Red palm oil business is very lucrative, it is a business that can give 50-100% profit depending on the season and availability. This is a product that is used in every home across Africa and beyond. In my State, we are very generous with palm oil when preparing food, if oil is not seen floating on top of your food then it might have yet not been used. Such food includes ekpang nkwukwor, edikang ikong soup, afang soup etc. And if you give somebody palm oil as gift still my State, it is more valued than any other costly gift you can provide..
It is not only used in the preparation of food, palm oil is also used for soap making and other additives. Some people call it red oil whatever name you call it; the fact remains that it plays an important role in building our economy through its sales within and outside Nigeria. Even before I was born palm oil business has always been thriving the most wealthiest people back then in my village were into oil palm business.
One of my classmates in secondary did not further his education but ventured into this business. He has built a massive mansion in the village and now loads full truck of palm oil from his compound. The States with the best palm oil are Akwa Ibom, Delta, Rivers, Bayelsa, and Cross River. They are said to be the highest producers of palm oil in Nigeria.
DIFFERENT WAYS OF DOING RED PALM OIL BUSINESS
There are different ways of doing this business, you can buy and store to sell at off-peak period. Or you buy and sell off immediately; this one can give you more money because you will be selling in large volumes. Another way is to buy and bottle them for retail sales.
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Someone started by working as a sourcing agents that came from Aba to buy in large quantities. He was charging the people #200 per gallon, he now owns palm oil milling company and he is a young man. In this article you will get to know what is required to do the business, the profit, where to buy, palm oil grades, challenges of the business, how to get customers as a starter and all that is there to know about palm oil business.
Use unique container to bottle your palm oil, make it appealing by placing a label on it. Make use of different sizes so that you can capture a wider audience.
REQUIREMENT FOR STARTING A PALM OIL BUSINESS
- Get a shop or storage house, where you can store the oil pending when you will sell them. Or where customers can be coming to buy. It should be a place that can easily be accessible.
- Purchase gallons you will use in storing the oil.
- Get training on how to know good oil. Locate someone who is experience and whom you trust to take you through the business. He/she will teach you how to identify good oil, where to buy and when to sell.
HOW TO START
As earlier said you should be able to identify good oil from the bad ones, this is where the success or failure of the business begins. Because anybody you sell bad oil to will never want to buy from you again and might even block others from buying from you. At the same time the good oil you sell to people will retain customers and as well build them.
Start your palm oil business with few gallons, if possible 10-20 gallons. So that when you sell 10 the remaining ones won’t be difficult to sell. Buy re-used kegs if you are using gallons although purchasing drums is far cheaper than gallons.
WHERE TO BUY
There are many places to buy oil from, they are; Akwa Ibom, Cross River, Ondo, Edo, Delta, Imo, Anambra, Abia, Enugu Ebonyi, Rivers, Ogun, Ekiti, Bayelsa etc. Southern Nigeria generally are blessed with palm trees. In Akwa Ibom palm oil plantation is an inheritance, you are born to own palm trees. A place like Etim Ekpo, Ukanafun, Ikono are well favoured by this. Recently, due to population increase, people are now cultivating hybrid palm tree for commercial purpose.
Apart from the fact that AKwa Ibom has good palm tree specie they also do not mix oil. Maybe that’s why they are topping the chart for best oil producers.
HOW TO KNOW GOOD PALM OIL/GRADES
Grade 1: this is the best oil; it can be stored within 8 months and above. The oil doesn’t sleep nor is it harsh, from the top to the bottom it remains the same. A little shake of the content will make the oil to flow freely; the taste is good, has a beautiful fragrance and does not foam at the top. The colour is most times dark red.
Grade 2 palm oil can be stored between 3-4 months. The oil is opposite of grade one, it is choking, sleeps from the top to bottom etc.
Grade 3 palm oil should be sold immediately or at most within a month. It is used in soap making.
You have to make a good use of your nose to distinguish good oil. Just dip your finger into the oil and smell.
The colour of palm oil may not mean the oil is bad, for instance there is a species palm tree called agric. It is not as reddish as the local one. Agric reduces in quantity for about 5 litres from its content. Most millers mixes agric and local species together to make it come out well.
HOW TO GET CUSTOMERS
Put a little oil in a small container like the 50cl bottle; give them out as sample to palm oil sellers or retailers. You just have to forget about profit at this time but concentrate on building customers. In as much as you sampled quality oil the palm oil marketers will be the ones to bring other buyers to you.
For those storing have at least one customer from the onset whom you can supply oil to, he/she will in turn refer others to you and the cycle keeps enlarging that way.
HOW TO PLACE PRICE ON YOUR PALM OIL
The price of oil depends on your location. However do not over charge; for instance if you are selling immediately placing #1,000-‘#2,000 on top of the amount you bought it won’t be a bad idea. Because you wouldn’t want to pursue customers with exorbitant price. Remember it is a business and others are waiting to use their strategies to retain/woo customers.
How To Start A Profitable Palm Oil Business In Nigeria
PROFITABILITY IN PALM OIL BUSINESS
Whatever way you do your palm oil business the truth remains that it is profitable. People who store oil makes a huge amount of money in a sweep. In 2016, palm oil marketers sold their stored palm oil which they bought at the rate of #6,000 at #20,000 and above more than 100$% profit. Sometimes high demand of oil can force the price up.
For those storing palm oil you don’t have to wait until the price hits the rock, you can start selling in batches so that if the price drops you won’t have to regret and if it increases you know you are still better off for it.
Assuming you are supplying about 1,000 gallons every month for those buying and selling immediately. 1,000 multiply by #1,000 will be ons million every month, that is how lucrative the business is. Let’s also assume you stored 200 rubbers and you made #5,000 as gain for each, the profit is also 1 million, that’s why you should consider doing palm oil business today.
That’s not all you can be an agent to distributors and wholesalers and be receiving a commission of #300-#500 for every one gallon of palm oil you sourced for purchase. Those retailing palm oil make a good profit as well. In Akwa Ibom a 50cl container of the oil goes for #400 and 37 bottles make 25 litres which is sold for #10,000. So 37 multiply by 400 gives you #14,800; that is how lucrative palm oil business is. 8 gallons of 25 litres makes a drum.
CHALLENGES OF PALM OIL BUSINESS
It is a known fact that there are no businesses without challenges; palm oil has its fair share of it.
Some of those challenges are:
- Identifying good oil, if you cannot identify good oil especially people who are storing then your failure has only just begun. A bad oil will keep getting worse as it stays longer. As a result of that, you may find it difficult to sell and when you eventually do you might not get your money back.
- Unforeseen circumstances; it might be difficult to supply your client at the agreed time this could be due to truck break down on the way, which do happened every now and then. Not been able to source for the oil on time or delay by the palm oil millers etc. In situations like this you have to calm your clients down because they will be agitating. Know this if you cannot handle this situation well you will lose customers.
- Fluctuation in prices; palm oil prices are always fluctuating sometimes after agreeing on a certain price with a client, that price will shoot up, it will take wisdom and good explanation to get an understanding.
- Glut; this affects people who store palm oil mostly. In 2017 so many people stored oil thinking it will be like 2016. When people were making more than 300% profit. The product became too much available forcing the price to remain low as a result of that people who weren’t smart to observe the market loosed in the business.
- Importation; palm is being smuggled in or allowed into Nigerian market from Malaysia and other neighbouring countries. They flood the product in and sell them out at a less price than our local oil. Customers patronised them because of the price even when the quality can’t be compared to our local oil.
- Selling on credit; some of those customers may pressurize you to sell on credit. If you do, getting your money back may be a problem. Sometimes they pay you in pieces such that you cannot continue with the business anymore.
WHEN TO START STORING PALM OIL
Start buying immediately palm fruits are prevalent and the price considerably drops. That should be between January-March. Don’t wait until the price completely drops. Buy in batches, little by little until the price eventually drops. You will have nothing to lose even if the price doesn’t come down lower than you thought.
WHEN TO SELL YOUR STORED RED PALM OIL
The right time to sell your palm oil is when the rains are coming down heavily and continuously. At this time palm trees bring out less fruit or you start selling from September down to December. It can also be when you see a sharp increase in the price of palm oil in the market you start selling your own.
Always check and turn your stored oil monthly. bring them out and sun them or use stick to stir. Place the gallons on a wood or on something. It is not advisable to place them on plain ground. There is so much to write about in palm oil business, I will keep on updating this post as much as I can. If you have any question or clarification to make, do well to use the comment box, thank you.
CURRENT PRICE OF PALM OIL
The price of red palm oil as at today is #6,500 in Akwa Ibom State. That is the reason many trucks are loading every day because the price will soon shoot up due to increase in rainfall. Smart investors are taking advantage of the price to store the oil now.
Oil palm storage business is one of the most lucrative business in storage business. Start storing your palm oil now.
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