Investing In Palm Kernel Processing

The oil that is derived from palm kernel is used for cosmetic product making and other vital industrial purposes. This business is one of the
hidden lucrative and profitable business that many people are yet to know much about or anything at all.

Unless you are told of how lucrative this business is by an insider, you will never believe it makes any money let alone making millions.

But I can tell you for certainty and for free that palm oil extraction business is a mega millions business.

Are you aware that palm kernel oil product is one of the few product you can sell right at the point of production, without necessarily needing to take it to the market?

Depending on your financial capacity, It can be run in a small, medium and large scale. You may be wondering but where can one get palm kernel in large quantity? It is produced in hundreds of thousands tones in the Eastern part of Nigeria annually.

All you need to do is to go set up this business around the east or you
transport the product to your desired location and mill.

It is however most profitable when you set it up where you can Palm Kernel Nuts PKN in large quantity due to transportation costs and other
logistics. Ondo state is also good at the production of palm kernel too, so you may decide to source there if you're within West.

DEFINATION OF TERMS

PKN - Palm Kernel Nut. The is the nut you get when a palm kernel's hard shell is broken. That's the nut where the oil we are talking about is extracted from.

PKO - Palm Kernel Oil. This is the actual oil that is being extracted from palm kernel nuts, the actual product or one of the main product we are talking about here.

PKC - Palm Kernel Cake. This another product that is being derived from the palm kernel extraction process and it makes up good percentage of the palm kernel produce.

PKS - Palm Kernel Sludge. Is a residue collected from palm kernel oil.

PRODUCTION PROCESS

In summary, the production line involves reception of good palm-kernel nuts, crushing the nuts with the nut-crusher, heating the seeds with the seed fryer so as to excite the oil molecules, and transferring the heated-crushed nuts to the oil press.

The oil press presses the seeds, and expels the oil content of the seeds through the oil exit chamber, and at the same time expels the cake through the cake exit chamber.

The crude oil is collected in drums or over-head tanks and left to settle. Since the sludge (sediments) is denser than the oil, it settles below the oil. The oil can then be collected separately from the sludge.

Two to three persons can conveniently operate the machinery. Below is a brief description of the machinery used.

1. NUT CRUSHER

»Function: Crushes the palm-kernel nuts and reduces it to smaller sizes so as to ease the oil extraction process.
»Price: N350, 000.

2. ELECTRICAL SEED FRYER

»Function: Fries/roast the crushed nuts. This process heats up the crushed nuts, thereby exciting the oil molecule content of the nuts.
»Price: N480, 000.

3. OIL PRESS (2T/D)

»Function: Presses the heated nuts and expels the oil content of the nuts via the oil exit chamber, while the cake is collected via the cake exit chamber.
»Price: N450, 000

Total: N1, 280, 000.

»Note: Their is an oil press with 4T/D capacity; it costs N800,000.

From the above, you will need about two million naira (N2,000,000) to procure and install the machinery and also procure about 10tons of raw materials (palm-kernel nuts).

PROFITABILITY

~1 tone of palm-kernel nuts gives an average of 410liters of oil, 540Kg of cake, and 25Kg of sludge.

~Average price for 1tone of palm-kernel nuts is N70,000.

~Average Selling Price of the products is

»Oil = N200 per litre
»Cake = N15 per Kg
»Sludge = N20 per Kg.

So if you process 1tone, you sell:
»Oil @ N200 x 410 = N82,000
»Cake @ N15 x 540 = N8,100
»Sludge @ N20 x 25 = N500

Total sales = N90,600.
Profit = N90,600 - N70,000= N20,000

The above profit is for processing 1tone of palm kernel.

Now, if you process 2 tone per day, you get N20,000 x 2 = N40,000 per day as profit, which by extension implies a monthly profit of N1,120,000 (24days). Profit increases as production increases.

Note: If you sell your products at a bit lesser price, you will generate much more sales and still make a reasonable profit. If you are a good negotiator, you can get the nuts as low as N(60,000 - 65,000) per ton.

CONCLUSION

Palm kernel processing business is lucrative and the market for the products is vast. It even extends to the international market. Get buyers, offer them good quality products at competitive prices, and that's it.

If you have much capital to process large quantity continuously, visit nigerian export promotion council; they will link you to exporters or international buyers.

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NB: THIS COST BREAK DOWN WOULD BE UPDATED SOON. THIS IS 2014 COST IMPLICATION.