Palm oil processing feasibility and business plan

Palm oil Comprehensive plan

Executive summary

ABC Ltd. proposes to develop a medium scale palm oil plantation and mill of Tenera a hybrid palm nut(between Dura and Pesifera) planted approximately on a 102 hectares farm land in Ntezi Village of Abakiliki Local Government Council Ebonyi State. It is the intention of ABC farms Ltd. to impact the immediate economy of the community where its palm oil plantation is located through direct and indirect employment of rural dwellers living around its vicinity. But more importantly to boost rural incomes and raise living standards.

Investment on them will be in excess of N200 million in the short to medium term of which shareholders of ABC Integrated Farms Ltd. have committed over N70 million in the planting of over:

  • 20,000 – 30,000 palm seedling between years 2012 – 2014
  • Purchase of a 10 ton (10,000kg) per day palm oil mill capacity of fresh fruit Bunches (FFB) of palm fruit
  • Construction of Industrial area, which includes the mill, quarters for mill staff, security post and a snake administrative building.

Given Seasonality, the expectation is that the plant will operate at rear capacity for four months of the year, (April-July) and less than this or half capacity for the rest of the year (August – March).

Therefore it is estimated that the plant will operate at an average capacity of 5 tons (5,000kg) per day throughout the year. Total capital expenditure is put at N390,000,000 including land purchase (350HA), 10 ton (10,000kg) per day mill equipment, seedlings planting of over 100,000 Tenera trees, and the construction of the industrial area housing the mill and palm kernel cracking unit, staff quarters for workers and security personnel.

In year 2018, it is accepted that a palm kernel oil processing plant will be commissioned to optimize gains in the value chain.

Pay back period is estimated to be between 10-12 years provided more investments continue to be made to upgrade activities in the value chain within the first three years of commencement of operations. A moratorium of three years is therefore advised.

This feasibility study is focused on oil palm, its products and direct by-products. Whereas from the palm tree derives palm oil, palm, wine and wood product; three dominant products of the oil palm are technical palm oil(TPO),special palm oil(SPO) and palm kernel oil(PKO),with the palm kernel cake and sludge as significant by-products that serve as input into the production of animal feed. Such is the versatility of the oil palm tree.

The literature, based on extensive studies has shown that the market largely exists for three oil palm products namely, technical palm oil(TPO) with free fatty acid (FFA) of between 5-30%;special palm oil(SPO) with less FFA of less than 5%;palm kernel oil(PKO),a by-product of the palm oil product whose demand has grown over the years as an industrial raw material. Present production is estimated at about 200,000tonnes per annum.

It is also estimated that the small scale producers of palm oil using traditional methods account for about 80% of local production (688,500 tons) whilst the medium and large estates account for 161,500 tons or 20% of total annual production. Lack of information about how to access the market for SPO supply to secondary processors and the lack of technical ability to produce to specification of industrial production are some of the factors militating against the small scale producers .

The conclusion is that there is great growth opportunity for the palm oil industry over the short to long term, especially for medium to large estates due to the huge demand-supply gap and existing capacity deficiencies. As a corollary, there are major opportunities along the palm oil value chain to be exploited by investors such  like Alemu integrated farms Ltd.


  1. Executive Summary 5
  2. Introduction 6
  3. Justification of project 10
  4. Objective of report 11
  5. Study of scope 11
  6. Product/Service Description 13
  7. The Promoter 19
  8. Marketing Plan 19
  9. Market Trend 21
  10. Defining Strategy 23
  11. Market structure 26
  12. Competition Analysis 26

12  Marketing strategy                                                                  26

  1. Technical Analysis 27
  2. Management of Mill and Plantation 28
  3. SWOT Analysis 30
  4. Critical Success Factors 31

17   Financial Projections                                                               32

18   Conclusion, Finding, Recommendation                                 34

  1. Appendices 37


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About the author

Sandra Chinedu

Chinedu Sandra is an Entrepreneur within the I.C.T space and loves blogging. She is on the Honour list of GEM, a World Bank Project for start-ups in Africa.


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