder you start taking what is yours, as you are given more in the marketplace to attain the rightful spot meant for you
Get started today, and see you at the top!
