Oil palm in Nigeria grows in the coastal belt which varies in depth from 100 to 150 miles and a riverine belt which follows the valleys of the Niger and Benue for a distance of about 450 miles from the sea. The main palm oil producing states includes Cross River,Akwa-Ibom, Delta, Bayelsa,Rivers, Anambra, Enugu, Imo, Abia, Ekiti, Ondo, Oyo, Edo and Ogun.
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.
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.
This report seeks to examine the financial viability or otherwise of establishing a oil palm seed processing plant in Nigeria which involves the sourcing of fresh fruit bunch {FFB} and processing same to yield palm oil, palm kernel oil and cake.
The oil palm industry in Nigeria is dominated by small scale with production capacity of between 1-5 tons per day. The production plants are usually found in the southern part of the country where the chief raw material, oil palm seeds, can be found.
A few large scale processors exist mostly in south western and eastern part of the country.
The Market for the palm oil, palm kernel oil and palm kernel cake is huge, sustainable and expanding. The estimated size of the local market is put at about N3 Billion for Palm Oil, N4.24 billion for Palm kernel oil while the market for Palm Kernel Cake is estimated at N3.3 billion. The products also sell very well in the export market.
Another product that can be gotten and sold from oil palm but the market is not developed in Nigeria is Palm kernel Shell. They are required in large quantity in the production of bio-fuel, road construction amongst other uses.
The market for palm oil, palm kernel oil and cake is national. With a population of over 165 million people and an estimated national population growth rate of 5.7% per annum ,an average economic growth rate of 3.5% per annum in the past five {5} years, Nigeria has a large market for palm oil, palm kernel oil and cake. The demand for palm oil, palm kernel oil and cake is high but due to a short fall in the supply of raw material production is low.
In 2005, in order to stimulate local production and attain self sufficiency in edible oil production, the government introduced the presidential initiative on the development of edible oil over a period not exceeding three {3} years.
Under this initiative, attention was focused on the promotion of eleven scheduled oil seed crops which are oil palm seed, groundnut seed, Soya beans seed, cotton seed etc and production target was set for each of the crops under the programme as follow
1. Oil Palm: 1 million hectares capacity of producing 15 million fresh fruit bunches
2. Groundnut: 15 million tons annually
3. Soya beans: 670,000 1 million tons per annum
4. Seed Cotton: 1 million tons over the plan period
After seven {7} years of the initiative, the domestic edible oil demand far exceeds the national production. The short fall in supply is estimated at about 50,000 tons per year.
From the above figures, it is clear that there is a large and sustainable market for palm oil, palm kernel oil and cake in Nigeria.
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At Foraminifera Market Research {www.foramfera.com}, we provide bespoke and up to date market research reports for start-ups and those already in business.
Our reports are designed to assist start-ups to understand the legal and financial requirements of starting the business, the market trends vis-a-vis demand and supply, competition, risk identification and mitigation strategies.
You can order our detailed business plan on the production of palm oil, palm kernel oil and cake in Nigeria by clicking on the link below.
Report Title: PROCESSING OF FRESH FRUIT BUNCH {FFB} TO YIELD PALM OIL, PALM KERNEL OIL AND CAKE IN NIGERIA
Report Code: FORA/08/2011/05
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