Have you ever been to the market and hear the conversations that go on between the palm oil vendor and the customers? Some would commend on the lovely taste of the last bottle they had gotten while some would express hearty pleasure; “can I get the exact one I bought last time? The taste and aroma are delicious”, “Please I hope this is the same type I bought last time, it is the best with beans…”, “I want the Palm oil from the East, I prefer it to the Ghanaian one…” these and more are comments from palm oil buyers at a vendor’s corner.
The comments are not just what is obvious but the fact that the palm oil seller never opens his or her shop without selling handsomely per day. Some people’s palm oil must be exhausted and they have no choice than to purchase more the next minute. Why?
Palm oil is obtained from a palm produce known as palm kernel whose components are physically extracted and refined into palm oil.
Most doctors will admonish patients with or without poor health conditions to stick to palm oil as a cooking ingredient as opposed to groundnut oil even in the preparation of stew or as far as in the frying of other food substances like eggs, meat, fish and other seafood.
Palm oil has been reported by health practitioners and nutritionists to contain innumerous vitamins and other components that does a lot of good to the body and especially the eyes since it is highly enriched in Vitamin A.
The truth is that palm oil forms a large part of the African diet. Some Nigerians, prefer foods that are swallowed rather than chewed and that is where the concept of “swallow” emanates. Hence, there is no swallow without a soup that conforms to it and there is almost no soup of the African dish that does not contain palm oil.
Asides the wide use as an indelible ingredient in making African dishes, palm oil is also used in making necessary life-supporting commodities such as soda and toilet soaps, body lotions and other cosmetics, preservatives, animal foods, canned foods, water treatment chemicals, drilling fluids and even drugs.
These Ideas alone, stimulate a business-endowed mind about the opportunities that are laid bare in the field of palm oil business. Imagine then, if one were to look into the larger aspect of palm oil business, say, supplying of these necessary commodity at larger units.
Top 10 Tips On How To Start a Palm Oil Supply Business In Nigeria
Palm oil, when viewed under the perspective of business, dealing in palm oil as a means of income should warrant a prospective palm oil supplier to consider the following areas:
1. Palm Kernel Supply
This has to do with the primary production stage of palm oil. In this aspect, one should be looking into how to make palm kernel available for those who need to convert that raw material into the oil itself. This is actually a very capital intensive component of palm oil business.
You are looking at how to own and develop a palm tree plantation. It goes as far as acquiring large hectares of land and tending to young palm plants from beds to maturity. Palm trees are perennials and it takes a number of years before each palm tree can grow into maturity.
However, if this feat could be achieved, it’s like one being a landlord and waiting annually to receive rents as reward for building innumerable residential houses. Although, it is also important to note that this aspect of palm oil business is totally high capital-demanding.
This is so because, one is looking into the possibility of purchasing large acres of land that the soil fertility is super rich to support palm growth and survival. It takes about five to ten years of planting, depending on the conditions of the soil, climate and weather, before a palm tree can grow into maturity, produce fruits and ready for harvest.
After this rigorous stage with a long wait for results, then one can recline and begin to enjoy the timely production of palm produce from the plantation that will be harvested once ripe so that the trees can begin another cycle of production.
As these humongous return set in, the plantation owner will therefore decide what to do with the palm produce. For example, he may sell these produces as raw materials to palm produce-demanding industries, companies or private bodies. Firms and organizations that need these can be searched for online with Vconnect or LinkedIn.
To champion the supply of palm kernel, one should:
- Acquire large area of land fit for plantation
- Ensure the quality of the soil and if possible, invite experienced agriculturists and geological technicians to ascertain the viability of the soil to support palm trees.
- Invite experts in the field of palm oil plantations so as to nurse the plantation for you on consultancy basis.
- Let these experts do the planting and spacing as required for healthy formation of the plantation.
- Monitor the plantation for the growth period of the trees along with your consulted experts and watch your plantation bloom into a full field of palm trees within a period of 5 to 10 years.
- Time to Harvest your multimillions.
It should be noted here that this area of palm oil supply is very capital intensive and it is recommended for those who find deep interest in palm oil business and have the millions of naira to set aside as capital, in a bid to make more money.
2. Palm Oil Processing
In this area of palm oil business, one is looking into the processing of the palm kernels into refined palm oil. This could be capital-demanding because it is majorly carried out with the purchase and ownership of large milling machines mainly engineered to extract the oil from kernels.
One may participate in this aspect of palm oil business through acquisition of machines and using these machines to process acquired raw palm produce. This hence involves creating a palm oil mill where palm oil will be manufactured in large quantities.
Although, not to be too afraid, in the rural areas, there are those who can be employed and given stipends to manufacture palm oil through traditional methods. This method is manual and labour intensive. One who has no high capital to get machines may employ traditional experts to carry out the manufacturing process.
In fact, it is true that in the market the best palm oil required by people are those that are manually extracted because it has natural taste. When your oil has been extracted, you want to start considering how to market them to make your good money.
3. Direct Buying and Reselling (Palm oil Trading)
This area in involves the after-production activities of the palm oil. A person who wishes to be involved in this aspect must be a good marketer. Since palm oil is a necessary commodity in food production and consumption, this means that it is difficult for anyone to monopolize, the market.
One can be a wholesaler or retailer of palm oil. Some people purchase drums and gallons of palm oil and sell them to petty traders in kegs and smaller bits. This is the easiest way of partaking in palm oil business despite having a small capital and still making a lot from it.
The truth is that there are different qualities and grades of palm oil. You as a seller of the oil need to know the type that your customers prefer and where to get it from. I am sure that you have been travelling from one part of Nigeria to another and you must have come across roadside sellers of palm oil in yellow and white gallons of different sizes and colours.
These people are retailers. They buy in larger quantities from local producers and sell in bits to roadside buyers. They make thousands from each 20liters sold and in days they sell more than 200liters. This is a very good way to make money from reselling of palm oil.
4. Geographical Advantage
This is to explain that there is advantage for those who want to go deeper into the business by conveying palm oil from State to State. For example, good palm oil is not made in the Northern part of Nigeria. This means that palm oil is costlier in places like Sokoto, Kebbi, Kaduna, Zamfara, Kano, Katsina, etc.
For those who may want to be involved full time in the marketing and trade aspect of palm oil business in Nigeria, either as wholesalers or retailers. You should consider various parts of Ondo, Enugu, Edo, Ebonyi and Delta States.
These are the States in Nigeria that are most renowned for the massive production of palm oil and from these States one can really buy at cheap prices in large quantities and then resell to those parts, especially the Northern parts where this red gold has more value due to scarcity of pure palm oil in these areas.
Just like Onions, tomatoes and other vegetables are cheaper in the North but costlier in the South and West, Palm oil is actually costlier in the North. One would therefore make use of the advantage that these parts of Nigeria have over one another in terms of availability of palm oil to make more money.
5. Meager Transportation Cost
One may be bothered about how to transport large quantities of palm oil from one part of the country to another. This is not a problem at all. Approach any motor park or garage, there are always DAF vehicles and trailers that are designated for carrying goods from one State to another.
After these the rest would be to negotiate how much it would cost to convey a unit of palm oil, in barrel or gallons to the State. Usually, to convey one gallon/barrel would not exceed ₦2,000 naira only. The more the gallons, the lesser the cost.
There will also be negotiation of receiving point where the goods will be dropped when they get to their States for the owner to finally receive it but sometimes the negotiations will be to deliver directly to the owner.
6. Palm Oil Warehouse
I say palm oil warehouse because it is important to have an idea about the part of the country that actually represent the greatest depot of palm oil in the country. Going into the business with full force will require this salient knowledge.
Hence, the States known for largest palm oil production in Nigeria are Delta, Enugu and Edo States. In fact, palm oil is the greatest source of revenue for these States.
In Delta State, focus on Isoko, Ukwale and Urhobo areas in Enugu and Edo State, every mile is a palm oil depot. Just ask around you will be directed where to get your palm oil.
This means that acquiring large quantities of palm oil from the States to convey to other States where they are not produced is a great source of income to the palm oil dealer. Won’t you utilize this opportunity?
7. No Fear Factor
Unlike some other commodity businesses one could venture into, palm oil business is very secure. This is so because palm oil does not perish, although when the time is so long without being used, it could lose taste and texture but still very much usable nonetheless.
Palm oil sleeps in cool temperature and melts back in warm temperature. There is no fear for the dealer about having to sell all before a due time because it is a durable goods.
It is most likely that the stock of palm oil will be all sold before any change in nature this means it can stay for months without any issues. Unlike a vegetable or fruit dealer who may run into a lot of loss because of failure to sell before perish time but this is not so for palm oil. The dealer’s mind is always at rest.
8. Accommodation Of All Capital Amounts
The beauty of palm oil trading is that it can accommodate any amount of capital. Those who have a huge amount to invest into the business should consider palm kernel production by owning a palm plantation while those who want to go into kernel processing can own a palm oil plant or mills.
However, for people with few thousands, it is wiser to go into the retail trading aspect of buying cheaper and reselling in bits. Presently, a 5litre palm oil gallon costs averagely ₦2,500 to ₦2,700 naira at average while a bottle of 75cl costs ₦750 naira.
Selling a full gallon in bottles would earn one ₦5,000 naira and the profit will therefore be ₦2,500 or ₦2,300 naira! Almost double the cost price.
Imagine buying a titan vehicle of palm oil whose tank has a volume of 44,000litres for ₦5.5 million naira, you can get more than ₦12 million naira at the end of the trade. Start from a gallon even if ₦5,000 is all you can afford.
9. Your Prospective Customers
Here is a list of few companies that really utilize palm oil in large quantities for their production process in case you are considering where to begin marketing with a high ambition. One may become one of their constant suppliers…
- Sunny Oil Nig. Ltd at Mushin, Lagos.
- OM Oil Industries Ltd at Ogba, Ikeja Lagos.
- Planet Oil and Chemical Industries Ltd at Aba-Enugu express way, Abia.
- Phemson Nig. Ltd at Iyana Ipaja Lagos.
- Emily Millionaire Cosmetics at Balogun Lagos.
- PS Mandrides PLC at Murtala Muhammad Way, Kano.
10. Be Empowered with Knowledge
There are many other countless companies that use palm oil in their organization and these are but few. So, it is important to also be well informed about the market vicinities and one shouldn’t forget to always make research and ask questions from the appropriate quarters.
With just a surf on the internet, one can acquire many information about palm oil. Where to begin from and how to get contacts of many palm oil dealing companies. Research gives you a head start on how to go about any areas adopted upon the palm oil business trade.
In conclusion, Know that palm oil business remains one of the most flourishing businesses in Nigeria and hardly does an individual or group venture into the business without making good money.
It is recommended for anyone who wishes to go into the business, to push on and not relent because the returns that are achievable from this business cannot be overemphasized.