How To Establish And Run A Oil Palm Plantation In Nigeria, The Feasibility Report.

From being the world’s leading producer and exporter of palm oil in the 1960s, Nigeria has fallen to being a net importer to meet the growing domestic demand. Demand is primarily driven by the household consumers who prefer to consume the technical palm oil (TPO) because of its flavor profile, but it is complemented by an increasing demand for the special palm oil (SPO) which can then be fractionated into RBD to meet the needs of industrial processors.

Though domestic production is nearly 900,000 tons, there is an estimated overall gap in Nigeria of between 150 and 300,000 tons of TPO and 200,000 tons of SPO, much of which is currently met through imports.

The Nigerian oil palm belt covers twenty-four states including with Ogun, Ondo, Oyo, Edo, Osun, Cross River, Anambra, Enugu, Imo, Abia, Ebonyi, Ekiti, Akwa-Ibom, Delta and Rivers as leading producers. Within the oil palm belt in Nigeria, 80% of production comes from dispersed smallholders who harvest semi-wild plants and use manual processing techniques.

Several million smallholders are spread over an estimated area ranging from 1.65 million hectares to 2.4 million hectares and to a maximum of 3 million hectares. The estimate for oil palm plantations in Nigeria ranges from 169,000 hectares (72,000 ha of estate plantations and 97,000 ha of smallholder plantations) to 360,000 hectares of plantations.

In a further bid to encourage local production of palm products to satisfy local demand, importation of bulk crude and refined vegetable oil was prohibited in 2001. In response to this ban and consequently increasing demand for local product, there has been some increase in private sector investments in the development of new oil palm plantations and the expansion of existing ones. Smallholdings and out grower schemes were also being promoted by the Federal and State Governments.

Palm oil forms an important part of the local diet in Nigeria because animal fats such as milk and butter are hardly consumed. It is used both as a cooking material and as an ingredient in soups, sauces and a variety of local dishes. Consequently, there had long been a thriving market for palm oil both within the main areas of production in eastern and western Nigeria and between these regions and the non-palm oil producing northern region.

Palm kernel oil (PKO) is an important and cheap source of oil for soap manufacturers,bio-fuel, cooking oil, vegetable ghee, Shortenings, Margarine, CBS,CBE, ice cream, dough, creaming, coating, and other specialty fats while palm kernel cakes are used in animal feed production.The market for Palm Kernel Oil (PKO) is very large. About 80% of all the edible vegetable oil consumed in Nigeria is made from refined palm kernel oil.

In Nigeria, the major buyers of palm kernel oil are vegetable oil refineries and soap making companies and our focus would be on vegetable oil refineries and soap making companies. We shall narrow down to vegetable oil refineries since their demand is far above supply.

It is estimated that only about 75% of the demand for palm kernel oil by local vegetable oil refineries and soap making companies is being meet in Nigeria.

Extensive market research has revealed that palm oil,palm kernel oil (PKO) and palm kernel cake are everyday goods used by individuals as well as Industries. Thus, the market is ongoing and is not dependent on economic cycles and can be described as a FMCG (fast-moving consumer goods) commodity market.

The company seeks to examine establish aneighty (80) hectares oil palm plantation with seventy -two (72) hectares used for the cultivation of oil palm while eight (8) hectares is used for office and civil construction. The plantation would start fruiting in the fourth year with an output of five (5) tons per hectare of fresh fruit bunch (FFB), production would increase to seven (7) tons per hectare of fresh fruit bunch (FFB). A further increase of twenty (20) tons per hectare of fresh fruit bunch (FFB) is expected from the tenth year while production is expected to start dropping by the thirtieth (30) year.

From one ton of fresh fruit bunch (100%), we can collect sixty-five percent (65%) of fruit from which twenty-eight percent (28%) of crude oil can be derived and thirty-seven percent (37%) of cake. From the twenty-eight percent (28%) of crude oil, four percent (4%) of sludge and twenty-four percent (24%) of pure oil would be derived. From the thirty-seven percent (37%) of cake, twenty-four percent (24%) nuts comprising of four percent (4%) of kernels and twenty percent (20%) of shell would be achieved while from the four percent (4%) of kernels, two percent (2%) of palm kernel oil and two percent (2%) of palm kernel cake would be derived.

The plantation would have a processing plant, producing crude palm oil, palm kernel oil and cake from fresh fruit bunch (FFB).

Table of Contents

EXECUTIVE SUMMARY 1.0 Business Overview 1.1 Description of the Business 1.2 Vision and Mission Statement 1.3 Business Objective 1.4 Value Proposition 1.5 Critical Success Factor of the Business 1.6 Current Status of Business 1.7 Description of the Business Industry 1.8 Contribution to Local and National Economy 2.0 Agricultural Practice 2.1 Nursery Raising and Planting 2.1.1 Collection of seeds 2.1.2 Seed germination 2.1.3 Raising seedlings 2.1.4 Planting 2.1.5 Manures and Fertilizers 2.1.6 Weeding 2.1.7 Leaf pruning 2.1.8 Irrigation 2.1.9 Harvesting and Yield 2.1.9.1 Method of harvesting 2.1.9.2 Yield 2.2 Factors of Production/ Cultivation 2.2.1 Soil Type 2.2.2 Seedlings 2.2.3 Climate 2.2.4 Fruits 2.2.5 Diseases and Pests 3. Marketing Plan 3.1 Description of product 3.2 Product Packaging and delivery 3.3 The Opportunity 3.4 Pricing Strategy 3.5 Target Market 3.6 Distribution and Delivery Strategy 3.7 Promotional Strategy 3.8 Competition 4. Production Plan 4.1 Description of the Location 4.2 Raw Materials 4.3 Production Equipment 4.4 Production Process 4.5 Production Cost 4.6 Stock Control Process 4.7 Pre-Operating activities and expenses 4.7.1 Operating Activities and Expenses 4.8 Milestones 5.0 Organizational and Management Plan 5.1 Ownership of the business 5.2 Profile of the promoters 5.3 Key Management Staff 5.3.2 Management Support Units 5.4 Details of salary schedule 6. Financial Plan 6.1 Financial Assumption 6.2 Start up Capital Estimation 6.3 Source of Capital 6.4 Security of Loan 6.5 Loan Repayment Plan 7.0 Business Risk and mitigation 7.1 Business Risks 7.2 SWOT Analysis

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