Palm Oil Production 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 refined, bleached and deodorised (RBD) to meet the needs of industrial processors.

Though domestic production is nearly nine hundred thousand (900,000) tons, there is an estimated overall gap in Nigeria of between one hundred and fifty thousand (150,000) to three hundred thousand (300,000) tons of technical palm oil (TPO) and two hundred thousand (200,000) tons of special palm oil (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, eighty percent (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 one million, six hundred and fifty thousand (1,650,000) hectares to two million, four hundred thousand (2,400,000) hectares and to a maximum of three million (3,000,000) hectares.

The estimate for oil palm plantations in Nigeria ranges from one hundred and sixty nine thousand (169,000) hectares (72,000 ha of estate plantations and 97,000 ha of smallholder plantations) to three hundred and sixty thousand (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.

The demand for Palm Oil is high because it is consumed every day in almost every home in Nigeria mainly for cooking purposes.

Palm oil is one of the few highly saturated vegetable fats and is semi-solid at room temperature. Like most plant-based products, palm oil contains very little cholesterol.

This report seeks to examine the financial viability or otherwise of producing palm oil from fresh fruit bunch (FFB) in Nigeria. The plant would also produce uncracked palm kernel shell as bye-products. Uncracked palm kernel can be cracked to yield palm kernel nuts which is used in the production of crude palm kernel oil (CPKO).

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 Critical Success Factor of the Business 1.5 Current Status of Business 1.6 Description of the Business Industry 1.7 Contribution to Local and National Economy 2. Marketing Plan 2.1 Description of product 2.2 Product Packaging and delivery 2.3 The Opportunity 2.4 Pricing Strategy 2.5 Target Market 2.6 Distribution and Delivery Strategy 2.7 Promotional Strategy 2.8 Competition 3. Production Plan 3.1 Description of the Location 3.2 Raw Materials 3.3 Production Equipment 3.4 Production Process 3.5 Production Cost 3.6 Stock Control Process 3.7 Pre-Operating activities and expenses 3.7.1 Operating Activities and Expenses 3.8 Project Implementation Schedule 4.0 Organizational and Management Plan 4.1 Ownership of the business 4.2 Profile of the promoters 4.3 Key Management Staff 4.3.2 Management Support Units 4.4 Details of salary schedule 5. Financial Plan 5.1 Financial Assumption 5.2 Start -up Capital Estimation 5.3 Source of Capital 5.4 Security of Loan 5.5 Loan Repayment Plan 5.6 Profit and Loss Analysis 5.7 Cash Flow Analysis 5.8 Viability Analysis 6.0 Business Risk and mitigation factor 6.1 Business Risks 6.2 SWOT Analysis

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