How To Start A Palm Oil Business In Nigeria 2024

Are you looking to start a Palm Oil Business in Nigeria? Palm Oil Business is one of the most profitable businesses you can start in Nigeria.

Nigeria imports 92,961 metric tons of palm oil every year.

This is because the local production of palm is unable to satisfy local consumption.

If you are looking to start a palm oil business in Nigeria, this is one of the best decisions you can possibly make. Any year, any time.

The palm oil business is lucrative and has a high demand for palm oil products.

Palm oil is used in almost every cooked meal. With the meagre supply of palm oil from local farmers, any palm oil that is found is a treasure.

Why You Should Start a Palm Oil Business in Nigeria today

Firstly, there’s a significant demand for palm fruit components such as leaves, fruits, trunks, and sap, both locally and internationally.

Investing in palm oil production will result in high returns, too.

There is a high demand for palm oil from September to December when most palm oil sellers make their money.

Palm oil tends to be in surplus from December to April as well. But prices go high between July and September.

Guys, I’ve written this article for people who want to start buying and storing Palm oil to sell it in the future.

6 Key Tips on How to Start a Palm Oil Business in Nigeria

1. Choose the Type

When embarking on a palm oil business in Nigeria, the first step is to select the appropriate type of business within the palm oil industry.

There are three main aspects of the Palm oil business, so choosing the right one is key.

Will you focus on cultivation, processing, or trading of palm oil?

Cultivation: This involves acquiring land and planting palm fruits.

When these fruits mature and bear fruit, you will harvest and sell them or sell the palm fruit in bulk during harvest.

Processing of palm: In the palm oil business, the processing aspect involves the extraction and refinement of palm oil from harvested palm fruits.

Another name for this is having a palm oil Mill.

This step transforms the raw materials into the final product, ready for distribution and sale.

Trading of Palm Oil: This is the most common and requires that you buy from market women or people in your area, then you store and sell.

This is the most common aspect of the Palm oil business in Nigeria.

2. Get Your Storage Space.

How to Start a Palm Oil Business in Nigeria

Secure some pace for storing your palm oil, regardless of the business model you adopt.

Some storage space right in your home guarantees rest of mind. But it’s better to have your storage space close to where your customers are.

So, renting a shop near a local market around you is a very smart idea.

In Nigeria, palm oil is best stored in big blue drums / barrels, in a cool place away from direct sunlight.

It takes about 6 – 8 (25liters) gallons to fill a barrel.

3. Arrange With Suppliers

Aside customers, your business needs suppliers to thrive. Find suppliers that produce high quality palm oil.

Conduct thorough research before making your choice because the success of your business would hinge largely on the quality of the palm oil you get.

From personal experience, i can say that good palm oil can be sourced from Osun, Ekiti, and Ondo state.

4. Decide on Transport Arrangements

You would need to transport your palm oil from the supplier’s location to your shop or storage location.

And in some cases, you would need to transport palm oil to your customers as well.

(In fact, you can make more money by charging extra for delivery. Buyers would readily pay for the convenience).

Most times, palm oil are best transported in gallons.

If you are transporting from Eastern Nigeria to either the Western or Northern part of the country, use the services of companies such as The Young Shall Grow Motors, G.U.O Motors, Cross Country etc.

If you have a van or truck to yourself, that would be fine.

But if you don’t have one, you would need to hire one each time you need to transport your commodity.

5. Start Small

Starting small in a palm oil business is one of the best tricks out there. As a business pro, I’ve seen this strategy work wonders.

Think of it this way.

How many jerry cans of Palm oil Will you buy the first time you visit a market?

Beginning small allows you to learn without burning through cash.

You learn where to buy the best product and how things work in the market. This way, you’re set to handle challenges smoothly.

6. Draft a Business Plan

Creating a business plan is crucial for several reasons. Firstly, it serves as a roadmap.

This roadmap guides you through key decisions and milestones.

A well-thought-out plan also helps set clear objectives. You define your target market and understand the competitive landscape.

Additionally, a business plan helps you plan your finances properly. It allows you to estimate startup costs, revenue projections, and potential risks.

Doing all these helps you attract potential investors but also ensures you have a solid financial foundation.

Another thing a business plan does for you is enhance your credibility when you’re seeking partnerships or loans.

With a business plan, you’re committed to making your Palm oil business successful.

Land and Location

Where will you buy oil?
Where will you locate your storage space?
Where are your suppliers located?

Will you have to travel to purchase good palm oil?
How far are you willing to go?

For you to be the best in every business, you need to go the extra mile. So, what are you willing to do to succeed in this business in Nigeria?

Now for a start, will you carry every palm you buy back home? With the rate of transportation today. That will be expensive.

But if you’re looking at renting a space in the area where you buy your palm oil how safe is that?

If you intend to carry your palm oil home every time you visit the market, then it’s important you have a goal for each market day.

But sometimes, you’ll have to prowl the villages to get good palm oil at a cheap price.

It all depends on what you’re willing to do.

Check Out 8 Secrets to Find a Good Location for Your Business in Nigeria

Machinery and Equipment

For someone who buys and sells palm oil from retailers to wholesalers the equipment you need are few.

You will need your jerricans, hose and funnels in case you need to turn some oil.

Get some okrika clothes that you will have to wear when going to purchase palm oil. Palm oil business is super profitable but it can also be dirty.

Also get a purse for putting your phone and money so it doesn’t get lost.

Manpower and Expertise

Will you find a partner who will do this business with you?

It’s difficult to trust people when doing business but partnership has always been of great help.

What will a partner do for you? You can partner with someone from a village you buy palm oil from.

He’ll buy the palm oil in the village, all you have to do is to buy the palm oil from him.

He’ll add his profit, but you’ll shoulder the responsibilities and talk to the big companies.

It can be done. You can also partner with mills so they keep palm oils for you with added profit.

You’ll be the one to bring a vehicle to transport the oil.

Financial Resources

Starting a palm oil trading business in Nigeria means having enough money to get things going.

You’ll need cash for buying palm oil in large quantities, arranging transportation, and setting up storage spaces.

Make sure you have some extra money for dealing with changes in the market and taking advantage of good deals.

Building good connections with suppliers and making sure your distribution system works well also require some financial investment.

So, having a solid financial plan is super important for making your palm oil trading business successful.

Compliance and Regulations

This involves registering your business. You know the way Nigeria is, so registering your business will help you avoid some embarrassing situations.

You’ll also have peace of mind knowing that your business is registered no matter what happens.

Your customers will also trust you better if they realize that your business is registered.

How Much Does it Cost to Start a Palm Oil Business in Nigeria?

For you to reasonably start a palm oil business in Nigeria, you will need to have N5 million naira in hand.

One Jerrican of palm oil costs N25-35000 as of Nigeria today.

10 is N300,000 if we decided to keep this price at N30,000 a Jerrican.

But how many do you expect to buy in a month?

How many are you looking to buy in a year?

How long will you store them?

When will you sell?

How many Jerry Cans of oil can you afford with the capital you have at hand?

You will also need to buy the tools and equipments needed. It’s also Important to consider your storage space.

Will you store the oil close to where you buy so that you will move them when you have a large quantity?

These are all questions that you should spend some time deliberating.

Is Palm Oil a Lucrative Business?

Yes. The palm business is super lucrative.

Recently, Nigeria’s ability to produce palm oil for consumption has dwindled and the demand for the product has increased.

This scarcity along with inflation has driven up the price of palm oil products in Nigeria.

The cost of starting a palm oil business in Nigeria is cheap compared to what you’ll get in order areas.

The primary costs of palm oil production involve acquiring raw materials (palm fruits) and processing.

In Nigeria, where palm cultivation is significant, raw material costs remain relatively low.

Processing expenses involve the palm oil factory, equipment, and operational overhead.

Notably, investing in cost-effective processing equipment substantially reduces this expenditure.

On the flip side, Nigeria faces increasing palm oil prices due to oversupply, making it the most expensive among palm oil-producing countries.

Seizing the opportunity, purchasing palm oil during periods of abundance and selling during scarcity can yield substantial profits—ranging from 100% to 200% or more—depending on location and market dynamics.

For instance, in 2016, a 25-liter palm oil container bought for #5,000–#7,000 during abundant times could fetch #15,000–#22,000 in scarcity intervals, with regional price variations.

Notably, strategic sourcing from places like Edo, Delta, and Akwa Ibom, followed by resale in high-demand areas like Kano, Lagos, and Abuja, proves lucrative.

Although adopting this model requires more substantial capital, traders often secure significant profits.

How to Succeed in Palm Oil Business in Nigeria

If you want to succeed in the Palm oil business as well as in life there are principles you have to abide by.

Communicate well with people.

Books like How to Win Friends and Influence People was written by Dale Carnegie to help you thrive with your fellow man or woman.

The Psychology of Selling by Brian Tracy teaches you the language of selling.

What you have to do that’ll save you from mistakes both relationship mistake and financial mistake.

If you learn how to communicate in business you’ll thrive.

Good communication skills enables you to have great customer service and this is the bedrock upon which every successful trading is built.

Risk in Palm Oil Business in Nigeria

You might buy bad oil.
Transport can be tricky.
Knowing the right time to sell is hard.
It’s essential you know how to store your oil.
You have to travel almost all the time.

Where to Buy Palm Oil Cheap in Nigeria

The best time to buy palm oil in Nigeria is between February and May, which is also known as storage season. During this time, palm oil is usually cheap and in surplus supply.

Go to the market and ask Palm Oil sellers where they buy their Palm Oil from. This will give you a clue on what to do.

You may have to ask around to find their answer you’re seeking.

Look for good deals in places like Edo, Delta, and Akwa Ibom during abundant seasons. The State of Osun is known for quality palm oil.

Conclusion

In conclusion, starting a palm oil business in Nigeria can be a good idea. To do well, it’s important to get affordable processing equipment and plan smartly.

You can make good profits by buying palm oil when it’s plenty and selling it when prices go up during scarcity.

Look for affordable palm oil in places like Edo, Delta, and Akwa Ibom when there’s a lot available. Then, sell it in busy cities like Kano, Lagos, Kaduna, and Abuja where people need it.

If you plan carefully and understand the market, you can have a successful palm oil business in Nigeria, bringing in profits and contributing to the local economy.

If you’re confused about which business to try in Nigeria, then check out this next article where you’ll find 55 most profitable business ideas in Nigeria.

Recommended Business Articles:

How to Start a Palm Oil Business in Nigeria 2024