The palm oil business is one of the lucrative businesses in Nigeria because of its diverse usefulness and the huge profit involved. In Nigeria, palm oil is one of the essential needs for cooking most meals. The interesting part of this business is that every part of the palm tree (fruits, leaves, trunks, and sap) is used for different things.
The palm fruits are processed to produce palm oil, the leaves on the other hand are used for roofing homes in rural areas. While the popular palm wine which is the sap is a refreshing and widely loved beverage in Nigeria.
Gone are the days when people think that the only sector to make cool money in Nigeria is oil and gas. Nowadays, industries that are being overlooked are the ones raking in huge profits for the business owners.
An aspiring entrepreneur must be able to look wide and deep when investing in a business. Not long ago, Nigeria was the third-largest producer of palm oil, with over 2.3million hectares (5.7×106 acres) under cultivation.
This article covers everything you need to know about starting and running a successful palm oil business in Nigeria. Additionally, you will also learn about the different areas of the palm oil business so you can choose the best that works for you depending on your start-up capital.
If you prefer to learn through video, watch the full video of how to start the palm oil business here. Also, subscribe to our channel to get more business ideas and insights.
Palm Oil Business Defined
Palm oil is an edible vegetable oil derived from the fruit of palm trees and it is reddish in colour. It is a native oil with rich components found in Nigeria and some parts of Africa. Palm oil can thicken when you store it in a cool place for a long time.
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Uses Of Palm Oil
A lot of people know palm oil to be used for cooking. Asides from being used for cooking, palm oil can be used for:
- Prevention of vitamin A deficiency, cancer, brain disease, and aging
- Production of soap, cosmetic, body cream, exfoliation cream, margarine, etc
- Release of stomach pain
- Production of drugs
- Treating malaria, high blood pressure, high cholesterol, dementia, etc
- Weight loss and for increasing the body’s metabolism
- Water treatment
- Production of dog and other domestic animal food
- Preservation of food
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Requirements Needed To Start Palm Oil Business
The basic things you need to start this business are:
Capital
This is the money you need to begin your palm oil business. The cost to be factored into your capital should include:
- Land acquisition or land rental cost
- Cost of hiring employees
- Farm maintenance cost
- Cost of purchasing the seedlings
- Processing machine cost
- Cost of means of storage
- Transportation cost
Land
The scope of your business will determine the size of land to acquire. It could be a few acres of land or hectares of land.
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Labor
Here, you may need to hire people to assist you in doing the processing. However, you may go for part-time staff who will only work at different stages of the business.
For instance, you may need a tractor operator to clear the land, then hire other people for the planting process. And during harvest, you can hire workers for harvesting.
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How Profitable Is Palm Oil Business?
The palm oil yield per hectare is estimated at 8 tons per year at most. Additionally, the profit farmers make per hectare is around 3.4tons per year.
There are other factors that also affect the profitability of your palm oil business such as the effect of pests and other diseases. Hence, this should be taken into consideration because it can affect the overall profit of your business.
Importantly, the age of the palm tree also has an effect on the yield. Normally, the peak production period of oil palm plantation is between seven (7) and eighteen (18) years after which it started to decline.
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Steps To Starting Palm Oil Business
Step One: Choose The Palm Oil Business You Want To Invest In
Typically, there are three main types of palm oil business you can invest in. If you have the required capital, you can invest in the three. Otherwise, you can invest in one or two of the types explained below:
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1. Palm Tree Plantation
Palm tree plantation is capital intensive and it requires patience. If you want to start earning from palm oil business immediately, this may not be the best option for you.
In this type of palm oil business, you will need to acquire a large expanse of land. Importantly, the soil must be tested to be sure it is appropriate for palm tree plantation. The land and type of soil used in planting and cultivating the palm affect the quality of the fruits.
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The location of the land is also important for easy access to customers. The incubation period after plantation of the palm trees can take five to ten years before harvesting. After harvesting, you can either sell the palm oil kernel seeds to those processing it or you set up a mill to extract the palm oil.
To plant, you will have to buy seedlings. Usually, one seedling in Nigeria costs N150 and you will need at least 1000 seedlings for a start. Importantly, ensure you give at least 8-9 meters space between two plants.
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2. Set Up A Palm Oil Extraction Mill
The second type of palm oil business is the setting up of palm oil extraction mill. This is also capital intensive but not as expensive as palm tree plantation. All you need to begin is the installation of palm oil milling machines for the processing of the palm oil kernel seeds.
Basically, you can either use the milling machines for personal or commercial processing. You can rent out the machine to people who want to process their palm kernel. You can make cool cash from this business
if you are positioned in an environment where the machine is usually needed.
One thing to note however is that palm oil has its season. The peak season is between January to May. So, you may not make so much money during the off-season which is around July to December.
Alternatively, you can install the milling machine for your personal use, process the palm oil kernel, and sell the palm oil to consumers or resellers.
To process for yourself, you need to purchase the palm kernel in large quantities from harvesters and process them into palm oil in your mill, then sell to retailers.
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3. Sales Of Palm Oil
Most palm oil business owners invest in this type of palm oil business because it is the cheapest and easiest part of the business. This business involves the buying of palm oil in large quantities and selling to consumers.
To get more profit from this business, you can store the palm oil in a cool place for months, then sell them during off pick period when the supply of palm oil has reduced and demand is high.
This guide will focus on this area of palm oil business.
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Step Two: Draft A Business Plan
As soon as you’ve selected your palm oil business niche, draft out a business plan that will guide your business transaction. While writing your business plan, you need to carry out a thorough feasibility study and market research to understand the nature of the business.
Learn about your competitions, the prevailing prices, and how and where to buy palm oil at a cheap rate. A business plan is a detailed document stating the short and long term objectives of your business and how to achieve them.
In writing your business plan, the following information should be included:
- Executive Summary
- Company Description
- Team
- SWOT Analysis
- Market Analysis
- Financial Analysis
- Marketing Strategies
- Competitive Analysis
- Appendix
See Also: How To Write A Business Plan Step By Step For Your Business
Step Three: Register Your Palm Oil Business With CAC
At entrepreneurs.ng, we encourage aspiring entrepreneurs to structure their business as soon as they begin. The first step to structuring your business is to register it with CAC. There are several benefits you stand to gain when you register your business. One of them is that you can open a corporate account where customers can pay into.
Additionally, registering your business makes your customers trust you. To begin, run a name search on CAC’s portal to confirm if your chosen name has not been registered by another person. Thereafter, you can begin the registration process. With basic information like valid ID card, passport photograph, signature and personal details, you are good to go.
Alternatively, you can hire a lawyer to help you register it. One of the recommended firms that can help you speed up the registration process is ReDahlia, located at 43B, Emina crescent off Toyin Street, Ikeja, Lagos.
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Step Four: Set Up A Storage Space
The next step is to set up storage space. Ensure the space is cool, safe, and dry. Rent a space or a room where you can store the palm oil while you wait for the right time to sell. Additionally, you will need to purchase kegs or drums to store your oil. Most times, people go for the 25litre yellow kegs.
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Step Five: Arrange With Suppliers
In case you are not the one producing the palm oil, you will need to have a solid arrangement with suppliers you can purchase from. If you carry out step two well, you will have the right knowledge suppliers to source your product from.
There are states in Nigeria that are known for producing palm oil in large quantities. Although there are several other states that produce palm oil, these states are seen as the largest producers of quality palm oil in Nigeria.
- Delta State
- Akwa-Ibom State
- Cross-River State
- Bayelsa State
- Imo State
- Rivers State
- Ondo State
- Abia State
You can visit the various states to connect with suppliers of the best palm oil.
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Step Six: Find A Good Means of Transportation
If you don’t know the right mode of transportation to use in transporting your goods, you may end up incurring huge costs that will affect your profit.
Hence, compare prices with several commercial carriers before settling for one. The easiest approach is to ask your supplier to suggest the cheapest, reliable, and safest mode of transportation to you as they’ve been in the system way before you. But, if you have your personal or company vehicle, you will not have a challenge with this step.
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Step Seven: Source For Customers
The efforts you put into steps one to five will go to waste if this step is not effective. You need a solid marketing plan which should be part of your business plan to succeed in this business.
As a matter of fact, it is better to source for your would-be retailers before buying or processing your palm oil. This will give you a ready market when you are ready to sell.
You can find retailers amongst market sellers, cosmetologists, housewives, etc. To attract a larger customer base, you can explore other modes of marketing such as:
- Online marketing (social media, google ad, etc)
- Referral marketing
- Newspaper marketing
- Word of mouth
- Collaboration/Partnership
Furthermore, you can also export palm oil as some international countries may have the need for palm oil, and Nigeria is known for its quality palm oil.
If you are considering exportation, one of the trusted places to find international buyers is Alibaba.com, a website known for connecting suppliers or manufacturers with buyers. Vconnect is equally a good place to try.
Apart from Alibaba and Vconnect, run thorough research for other platforms that can aid your palm oil exportation and go through our content on how to run an export business.
Finally, there are companies in Nigeria that buy palm products. Some of them include:
Phemson Nigeria Limited
A Lagos company involved in the purchase of palm oil and palm oil processing equipment.
Planet Oil and Chemical Industries Ltd
This is another palm oil buying company located in Abia State. They also buy palm kernel oil as well.
Sunny Oil Nigeria Ltd
This company is located at Mushin, Lagos. They also purchase palm oil products and palm kernel oil.
OM Oil Industries Ltd
Another palm oil buying company located in Ikeja, Lagos.
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In conclusion, you cannot go wrong with the palm oil business if you dutifully follow the steps highlighted in this article. As with every business idea we discuss on this platform, you can not substitute hard work and persistence. Work hard and stay the course, success will come.
Do you run a palm oil business and will like to share some insights? Do you want to start a palm oil business in Nigeria? We will like to read from you in the comments.
All the best!
80 responses
Please i need a special guide, i want to venture into this business. I have already registered with CAC. Please assist me.
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I want to start the business please i need your guide
Hello Mike,
Thank you for reaching out to us. Please reach us on WhatsApp- 08038874148. Thank you.
Thank you for this insightful post. I will love to also pick a spot in the palm oil value chain and I would need all the guidance I can get.
Hello Temitope,
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You can get the full guide from our shop or reach us directly on WhatsApp- 08038874148.
Please I want to go into the business please I need someone to put me through
You can attend The Business Clinic. Follow the link to learn more and register.
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Thank you for making the purchase. Enjoy the read, and great luck with your business.
All this step really help me a lot , but I still need collections on where to buy and link to export outside the country.
Thank you Micheal for your visiting our platform.
Please get the comprehensive guide from: https://entrepreneurs.ng/35-business-ideas/
Thank you.
The article is very helpful, the steps are essentials for beginners like myself.
This is very insightful thank you very much for the insight on palm oil business, I love it
Thank you, Joseph.
Do get the comprehensive guide here: https://entrepreneurs.ng/35-business-ideas/
Thank you.
Thank you for the insight. This Article is one of the best I have read.
I want to start this business but how do i write a business plan on it, as i require it urgently.
Hello Chinenye, kindly send us an email on business@entrepreneurs.ng
Hw do i start up oil business
Hello Kingsley,
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We have a program that will prepare you to launch your business with expert guidance. Learn all about it here – https://entrepreneurs.ng/start-your-business-in-30-days/
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I need to follow up anytime u have an update!thanks
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How do I subscribe to your newsletter please. I love this article
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I will love to have more knowledge about the palm oil business.
Hello Oladapo,
Please get our guides on entrepreneurs.ng/shop/. It contains how you need to start your palm oil business.
Thank you.
Thanks for the insight. I appreciate, please I am in Kaduna and want to start buying and selling of Palm oil how can I get a good and reliable supplier from delta or any state, to be supplying me in Kaduna? Thanks
Thanks for the insight I really appreciate it. I will like to start selling palm oil. How much will I be expecting to start with?
Hello Obetan,
Thank you for reaching out to us and we are glad you found the content insightful.
To get the cost of starting the palm oil business, please visit: entrepreneurs.ng/35-business-ideas/ and purchase our comprehensive guide on how to start the most profitable businesses.
Thank you.
Hello Obeten,
We are glad you found the content insightful. To get the cost of starting the palm oil business, please visit entrepreneurs.ng/35-business-ideas/ to purchase our comprehensive guide on how to start the most profitable businesses. The guide contains the cost breakdown and how to start the business.
Thank you.
Good one. I am planning to go into the palm oil business but the challenge is, the cost of transportation. Is there a place close to Abuja where they produce palm oil in large quantities?
Hello Elijah,
Thank you for reaching out to us.
We have a researched guide that contains the information you need to start a profitable palm oil business. Get it on entrepreneurs.ng/shop.
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Thank you. This peace is really insightful. Please I’d like to know how many years it’ll take a palm tree plantation to mature and ready for harves from seedling. Also, if you can prepare a comprehensive business plan on same business for me I’ll be glad. Here is mail address: dhfredrick@gmail.com
Hello Fredrick,
Thank you for reaching out to us. We’re glad you found the content insightful. You can get in-depth research on how to start the palm oil business here: https://entrepreneurs.ng/product/start-your-own-palm-oil-business/
It contains the financial breakdown and answers your question. If you need to reserve us to develop a business model for you, you can reach us on 08038874148.
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It all depends on the species planted. 3 Years is enough to start harvesting if you got good seedlings.
How much do I really need to set up a milling factory?
Hello Topaz,
Thank you for reaching out to us. You can find how much you need to set up a milling factory here: https://entrepreneurs.ng/35-business-ideas/
Thank you.
Thanks for the post. I’m setting up a mill in the coming year. Though I reside in Abuja, will it be wise to set up here or in Abia state, considering nearness to supply.
Do you have any post on Egusi processing mill.
Thank you.
Hello Ikenna,
Thank you for reaching out to us. We’re glad you found the content insightful. Nice that you’re interested in starting the palm oil business.
You can find more information about setting up the palm oil business here: https://entrepreneurs.ng/35-business-ideas/
You will also learn the recommended places and companies that can purchase from you. Thank you. Do let us know if you have any challenges getting the crash course.
I am truly fortunate to have encountered such an article like this because, starting oil palm selling business after my NYSC year has been my priority. Please how do I meet someone/ people who has already been in this business for sometime so that I can have a boastful understanding on what I wanted to venture in? I am ADEMOLA, from Ondo state. Thank you!
Hello Ademola,
Thank you for reaching out to us. We’re glad you found the content insightful. Nice that you’re interested in starting the palm oil business.
You can find more information about setting up the palm oil business here: https://entrepreneurs.ng/35-business-ideas/
This guide is a crash course and will give you the confidence you seek to start and succeed in the palm oil business.
Do let’s know if you have any concerns about getting the guide.
Thank you.
Hello, my name is Paul Emeka. Thank you for this comprehensive analysis. I have 24 gallons of palm oil in storage 25 litters each I’d like to sell. I’m willing to invest more if I have steady buyers, the idea of owning a mill also sounds good. I equally have a large quantity of unprocessed rice available. I’m located in Ebonyi state. I really need buyers of these farm products it will encourage me to invest more in farming I do have big dreams for it.
This is absolutely a perfect guide… I have a Palm Oil processing mill, but was looking at packaging a sealed Palm Oil in small litres of rubbers for sale to those areas where it’s scared. But the marketing plan and strategy is my cause of concern now.
Hello Emmanuel,
Thank you for your interest in starting the palm oil business. And, we’re glad you loved the guide. You can get a marketing and strategy plan with the cost of starting the palm oil business here:
https://entrepreneurs.ng/35-business-ideas/
Thank you.
Hi, my name is Eddy Ben, I want to start the palm oil milling in a small way, but the truth is don’t know how to go about it, I don’t know how it’s been done, please I want to learn, thank you.
Hello Eddy,
Thank you for your honesty.
We have a comprehensive proposal on how to start the palm oil business and 34 other businesses. Get it here:
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It will answer any questions you may have about starting the palm oil business and give you a head start on your entrepreneurial journey.
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My name is Solomon Duza Abraham By the grace of God I want to start up Red Palm Oil business as a wholesaler which I will be buying and selling. It’s my dream to become a businessman and I love doing business and also I have a passion for the Palm Oil business because I love it.
Hello Solomon,
Glad that you love the Palm Oil Business and have a passion for it. Also, we’re glad you found the content useful. Please know that we have a comprehensive guide coming out soon that contains the strategies and investment cost of starting the POS business and other businesses. We will send an email and also make the announcement on entrepreneurs.ng once it’s launched. Thank you.
This is one of my dream business and I find this information very helpful but one of my major problem is finding buyers without having a shop.
Hello, Happy.
We’re glad you found the content insightful. You can open an online store and source for clients online. Interestingly, we have a comprehensive guide coming out soon that contains the investment cost of starting the palm oil business and other business ideas. Do keep tabs on entrepreneurs.ng because we will make the announcement once it’s published.
Thank you.
I really appreciate this article. I have a plan to venture into palm oil milling in a small way. I will appreciate you if you can enlighten me more on the price of the equipment needed. This is my Gmail awetolu2@gmail.com.Thanks in advance.
Hello Tolu.
We’re glad you found the content useful. We have sent you a mail as requested. Also, we have a guide coming out soon that will answer all your questions and more. We will make the announcement on entrepreneurs.ng once it’s published.
Thank you.
Thanks for this information
We’re glad you found it useful. We have an even more comprehensive guide coming out soon with the cost of investment you need to start the business. Please, keep tabs on entrepreneurs.ng because we will make the announcement when it’s published.
Thanks for this great information. I have long for this I just to if someone can buy for me and sell when the price rises.
Hello Rachal,
We’re glad you found the content insightful.
We have a comprehensive guide coming out soon that’s more comprehensive and contains the cost of the investment for starting the business. Please, keep tabs on entrepreneurs.ng because we will make the announcement as soon it’s launched.
Thank you.
How much do u sell 25lit of palm oil
Hello Daniel,
Thank you for reading. We have a comprehensive guide coming out soon that contains the investment cost and marketing strategy for starting the palm oil business and other business ideas. Do keep tabs on entrepreneurs.ng because we will make the announcement once it’s launched.
Thank you.
I too want to start this lucrative business.
I’m a student what modalities must I put in place for a success thanks
Thank you Happiness for reading and we’re glad you found the content insightful.
The secret to success in any business is understanding that business, working hard, and being patient with the process. We have a guide coming out soon that’s more in-depth about the Palm Oil business and other business ideas. Please keep tabs with entrepreneurs.ng, because we will make the announcement once it’s out.
To consult with us on business strategy, reserve us by visiting the link: https://entrepreneurs.ng/business-consulting-services/
Thank you.
Thank you.
I have started already with sales of palm oil but I need More information
Thank you for reaching out. Please expect our complete guide soon.
I will like to work with you. I’m a lawyer. Here is my contact in case
Hello Henry,
Thank you for reaching out to us. You can reach us on business@entrepreneurs.ng.
Thank you.
I will like to start up my own Palm oil business too , but I would want to start it in a small one . Some one once told that I can buy a bounch which cost of 300 Naria per one and can also be taken to mill . Sir is there any profit in there .
Hello Philip,
We are glad the content was useful to you and that you want to start your business. To start your business, it’s on you to do your due diligence or consult a business consultant. Good luck.
I am inspired to start, want to know whether palm oil is produced in Nassarawa state, when is the best time buy and sell thanks again
Hello Tina,
We are glad you are inspired to start your business. You can make further research to find out about those details.
Thank you.
I find your article very useful. I want to start a palm business, from planting to sale of the product. I’m located in Benue state. What is the cost of a good business plan
Hello Mike,
We are glad you found the article insightful.
For the business plan, we can prepare a business plan that is tailored to you. Please send us an email on business@entrepreneurs.ng and we can take the discussion from there.
Thank you.
Am also interested in starting the plam oil business. They major thing I really want to know is how to purchase the gallon in quantity and what is best getting a van or hiring a logistics company sir.
Hello Uchenna,
Thank you for reading. Glad you found the article insightful. Everything you need to start this business was discussed in the article. However, if you will like to consult us for a fee, please send a mail to business@entrepreneurs.ng.
Thank you.
My name is Emmanuel currently resident in South Africa but planning to return back to Nigerian my plan is to invest in buying and selling of palm oil business,please how much do you think I should start with
Hello Emmanuel,
Thank you for reaching out to us and we are glad that you found the article very insightful.
According to the article, you can do your cost analysis and start with what you have, but if you want us to do that research for you, it comes at a cost. Do send us a mail at business@entrepreneurs.ng.
Thank you.
i want to start selling palm oil
Best of luck to you!
I want to start the last phase of the Palm oil business so how much will it cost me for a start ???
Hello Olamide,
Thank you for reading and we are happy that you want to start your own business. Do send us a mail at business@entrepreneurs.ng about what you need from us and we will take the conversation from there.
Thank you and stay safe.
I want to start the business, please I need your guide.
Hello Esther,
Thank you for reaching out to us.
Get our business guides from entrepreneurs.ng/shop/. We can be reached directly on 08038874148.
Thank you.