In our last topic, we discussed in details Agricultural Investment Opportunities in Nigeria, as agriculture has come to stay because it matters to the future of development, it is more effective than other sectors in reducing poverty and most importantly to improve the livelihood of a booming population. The business Opportunities in Agriculture is so wide, you could want to start up a business in either Livestock or Crops but in this article we would be discussing Palm Oil Processing as a lucrative business in the agricultural system.
Just as we know that Palm Oil (Elaesis guineesis from Greek) is made from the fruit of trees called African Oil Palm. The tress originated in the tropical rain forest region of West African, but were introduced to Indonesia and Malaysia in the late 19th and early 20th century. Oil Palm mainly grown for the industrial production of vegetable oil requires a high and year round rainfall with little or no dry season and stable high temperatures; soils should be deep and well drained.
A modern oil palm plantation needs a grower who has learned how to cultivate oil palms. Growing selected oil palms is not just a matter of picking the fruit; it is a modern crop. . The grower should ask for advice, so that he learns to do better and better. The grower must think about his work and plan it, so that he can always do his work at the right time. Selected oil palms give the grower much more work than the natural trees, but they yield much more.
An oil palm grower is a modern farmer. With the money he earns he can buy for his family what they need, and he can modernize his farm. Oil Palm begins to produce fruit for harvest 3 to 4 years of planting, if fertilized well. During this period the grower must spend money and work hard, without harvesting any fruit or earning any money. Life expectancy is 28 to 30 years on average, at which point they are usually 40 feet / 12 metres high and it becomes too hard to harvest the heavy fruit bundles using extension poles. The palms are injected with pesticide, which kills the tree from within, and eventually they get bulldozed in order to make room for new oil palms. after it has been planted.
Why you should invest in Oil Palm.
When next time you walk into a grocery store, take a moment to think about the fact that 50 percent of the items you see contain palm oil. Despite its ubiquity and familiar presence on ingredient lists, palm oil is a foreign, tropical product that most North Americans know very little about.
- In the supply system, Nigeria is the fourth largest producer of palm oil in the world accounting for 3% of global production. Based on research (NIFOR) oil palm upstream production estimates 0.98 million tons.
- Considering Nigeria population of about 194 million based on statistics, and per capita consumption of 12.5kg per annum against the world average of about 20kg per person per annum , estimated annual consumption is 2.4 million tons.
- The demand for palm oil is primarily driven by household consumption for food. This accounts for 90% of palm oil consumption in Nigeria. The non-food industry accounts for 10%. Therefore, the large and rapidly growing population will continue to be a major driver of palm oil.
- It is a mechanism to fill the gap. Import of redefined palm oil/vegetable oil is prohibited and there is a duty of 35% on the import of crude oil/vegetable oil and by adopting this policy, the country is able to generate employment in manufacturing/refining industry.
- Through this process, two largest organized oil palm plantation in Nigeria have continuously reported a gross profit margin of more than 50% and operating profit in the range of 30-40%.
- Palm oil is not only known for household consumption but it is used as raw materials for industrial products as soaps, bio-diesels, margarine, cosmetics, pharmaceuticals, lubricants etc.
- Palm oil has a long shelf life. it can be stored for up to 12 month without much spoilage. However it will be better to sell off within 6 months to preserve its freshness.
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Top 10 countries producing Oil Palm.
|Rank||Country||Tonnes (Metric Tons)|
|6||Papua New Guinea||500,000|
Oil palm production 2017/2018 statistics.
Challenges associated with oil palm plantation.
- To grow oil palms takes a lot of work: Before planting your oil palms, you have to clear the forest and remove the tree stumps.
Then it takes a lot of time to sow the cover crop, dig holes in the plantation, take the seedlings out of the nursery, carry them to the plantation and plant them. All this work needs to be carefully done; you must take your time.
Never hurry if you want to be successful with your plantation.Once the oil palms are planted, you must put wire netting around the young trees, you must spread fertilizer and keep watch over the plantation.
Young oil palms need a lot of care. It is better to make a smaller plantation, but look after it carefully.Once the oil palms have begun to produce, the fruit must be harvested at the right moment.
If you cannot pick the fruit at the right moment, it becomes too ripe, many clusters will drop and the quality of the fruit will be less good.
- It is capital intensive: Most often you will have to pay workmen for clearing the site of the plantation and removing tree stumps.Then you must buy seedlings and fertilizers. Unless you apply fertilizers to the oil palms when they are still young, they will not grow well and you will have to wait a longer time before you can begin to harvest.You may also have to pay workers to help you look after the young plantation. Weeds must not be allowed to get in the way of the oil palms, and the trees must be protected from damage by rats and agotis. All this work takes a lot of time, and this means that you may not have enough time to look after large fields of food crops.
- Growing oil palms takes much time and much care: Do not try to cultivate too large an area, or the work will be badly done.
It is better to cultivate a small plantation and to do the work well. A small plantation that is well looked after can yield more than a large plantation that is badly looked after. Investing an oil palm plantation takes time before the profits start coming in. A palm tree requires at least five years before it matures and starts producing. After it matures it produces palm fruits yearly.
- Adequate storage facilities need to be provided for the palm oil. This can be sometimes challenging especially when you have limited funds.
Palm oil has for long time been considered a relatively low-value edible oil because of the difficulty in manipulating its fatty acid profile. Recent research has gradually upgraded this perception, and palm oil is now becoming a high-value niche product in the health food sector. There is always something you can make out of it.