PALM OIL STORAGE BUSINESS IN NIGERIA 2023
My inbox is full of so many people asking me about Palm Oil Storage specifically after my first post on storage business in Nigeria. So, I decided to put this write up together today out of my busy schedule and I hope this helps. It is not much though but, I am sure you will a better perspective about the business.
You can make a lot of money this season storing and reselling red palm oil and I am going to show you exactly how to do it. It’s not difficult at all; in fact it is one of the easiest business you can do in Nigeria and make quick money within four to six months. I happen to know places in Nigeria where you can get this product at cheap prices and places where you can sell it at good price, I am going to make everything clear to you on this article.
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. 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 wealthiest people back then in my village were into oil palm business.
DIFFERENT ASPECT OF PALM OIL BUSINESS
There are different ways of doing this business:
You can buy and store to sell at off-peak period.
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.
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.
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. Create a wooden base for the jerrycans on the floor of the store and on the wall.
Purchase new and very clean 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.
After purchase, ensure the mouth of the jerrycans are properly sealed to prevent aeration.
HOW TO START
To start a palm oil business ensure whoever you are buying from very good and quality palm oil. When buying go with your own new and clean jerrycans. Do not make use of old or used jerrycans or accept the ones the sellers are giving you, you might have issues with these jerrycans which can make your oil go bad. But, if you are making use of your own jerrycans and you monitor the transfer of the palm oil to your own cans, you will definitely have less issues with the oil.
Another thing you can do is starting small with 30 to 50 jerrycans depending on your capability. Whatever profit you get from the initial capital can then be re-invested to grow your business until you can start selling over a thousand jerrycans.
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
Benue
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.
If you are buying from trusted agents or directly from the source you might not need to worry about the grade. You will always get very good oil in most locations.
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. Also, your agent can also help you get a ready made customers and marketers who will buy from you in large quantity at a very good price.
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:
1. 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. You can take care of this by buying from source or trusted agents.
2. 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.
3. 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.
4. Glut; this affects people who store palm oil mostly. This is not likely to occur as the price of palm oil has be stable for the past five years. There will always be a season of surplus and season of scarcity.
5. 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. This however has been stopped for a while now as some commodities which we can produce locally has been banned from been imported.
6. 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
The best time to buy palm oil is March/April when the price must have dropped drastically. At this time, you can buy and store.
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 July 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.
CURRENT PRICE OF PALM OIL
Around here 25 litres of palm oil are between N15,000 to N20,000 which is still on the high side. By March/ April it is expected that the price will drop to between N9,000 to N10,000 per 25 litres. You can buy at this time and store. From July upwards the price is expected to have gone up again to N20,000 and N25,000. At this period, you can start reselling. Let us assume you bought a 25 litres of palm oil in April at N10,000 and you sell in October at N25,000, you will be looking at a profit of N15,000 from one jerrycan. Multiply this by the number of jerrycans you bought. If you bought store 30 jerrycans for example with N300,000, you will resell for N750,000 and make a profit of N450,000 within the shortest possible period.
CONCLUSION
Oil palm storage business is one of the most lucrative businesses in storage business. Start storing from March/April and wait to resell and make good profit later in the year. There are lots of things to say about palm oil storage business but for the sake of time I will stop here.
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