INVESTMENT OPPORTUNITIES IN THE OIL
PALM VALUE CHAIN
BACKGROUND
The
main goal of the Oil Palm Value Chain is to bridge the gap in national
vegetable oil production estimated at 350,000 metric tonnes through the
implementation of the following strategies:
a)
Expansion
of hectarage under oil palm by smallholder farmers and estates.
b)
Improvement
of the productivity of farmers by the application of fertility management
packages and use of improved planting materials.
c)
Enhancing
the Semi Wild Grove (SWG) yield by gradual replacement of old and unproductive
wild palms with improved planting materials.
d)
Building
the capacities of smallholder farmers along the entire value chain.
e)
Supporting
upstream and downstream processing activities to produce quality crude palm oil
and vegetable oil products, and
f)
Helping
to grow the marketing system and create employment for the youth along the
various value chains of the oil palm.
Oil palm grows in at
least twenty–four (24) States of the Federation namely: Abia, Akwa Ibom, Cross
River, Rivers, Bayelsa, Imo, Anambra, Ebonyi, Enugu, Delta, Edo, Ondo, Ogun,
Osun, Oyo, Ekiti, Benue, Kwara, Kogi, Nasarawa, Plateau, Taraba, Adamawa and
Kaduna (Southern Kaduna).
A NURSERY ESTABLISHMENT
Investment in nursery establishment
(raising of sprouted nuts into mature seedlings) can be done either on a large
or small scale, depending on investor’s capital outlay. But in this case, investment
plan is based on raising 10,000 sprouted nuts into mature seedlings.
Cost
Estimate and Revenue for Raising 10,000 Sprouted Nuts into Mature Seedlings for
11 months.
·
Land
Clearing ₦10,000
·
Borehole
(1No.) ₦500,000
·
Poly-bags ₦70,000
·
Tipper
load of top soil ₦8,000
·
Wire
collar (25 bundles) ₦113,000
·
Sprouted
nuts ₦500,000
·
Weeding ₦25,000
·
Watering ₦50,000
·
Farm
yard Manure e.g animal dung ₦20,000
·
5%
Contingency ₦64,800
SUMMARY
Total
Production Cost ₦1,360,800
Total
Revenue (@ ₦250 per seedling) ₦2,500,000
Profit Margin ₦1,139,200
B PLANTATION DEVELOPMENT
This involves the planting up of
arable land with improved tenera oil palm seedlings at 150 seedlings per
hectare, and at a spacing of 9metre X 9metre triangular.
Cost
Estimate and Revenue for One (1) Hectare Plantation
Field
Planting and Maintenance
·
Land
Clearing/preparation ₦100,000
·
Seedlings ₦75,000
·
Field
planting ₦12,000
·
Weeding
(Annual Minimum of 4No) ₦30,000
·
Fertilizer
(Annual Minimum of 2 Applications) ₦98,000
Harvesting
for 1–Hectare Plantation
Each hectare is
capable of producing 12 metric tonnes fresh fruit bunches (12mtffb) and
total cost of
harvesting 12mtffb (@ ₦20 per bunch, for approx. 350 bunches) equals ₦7,000
Processing
for 1–Hectare Plantation
Each hectare is
capable of producing 2.16 metric tonnes of Crude Palm Oil (CPO) after 3 years
of establishment. Therefore one hectare will produce 2.16 metric tonnes CPO and
realize revenue of about ₦388,800 at ₦180,000 per metric tonne.
SUMMARY
Total
Production Cost ₦322,000
Total
Revenue ₦388,800
Profit Margin (after the first 3 years) ₦66,800
NOTE:
The higher the
number of hectares one cultivates, the higher the returns on investment one
gets.
C HARVESTING OPERATIONS
This involves the use of Motorized
Harvesters, to reduce drudgery in harvesting operations. Each Motorized
Harvester is capable of harvesting 500 – 900 fresh fruit bunch per day.
Investment in Motorized Harvesters is a quick win and calculation is based on
one year investment plan.
Cost
Estimate and Revenue for the use of Motorized Harvesters in Harvesting for One
Year
·
Motorized
Harvesters =₦500,000
·
Maintenance
cost for one year (5% cost of machine) =₦25,000
·
2
Litres of petrol per day @ ₦97 x 2, for 313 days =₦60,722
·
1
Litre of engine oil @₦600,to be changed every week(52 times) =₦31,200
·
1
pair of Hand Glove @ ₦500 =₦500
·
1
Pair of Overall (protective clothing) @ ₦3,000 =₦3,000
·
1
pair of safety boots @ ₦1,500 =₦1,500
·
Contingency
(5%) =₦31,096.10
SUMMARY
Total
Production Cost ₦653,018.10
Total
Revenue (Harvesting of 156,500ffb @ ₦20 each) ₦3,130,000
Profit Margin ₦2,476,981.90
NB:
Revenue comes from harvesting of 156,500 fresh fruit bunches (at the rate of
500 ffb per day, for 313 days in a year)
D PROCESSING
COST ESTIMATE AND REVENUE FOR
SME/COMMERCIAL PROCESSING ACTIVITIES FOR ONE YEAR
Establishment
of 0.5mtffb/hr Medium Scale Processing Equipment (MSPE), for processing of
premium palm oil.
The
investor using MSPE will be fully engaged in processing activities, and would
employ women and youths along the processing line of palm oil production in
order to produce Premium Crude Palm
Oil.
1.
Cost
of 1No. Medium Scale Processing Equipment (MSPE) =N4,000,000
2.
Building
a shade/store to house the equipment (MSPE) =₦1,000,000
3.
Maintenance
Cost for the Mill for one year
=N1,000,000
4.
Cost
of Fresh Fruit Bunch (ffb) for one year (@₦240,000/day(ie₦20,000 X 12mt) X 313 days (one year) =₦75,120,000
5.
10No.
Labour @₦3,000 per day X313 days =₦9,390,000
6.
100
litres diesel (power) per day @₦ 180 X 313 days =₦5,634,000
7.
Cost
of storage tanks =₦500,000
8.
Water
(Borehole) =1,000,000
9.
Contingency
(5%) =₦4,882,200
Total Production Cost =₦102,526,200
Total Revenue from sale of 2.16mt CPO
(12 X 18%) =₦121,694,400
@ ₦180,000/mt/day X 313 days (one
year)
Profit Margin =₦19,168,200
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