The Steps Involved in Processing Palm Oil
There are five major steps when processing the palm fruit bunch to its final product – the palm oil. These steps are listed below accordingly:
Weighing and Offloading from trucks: The act of weighing is very crucial to the operation for easy calculation of the amount you are producing and calculation of the cost from sellers. Offloading from trucks has to be done carefully because it may affect the overall quality of the product. If it is handled carelessly the acid content may rise and offset the taste and increase the processing hurdles as the acid content has to be reduced to a certain minimum.
Threshing: This is the process where the fruit are cut off to separate them from their bunch. They are subjected to high temperature boiling in water to loosen the fruits in a process known as sterilization by pressurized cooking.
Pressing/Extracting the Palm Oil: This is the peak of the processes involved in the processing of the palm oil, where the oil is being extracted from the fruit bunch.
Filtering of the palm oil: The oil at this stage will contain unwanted remains of the fruit shells and water and some other dirt. So it is purified at this stage.
Storage of the palm oil: After the whole work is done, they are stored in gallons or barrels, to be transported later to the market or for buying customers to come and pick up, as palm oil is often sold on-demand.
List of Required Items
This business is capital intensive, it needs preparation both monetarily and logistically. We will be adopting a medium scale model as it is the popular and practical model in West Africa (particularly Nigeria) and is big enough to accommodate even for exporting. So the items that will be listed will reflect the medium scale business model.
Item Description Price
10 Ton Capacity Mill Production capacity = 10 tonnes, including boiler, thresher and all the other necessary machines. 3,800,000
Diesel Generator 16KVA power generator. 1,406,500
Borehole For water supply. The full installation with electric pump connected to tanks for storage. 300,000
Plot of Land 1,000,000
Total = 6,506,500
Expected Profit Margin
A tonne of palm oil is sold for somewhere around $550 which is about 173,000 in Naira, and only 25% percent of the oil is extracted from a fruit bunch making if a good machine is used, so you need about 40 tonnes of fresh fruit bunches for 10 tonnes of palm oil which is the average capacity of the medium scale mill we mentioned above. Now if you account for weekends like a Sunday when there isn’t work and days it takes to process each batch of bunch, mostly 3-4 days because fermentation alone takes 2-3 days, you will be left with about 12 days of pure palm oil output, which gives you 120 tonnes per month.
The machine itself works at 90-95% efficiency according to the manufacturers leaving you with 100 tonnes of oil per month. We said earlier 1 ton is sold for N173,000 so we will be having N17,300,000 for 100 tonnes. Now close to 40% of the expenditures is the cost of the palm fruit, which stands at about 6.9 million Naira, the rest of the expenditures are transportation, staff payment, diesel fuel and maintenance costs, they roughly add up to 3.5 million Naira, so you have;
17,300,000 – 6,900,00 = 10,400,000
Then 10,400,000 – 3,500,000 = N6,900,000, approximately 7 million Naira, this is your expected profit when embarking on this business.
Summary
Capital to start business: 6.5 million Naira.