How To Start Palm Oil Business In Nigeria (Ultimate Guide)
Palm oil business also known as Oil palm business, is one of the most lucrative businesses to do in Nigeria and other African countries.
With Palm oil being the most important daily food commodity after water and salt in African homes, the business is such that is never in lack of customers and can thrive anywhere in the continent at all seasons.
In this ultimate guide, I will show you everything you need to know about Palm oil business. How to start it, recognise the best quality of palm oil, and where to buy and sell the product. (it is going to be an exciting journey into this agribusiness, continue reading!)
Do you know before crude oil was discovered in Nigeria and some other African nations, the continent largely depended on the export of Palm oil as their number one method of acquiring foreign exchange?
Do you also know that Africa is not the only continent where Palm oil business thrives? In Asia for instance, Palm oil is a very important product as it is used in the manufacturing of several goods such as beauty products, food supplements etc.
Till today, Malaysia (an Asian country and the highest producers of Palm oil) still generates foreign exchange from it. In fact, the product is among the top 10 locally produced agricultural items that Malaysia is known for exporting.
So how do you start this business in Nigeria or any other country for instance? Let me show you!
First, you need to realise that Palm oil has three (3) different qualities or grades. There is grade 1, 2 and 3. They are also known as grade a, b, and c of Palm oil.
All three grades are good but valued differently in the market. Before proceeding further, let me show you how to recognise each of these three different grades of Palm oil. Failure to know this before going into this business may lead to a great loss. Nobody likes losses.
Grade 1 Of Palm Oil (Also Called Grade A)
This is the best quality of palm oil. It is often dark red in colour and when put in a container, the product does not have a part of it settling down i.e forming a very light red or whitish thicker version of the oil towards the bottom of the container. How it is from the top is how it is to the bottom.
This particular grade has a sweet smelling fragrance, a kind of a “fresh” smell and is actually sweet when tasted.
You can discern this by dipping a finger in the oil and tasting it before buying. Perceive the smell too (Lol). It is very important.
This first grade of palm oil can be stored in a container for more than nine (9) months and the quality will “almost” still remain the same.
When Nigeria went into recession in 2015 and the cost of oil became very high, traders who had this quality of Palm oil long stored in containers, made a whole lot of money from it. Some became millionaires as a result.
This grade is so good that you almost feel like drinking it when eating white Yam (boiled) with it.
It is always advisable to always invest in this grade. Though it is often costlier than others, it sells faster.
Grade 2 Or B of Palm Oil
This grade follows the first closely to the point people often mistake it for the first grade. But let me show you how you can recognise it easily.
Though it tastes almost exactly like the first and almost the same colour at the top. This grade when put in a container is different.
From the outside of the container, you can see a part of it settling down i.e forming a very light red thicker version at the bottom of the container. When stirred with a stick, spatula or spoon, this grade of Palm oil often appears a little bit dull.
This kind of oil is often not advisable to be stored more than four (4) to six months (6) as that will further reduce its quality and value in the market.
Do not let anybody put you under pressure to buy this quality if you are going to be storing the oil for a very long time. So you don’t be at the losing end.
If you are going to be storing it for a long time, it is always advisable you placed something on the ground before placing their containers there. Something like a thick clothe, mat or wood (plank) will do. Instead of placing them on ordinary cemented floor.
Also ensure to often bring them out to where the sun can shine on them and stir or shake their containers once in a while.
Grade 3 or Grade C Of Palm Oil
This is the third quality of Palm oil. In Nigeria for instance, this grade does well in areas where the production of palm oil is not high. Like the northern part of Nigeria.
You can easily recognise this type because it is almost the same in appearance from the top to the bottom of a container.
The colour is often yellowish or light red even without being stirred with anything. The appearance is very dull and the taste and smell is far different from the rest. That strong sweet fragrance is almost totally absent.
This grade is only advisable to buy in large quantity if you already have a market and strategy for reselling them immediately.
It is not worth storing more than a month to three. Else it will really lose its value in the market.
Where To Buy And Sell Palm Oil
In Nigeria and other countries in Africa, there are areas where you can buy Palm oil at very low rates and resell them at other places at higher prices.
Some of the areas that have been known to produce Palm oil in high quantity that anybody interested in the business can visit and buy from includes, Abia, Akwa Ibom, Cross River, Ebonyi, Benue etc.
There are also areas where you can easily situate your Palm oil business if you intend to be selling it locally. These areas with high population of people, restaurants and manufacturing companies that will make use of it.
In Nigeria, some of these areas include Port Harcourt, Enugu, Lagos, Onitsha, Ibadan, Kano, Abuja etc. Palm oil is well known to thrive in these areas.
Even if you do not live in an area where the product is well needed, you can visit such areas, meet some of the market men and women there that may be interested in buying the product. Let them know you can supply them the product at very affordable prices. Before you know it, your Palm oil business will start booming.
Also put in mind your cost of transport when choosing an area of supply as very distant places may increase your expenses.
Apart from doing this business locally in your country, you can even expand your reach by starting the exportation of Palm oil to other countries where the product is also highly needed.
In Summary
Palm oil business is a business that is worth doing. It can thrive anywhere irrespective of the season.
Buying a good quality of it will give you an upper hand over every other trader especially as a starter in this business.
Do not let anyone put you under unnecessary pressure to buy from them if their product is not up to what you are looking for.
With hardwork, commitment and of course a good marketing strategy, you will do very well in palm oil business.
Thanks for reading!
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