Palm oil business in Nigeria, in recent years, has been one of the booming business industries that remains untapped by lots of entrepreneurs.
In the fiercely competitive space of hidden business opportunities in Nigeria, the palm oil business has proven to be one of the most profitable business ideas, either on a large scale or as a small-scale business.
Nigeria, which is one of the leading producers of palm oil around the world, saw a massive spike and trend in the rise of palm oil production over the last decade. The business sector of palm oil production keeps spiking each year due to the immense benefits of palm oil.
Palm oil is known to have diverse benefits, such as economic benefits, consumption benefits, and health benefits. It is also used in the production of soap, cosmetics, and so on. However, many entrepreneurs are still not aware of how profitable palm oil businesses can be in Nigeria.
Therefore, in this guide, I’ll offer you insights on palm oil business in Nigeria, how profitable palm oil business is in Nigeria, how much you need to start a palm oil business, and how to start a palm oil business in Nigeria.
HOW PROFITABLE IS PALM OIL BUSINESS IN NIGERIA?
Some of the questions asked by entrepreneurs trying to start a palm oil business in Nigeria will be: How profitable is palm oil business in Nigeria? Or is palm oil business lucrative in Nigeria? Or is palm oil a good business? Well, all these are same questions and I’ll answer succinctly.
A metric tonne of palm oil is selling between 1 million Naira to 1.4 million Naira in Nigeria, depending on the location of the sale. Therefore, it is necessary to say that palm oil business is highly profitable in Nigeria, given the rise of palm oil production and the economic impact of palm oil production in Nigeria.
There is no doubt that with the amount of metric tonnes of palm oil produced annually in Nigeria and the price of a keg of palm oil, this business is profitable. Entrepreneurs or palm oil producers in Nigeria can also look into export-import expedition using palm oil. That leads to the next question.
HOW MUCH WILL IT COST TO START PALM OIL BUSINESS IN NIGERIA?
There is never a fixed price for the cost of starting a palm oil business in Nigeria. However, there is an estimate that varies depending on the factors. These factors are either you intend to be a palm oil producer, a palm oil distributor, or a palm oil retailer. I’ll make you understand better.
A palm oil producer should have an estimate of 1 million Naira and above to start a palm oil business as a producer. A distributor, on the other hand, should have an estimated start-up capital of around N400,000–N500,000, and a retailer should have a capital of around N100,000 to sell in retail and in small quantities.
HOW TO START A LUCRATIVE PALM OIL BUSINESS IN NIGERIA
Starting a profitable palm oil business in Nigeria can be an issue bothering entrepreneurs looking to dive into this business industry. However, it is less complex than you think, especially when starting as a distributor or retailer.
Here are the step-by-step guides to starting a palm oil business in Nigeria:
1. Market Research
The first step in starting a palm oil business in Nigeria is to do detailed market research and analysis. What is market research? This means you should make an analysis and gather information about consumer needs or preferences for palm oil.
- Do people really need palm oil?
- What region of people needs palm oil the most?
- What type of palm oil are consumers looking for?
- Are consumers willing to pay a high price for palm oil if inflation arises?
These are different variations of questions that you should keep in mind when doing market research for the palm oil business. However, the purpose of market research is to ensure you understand consumers preferences and what they need before starting out your palm oil business.
2. Palm Oil Business Plan
The next step to starting a profitable palm oil business in Nigeria is to create and map out a business plan. This is an overview of how you want to distribute your capital, the consumers you want to sell to, your target market, your annual projections, and how you want to execute your operations in the palm oil business.
This is necessary in order to keep you on track and organised because palm oil business is more lucrative in the first 5 months of the year (Jan-May). Anything aside these months are regarded as off-seasons for palm oil business.
3. Be Capital Ready
It is important to be capital-ready, as capital is the bedrock of a successful business. How do you even think of starting a palm oil business without having capital? It’s never possible.
Therefore, the next step in starting a successful palm oil business in Nigeria is to be capital-ready. I mentioned earlier in the article the estimated cost of starting a palm oil business, either as a producer, a distributor, or a retailer.
4. Business Registration
Starting a palm oil business in Nigeria would require you to register a business name with the Corporate Affairs Commission (CAC), especially if you’re a palm oil producer.
Why should you register your palm oil business? Business registration in Nigeria is necessary for palm oil producers to ensure they follow all regulations relating to palm oil production.
Aside from following all legal requirements, registering your palm oil business will ensure you’re a verified and credible business. This can help you gain the trust of potential customers and improve the reputation of your palm oil business.
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5. Palm Tree Plantation
A palm tree plantation is also another step in starting a palm oil business in Nigeria. Mind you, a palm tree plantation is only necessary if you want to be a palm oil producer, and this can take a lot of years. This is to tell you that it doesn’t happen overnight as a palm oil producer, except if you’re getting your palm kernel seeds from a bulk supplier.
A distributor or retailer that intends to sell quickly and in small quantities may not need to establish a palm tree plantation. A palm oil distributor or retailer only needs to find a supplier. Therefore, this step is mainly for palm oil producers that are ready to ride with the long duration of this business.
A palm tree plantation will require the purchase of land; this land should be the best for palm oil production. Entrepreneurs should ensure they find the best suitable type of land for palm tree plantations.
6. Palm Oil Mills
A palm oil mill processes palm kernel seeds and produces crude palm oil in mass quantities. Therefore, the next step is to establish a palm oil extraction mill.
It is worthy of note that the palm oil extraction mill is less expensive compared to the palm tree plantation. The purpose of this palm oil mill is to produce crude palm oil as a primary product and biomass as a secondary product.
This can be done through the purchase of a palm oil milling machine. After purchasing your palm oil milling machine, be sure to understand the extraction processes of crude palm oil using palm oil mills and palm kernel seeds.
7. Employ Workers
It is clear that starting a palm oil business isn’t easy for a single person, except if you’re a retailer or just a distributor. Palm oil producers are required to employ qualified workers, if that is the case.
Therefore, employing hardworking and qualified workers will be the next step of consideration in starting a palm oil business in Nigeria.
If you’re a palm oil producer and not a retailer or distributor, then it is necessary to employ these workers to assist in either harvesting your palm kernel seeds (the first stage) or during the palm oil extraction from the mills (the later stage).
8. Transport Formalities
This step should be adopted by both palm oil producers, distributors, and retailers. I’ll tell you why. Customer satisfaction with the timely delivery and transport of their palm oil orders should be your priority. It is necessary to partner with the fastest delivery service or transport service you can get.
This is to ensure you deliver palm oil orders to customers in quick and fast succession around the country. A faster delivery of palm oil to customers will bring more sales and customer referrals in return to your palm oil business.
9. Marketing For Sales
Marketing your palm oil business to potential customers should be your next line of action. What is the point of starting if you’re not making sales?
Either as a palm oil producer, distributor, or retailer, it is necessary to market your palm oil business across different locations. This can be done using social media campaigns, local SEO, adding your business to Google, networking with other vendors, and referral services.
Entrepreneurs looking to expand their palm oil business in Nigeria should adopt good marketing strategies to reach so many people and customers around the country.
FAQs ON PALM OIL BUSINESS IN NIGERIA
Is Palm Oil a good business?
Yes! palm oil business is good in Nigeria. This is because Nigeria remains one of the leading palm oil producers worldwide, and the spike or increase is never going down anytime soon.
How much does it cost to start a palm oil business in Nigeria?
I gave the answers earlier in the article, and it is never a fixed price. A palm oil producer is expected to have an estimated capital of 1 million Naira. A distributor should have an estimated capital of N500,000 or less; a retailer should have a start-up capital of N150,000 or less.
What are the risks of palm oil business in Nigeria?
The risks attached to palm oil business all come down to the mistakes of the producer, such as poor capital funding, poor or improper milling, poor planting materials, poor delivery logistics and poor technology usage.
How much is a metric tonne of palm oil in Nigeria?
A metric tonne of palm oil in Nigeria is currently around 1.2 million Naira, or slightly less. It all comes down to the location and current economic circumstances of the country.
BOTTOM LINE
Palm oil production doesn’t happen overnight. Therefore, entrepreneurs looking to start a profitable palm oil business in Nigeria as producers should take market research and business planning seriously. Distributors and retailers are entitled to less capital investment compared to producers.
On the other hand, retailers and distributors should focus more on marketing strategies and customer satisfaction, as they are bound to spend less capital. For any related questions regarding palm oil businesses in Nigeria, leave a comment below.