How to invest in oil palm plantation
Oil Palm is native to West Africa. Nigeria used to be the world’s largest producer of oil palm before the oil boom era. Indonesia has now taken over as the top producer and oil palm and allied industries is now the main stay of its economy.
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In the early 70’s, Malaysia came to Nigeria to obtain oil palm seedlings and seeds, according to experts.
Apart from household consumption, oil palm serves as by-product to numerous industries such as the food and beverage, cosmetics and the pharmaceutical industry among others.
The palm can be used in various ways; the leaves are used in making brooms and as roofing materials (in the rural areas). The bark of the fond can be peeled and woven into baskets.
The main trunk can be spitted like dawn timbers and used as part of building materials. Palm wine can be obtained from oil palm tree and oil are readily obtainable from the fresh fruit bunches.
When the fruit is processed the residue obtained can be used as fuel (for cooking and fertilizer to improve soil nutrient). Red Palm Oil is used in cooking, making soap, candle and margarine.
Palm Kernel oil can be extracted from the nut. The residue obtainable in the process of palm kernel oil extraction otherwise called palm kernel cake is used to as livestock feed. Palm Kernel Oil is used in vegetable oil and soap making. Palm kernel shells are also useful as energy source and industrial raw materials such as mosquito coils when banded.
The uses to which oil palm can be made seem non exhaustive. This indicates that investment made in the establishment of oil palm plantation is nothing but a wise one. The market is guaranteed for all the products of oil palm plantation in this era of global food crisis.
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Technical Information
To establish oil palm plantation, it involves getting a good site with rich, well drained acidic soils are abundant. The soil should have adequate quantities of potassium, magnesium and nitrogen.
Soil tests should therefore be carried out to determine the nutrient status of the land obtained.
It is usually better to use the early maturing variety called tenera which bears fruits as from the fourth year.
Other requirements include seedlings procurement; this can be obtained from reputable nurseries. Prospective investors must engage the services of Agricultural experts in the course of establishing this project.
Other cultural practices are planting, regular weeding, pruning and fertilizer application. Serious minded investors will be guided accordingly in the implementation of this project.
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Financial Implication
We are recommending a 20 hectare plantation for a start. 20 hectare oil palm plantation can conveniently service a palm oil mill that will be established by the owner when the plantation starts to fruit.
To establish a 20 hectare plantation a sum of N19.3million will be required broken down as follows:
Pre-investments: N300, 000
Land acquisition: N10, 000,000
Land clearing/preparation: N3, 000,000
Seedlings procurement
400/hectare (8000 @ N500): N4, 000,000
Other cultural practices @
N100,000/hectare: N2, 000,000
TOTAL N19, 300,000
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Note: The project scope can be higher or lower depending on the financial strength of the prospective investors.
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Various governments can also set up this project and lease it out to individuals and corporate bodies on maturity. It is a way of diversifying the economy and also to create jobs and income opportunities for Nigerians.
It is also one of the strategies for food security in the country and also in line with the transformation agenda of the country.
Income analysis
A matured plantation will start to give investor 12.5 tonnes per hectare of red palm oil annually from the fourth year per hectare. 250 metric tonnes of oil can be obtained annually from 20 hectares plantation. A tonne of red palm oil is a minimum of N150, 000. Gross revenue of N37.5 million is obtained from red palm oil.
We can also get 7.5 metric tonnes of palm kernel per hectare. This gives us 375 tonnes from 20 hectares.
This translates to annual income of N26.25 million. Total income realizable is about N63.75 million while the annual operating expenses is put at N15 million. This leaves us with net income N48.75 million annually for the investor for the rest of his/her live.
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There are still other sources of income such as palm fronds and palm kernel shells. Serious-minded investors can be assisted in the realization of this worthwhile investment. Olumakinde Oni can be reached on email: olumakindeoni2@yahoo.com.