Do you want to start a palm oil exporting business in Nigeria? If YES, here are 7 steps on how to export palm oil from Nigeria successfully and make money.
The oil palm is one of the many cash crops that Nigeria is blessed with, and Nigerians can really make a lot of money from palm oil especially by exporting it to other countries. Palm oil makes up nearly 50 percent of edible oils consumed worldwide. Apart from being a popular ingredient in Nigerian food (especially soups, stews and pottage), palm oil is the most versatile of any plant product.
- Industry Overview
The global palm oil market is estimated to be worth hundreds of millions of dollars every year. Unfortunately, even though West Africa lies in the center of the world’s oil palm belt, it produces less than 5 percent of the palm oil consumed worldwide.
Malaysia and Indonesia have become the dominant powers in palm oil production and presently supplies more than 70 percent of the palm oil consumed worldwide. As of now, only Cote D’Ivoire produces enough palm oil to meet the demand it has in its local market.
Africa has lost its glory days of red palm oil dominance. In the 1950s and 1960s, West Africa and especially Nigeria was one of the leading producers of palm oil and was the heartbeat of global palm oil production. It was equally the number one export commodity of many countries in the region. In its heydays, West Africa produced up to 75 percent of all the palm oil consumed worldwide.
During those days, Nigeria held center stage in production and exportation of palm oil, accounting for more than 40 percent of the global output. Even as at 1960, palm oil still contributed 82 percent of the national export revenue. Nowadays, the region imports nearly 60 percent of its palm oil from faraway Malaysia and Indonesia to complement local production.
Palm oil is very much in high demand in the world today because it is a versatile vegetable oil used in a variety of ways in different cultures, industries and markets. In food, palm oil is used as a substitute for fat in making condensed milk, coffee cream, ice cream and margarine. Because of its consistency and ability to resist high temperatures, it is commonly used as cooking oil and is considered one of the best oils for frying.
All these amazing qualities make palm oil a highly sought after commodity in homes, restaurants and food processing industries. As a non-food product, palm oil makes an important raw material in the production of soaps, detergents, greases, lubricants and candles.
With the growing profile of the biofuels market, palm oil has also proven to be a valuable feedstock for biodiesel and serves as an alternative to mineral oils used in power stations.
Palm oil derivatives are widely used in the pharmaceuticals and cosmetics industry. It is also used in the production of printing ink, drilling fluids and water-treatment products. Apart from local trade in palm oil, it is heavily sold in the international market as CPO (Crude Palm Oil) and it usually commands a high premium price given its vast capabilities and high demand from several industries.
How to Start a Business Exporting Palm Oil from Nigeria
1. Understand the international marker: exporting palm oil from Nigeria to other countries is a lot different from selling them in the local market and as such, you need to know the ropes of the business else your business will fail.
You will need to have in-depth knowledge about licensing requirements, how to source your products, port procedure, how to find customers, how to interact with foreign customer, et al. to get the best out of business deals and much more.
A good way to gather these information is from someone who has been in the business for a very long time and has been successful in exporting palm oil. When you find such a person, you should inquire from them how to run a successful palm oil exportation business in Nigeria.
2. Sourcing the palm oil: next, you will have to determine your channel for sourcing the palm oil. Will you be processing the palm fruit into palm oil by yourself or will you buy the already processed palm oil?
If you intend to buy the already processed oil, then you have to know where to purchase the palm oil at the cheapest price so as to reap maximum reward. If this is where you are pitching your tent, then it is best to look for a consistent supplier and/or manufacturer that will be providing you palm oil out of season and in season.
Currently in Nigeria, Akwa-Ibom state is the largest producer of palm oil. The state is located on the coast in the south-eastern part of the country. The capital of the state is Uyo. Other states that produce palm oil in large quantities include Cross River, Rivers, Abia, Imo, Ondo, Edo, Delta and Bayalsa state.
3. Documentation: in order to export palm oil from Nigeria to other countries, you will need some documentations. These documents include, company registration, quality assurance and commercial documents, traffic concession, shipping documents et al.
- Register the Company: before you can export goods to other countries, you must register a company. An individual looking to export palm oil could register as a sole proprietor, while medium/large company can incorporate as a limited liability company. In Nigeria, the body that is in charge for incorporation of companies is the Corporate Affairs Commission.
There are some very important requirements that you need to have in place before you can be eligible to register your business. They include.
- Your company has to have at least two members, but no more than 50 members.
- The members of your company have to be at least 18 years old (However, they may be younger if at least two of your members are over 18).
- You can’t register your company if there are members of unsound mind, disqualified by CAMA or bankrupt.
- The minimum share capital of your business has to be at least N10,000. You will also need to fill the documents listed below;
- A Notice of registered address of your business
- Articles of Association and Memorandum
- Receipt of payment of your stamp duties
- Particulars, list, and consent of the first Directors of your company
- Statement of compliance by legal practitioner
You should bear in mind that the process of getting your company registered can take as much as 3-6 weeks, depending on the schedule of the CAC and as such, you will have to exercise some patience.
- The Nigerian Export Promotion Council: you will need to register with the Nigerian Export Promotion Council. They provide viable information on best practices for exporters. Members also get access to foreign buyers and learn regulatory requirements for export.
4. Make sure that you have quality documentation: most of the countries in the western world have very strict rules that you need to comply with and as such you should make sure that your palm oil has a quality assurance certification. The label should include address of processing company, NAFDAC number, and date of production/expiration. In addition, the product should be properly packaged and sealed.
- Shipping Documents: The mode of transportation determines the type of documentation. The most cost effective method is shipping. Contact a good shipping company with experience in commodity export. They will provide useful information and handle the documentation. Some documentation involves customs, export agencies, buyers etc.
5. Determine who you buyers will be: these days, technology has made it a lot easier to transact business. Even from the comfort of your home, you can negotiate a business deal, and as well close the deal. You can achieve this by participating in trade websites, and become a full life member, as you seal business deal with concerned customers.
You should set your sights to countries that have a huge demand for palm oil. The Top Palm Oil Importing Countries in the World
- India (9536K Tonnes)
- China (5909K Tonnes)
- Bangladesh (2816K Tonnes)
- Pakistan (2519K Tonnes)
- Netherlands (2483K Tonnes)
- Italy (1641K Tonnes)
- Germany (1338K Tonnes)
Latest posts by Ajaero Tony Martins (see all)
- Designing an RV Park – 6 Critical Factors You Must Consider - January 16, 2020
- 8 Strong Reasons You Should Become an Entrepreneur - January 9, 2020
- How to Find a Business Partner or Investor With Money - January 9, 2020