Wednesday, April 21, 2010


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Vegetable oil is a product derived from oil bearing seeds and has both domestic and industrial uses. Domestically, it is used in homes and fast food centers as cooking oil while industrially, they are used in the production of soap, butter and margarine. The cake gotten as a bye-product is used in formulating livestock feeds especially for cattle, sheep and poultry.


The market for edible oil is national. With a population of over 140 million people and an estimated national population growth rate of 5.7% per annum ,an average economic growth rate of 3.5% per annum in the past five {5} years, Nigeria has a large market for edible oil. The demand is high but local supply low hence the need for importation in the past.

In 2005, in order to stimulate local production and attain self sufficiency in vegetable oil production, the government introduced the presidential initiative on the development if vegetable oil over a period not exceeding three {3} years. Under these initiative, attention was focused on the promotion of eleven scheduled oil seed crops which are oil plam,groundnut,soya beans, cotton etc and production target was set for each of the crops under the programme as follow

1. Oil Palm: 1 million hectares capacity of producing 15 million fresh fruit bunches
2. Groudnut: 15 million tones annually
3. Soya beans: 670,000 1 million tones per annum
4. Seed Cotton: 1 million tones over the plan period

After three {3} years of starting the initiative, the domestic edible oil demand for exceeds the national production. The short fall in supply being estimated at about 30,000 tones per year. From the above figures, it is clear that there is a large and sustainable market for vegetable oil in Nigeria.

Raw Materials:

The main raw materials needed for the production of edible oil is 100% obtainable in Nigeria. Vegetable oil can be produced from oil bearing seeds like groundnut seed, sessame seed, cotton seed and Soya beans. The plant should be as close as possible to the source of raw material.

Plant and Machinery:

The plant we are looking at is that which can be used for small/medium production of vegetable oil, that is, about 1000 litres of oil in a day and depending on the type of product and raw material used for production, some of the equipment needed are filter press, weighing scale, groundnut decorticator etc.

The machine can be sourced from abroad or fabricated locally and the efficiency of the plant can be about 30%, that is, 30 tones of raw material would give 10,000 liters of vegetable oil and 20 tones of cake.

The manpower required to run the mill is about 2-3 persons.

Manufacturing Process:

The raw material to be used for production determines the production process. For example, if groundnut is used, the harvested seed would be feed into the decorticator for dehusking after which it would be taken to expeller and boiler for boiling. Next to the filter press where pure is extracted. For the imported machine, if the production is started with 100 KG of groundnut seed, 28 KG of husk, 30 KG of pure oil and 42 KG is cake would be produced.

Plant Layout:

For the imported plant, installation is very easy, in 5-8 hours, the plant can be installed and can start production .Ready foundation frames would be supplied by the manufacturer and by simply placing the expeller and electronic motor on it and connecting with a V belt, it is set. The mill is a compact unit as there is no intermediate counter shaft. It occupies less space and can be shifted from one place to another.

Project Cost Estimate:

This will depend on the source of machinery and equipment, capacity and the location of the plant. For a 3 tones per day mill of imported source, below is the initial project cost

Pre-Investment = N250, 000
Plant and Machinery = N2, 000,000
Utilities = N2, 000,000
Working Capital = N2, 500,000
Motor Vehicle = N1, 500,000

Total = N8, 250,000


Given that 22,000 liters of oil and 26.4 tones of cake is produced in a month and the price of 20 liters of oil is N4500 while that of the cake is N20, 000/MT, a profit of N1,408,000 is realizable in a month for a plant of 3 tones per day .

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