In the past 22 years, we at Dews Enterprises have made great efforts in research and development trying to find ways of making it possible for investors and entrepreneurs to tap into this gold mine called oil palm industry. Starting from the oil palm tree plantation to red palm oil production to palm kernel oil extracting to edible vegetable oil production etc. In the course of our research, we have come to the understanding of most of the problems and challenges confronting prospective investors and entrepreneurs. Some of these problems include lack of sufficient capital fund, lack of managerial competences, inability to consult or learn from experts and professionals. In proffering solutions and helping prospective investors and entrepreneurs tap into this obvious gold mine, we intend to first of all focus on palm kernel oil extracting business of the industry. As a result, we invite participants and interested investors and entrepreneurs to come on board and follow this thread as we discuss and find ways of investing and succeeding in this industry.

Palm kernel oil can be commercially extracted by using two methods. (1) Mechanical extraction and (2) Chemical solvent extraction. The chemical solvent extraction method involves the use of a chemical solvent called hexane. The chemical extraction method is most suitable for a large scale operation while the mechanical extraction method is most suitable for micro, mini, small and medium scale operation. The mechanical extraction method involve the use of a mechanical screw press machine.

Meanwhile, we shall focus on the mechanical extraction method. This method can done on a micro, mini, small, medium or large scale.

Using mechanical extraction method, prepared palm kernel nuts are fed into the crushing machines called expellers which would grind the nuts, separate the oil from the cake and expel the crude palm kernel oil. The expelled oil collects under the machine and the cake comes out from the front end of the machine.

Interesting.

Below is what the crude palm kernel oil looks like after passing through the filter press

This is what the bi-product called palm kernel cake (PKC) looks like

There is another minor bi-product called sludge (PKSL)

The business of palm kernel oil is a profitable and lucrative business. Without further analysis, it is obvious and common sense knowledge that a crusher who was able to efficiently and effectively crush and convert the raw material which is palm kernel nuts (PKN) into the finished products which is palm kernel oil (PKO), palm kernel cake/meal (PKC) and palm kernel sludge (PKSL); that crusher/producer has definitely created and added value. This value has a premium in the form of profits.

For an effective and efficient palm kernel oil extraction, there is a standard norm. You must be able to extract an average of 40% of the palm kernel oil from the palm kernel nuts for it to be profitable. We say average because the raw materials which is palm kernel nuts are not all of the same quality. Some species contain more oil than others depending on the ground and locality on which the palm trees grew and the nuts were sourced from. Again another aspect of quality is the percentage of palm kernel shell it contains. Also the moisture content of the batch of raw materials received. All these affect the amount of palm kernel oil that can be extracted. This is where experience comes in. An experienced crusher/producer ensures that all raw materials received must meet the minimum required quality. Suppliers of raw materials know it that their load could be rejected or a surcharge applied if they do not meet the minimum quality required. This is standard practice and must not be overlooked.

Granted that you maintain the average extraction rate of a minimum of 40% ( we say minimum because in some cases one could extract up to 45% depending on the quality of kernel nuts and expelling efficiency of the machine): your yield would be one ton of palm kernel oil (PKO) 1.20 tons of palm kernel cake (PKC) and about 0.30 tons of palm kernel sludge (PKSL) all these from 2.5 tons of raw materials, palm kernel nuts (PKN) you processed. This is standard practice. Anything less is not efficient operation and should be investigated and the problem solved.

Granted that you maintain the average extraction rate of a minimum of 40% ( we say minimum because in some cases one could extract up to 45% depending on the quality of kernel nuts and expelling efficiency of the machine): your yield would be one ton of palm kernel oil (PKO) 1.20 tons of palm kernel cake (PKC) and about 0.30 tons of palm kernel sludge (PKSL) all these yielded from 2.5 tons of raw materials, palm kernel nuts (PKN) you processed. This is standard practice. Anything less is not efficient operation and should be investigated and the identified problems solved.

Hello folks, are you following? Comments, suggestions and questions are welcome

Good job. I learnt that some palm nuts have more flesh than the others. Can you specify the varieties of palm nut that will give you the above results?

You have not mentioned palm oil at all. What is the average percentage of palm oil derivable from the process?

Abojupupa:
Good job. I learnt that some palm nuts have more flesh than the others. Can you specify the varieties of palm nut that will give you the above results?

You have not mentioned palm oil at all. What is the average percentage of palm oil derivable from the process?

Abojupupa, we appreciate and thank you for your comment, but we are presently focusing on palm kernel oil extracting. We shall focus on red palm oil production later. However, there are basically three varieties of fresh palm fruit nuts. The dura, the pisifera and the tenera varieties. The dura variety is the one with very thick shell and less mesocarp while the pisifera variety has virtually no shell and is sterile. The tenera is a hybrid of the dura and the pisifera and is preferred because it yields more red oil as it contains more fleshy oil yielding mesocarp and a thin shelled palm kernel nut. Since we yet focusing on palm kernel oil extracting, lets not digress into red oil production presently. We shall do justice to red oil production later in the thread. So just stick on and follow the thread.

ozornet:
Granted that you maintain the average extraction rate of a minimum of 40% ( we say minimum because in some cases one could extract up to 45% depending on the quality of kernel nuts and expelling efficiency of the machine): your yield would be one ton of palm kernel oil (PKO) 1.20 tons of palm kernel cake (PKC) and about 0.30 tons of palm kernel sludge (PKSL) all these yielded from 2.5 tons of raw materials, palm kernel nuts (PKN) you processed. This is standard practice. Anything less is not efficient operation and should be investigated and the identified problems solved.

This yield as stated above pertains to palm kernel oil (PKO) production from brown /black hard palm kernel nuts and quite different from red oil production from the red fresh fruit nut.

Abojupupa, I hope we have addressed your question

Now that we have seen the items involved and the percentage yields, let's look at the prices of these items.

As at today 31st January 2018, at Enugu, palm kernel nuts (PKN) are supplied to the factory at N125,000, palm kernel oil (PKO) sells for N350,000 and the vegetable oil refineries pay in advance, palm kernel cake (PKC) sells for N42,000 and the palm kernel sludge (PKSL) sells for N80,000. All these items are per ton.

However, at Ogun State, one of my clients said they buy PKN at between N135,000 and N138,000. that they sell PKO for N350,000, PKC for N45,000 and PKSL for N100,000 per ton.

Again another client at Calabar said they get PKN supplied at between N105,000 and N107,000, sells PKO for N340,000, PKC for N35,000 and PKSL for N70,000

Following with keen interest

I have been working in manufacturing environment for over 15 years, and I love it,
on a small scale,
1, how can one set up the processing plant,
2, I base in Abuja, how close is raw materials, and people buying the out put products
3, is there any need for registration with any government agency like food and environmental.
thanks

ozornet:
As at today 31st January 2018, at Enugu, palm kernel nuts (PKN) are supplied to the factory at N125,000, palm kernel oil (PKO) sells for N350,000 and the vegetable oil refineries pay in advance, palm kernel cake (PKC) sells for N42,000 and the palm kernel sludge (PKSL) sells for N80,000. All these items are per ton.

I have a ton of PKSL for sale at the rate of N60k per ton. Also I will appreciate if you cann give me the contact of refineries that pay in advance for PKO. We can supply them 10 tons weekly.

ysalli:
I have been working in manufacturing environment for over 15 years, and I love it,
on a small scale,
1, how can one set up the processing plant,
2, I base in Abuja, how close is raw materials, and people buying the out put products
3, is there any need for registration with any government agency like food and environmental.
thanks

We are a firm of engineers and business consultants with more than 20 years experience in the industry. We can prepare a customised and bankable business plan for you and also serve as your consultants on a continuous basis if you retain us. We can train you and or your workers for you. We shall link you with suppliers of raw materials and buyers of finished products.
Abuja or any where in Nigeria for that matter is suitable for setting up the factory. You buy your raw materials from places like Northern parts of Edo, Kogi, Benue or even Cross Rivers and Akwa Ibom States where they are cheapest and land it Abuja still at a premium. After all companies buy raw materials like maize, Soyabean, sesame seeds etc from the North and take same to the South like Lagos, Onitsha, Ibadan, Aba etc and still make their profits. The finished products are hot cake and in some cases, buyers pay you in advance if they are convinced that you are reliable and won't run away with their money.
You only need to register your company with the Corporate Affairs Commission either as a business name enterprise or a limited liability company. You do not need NAFDAC as all your finished products are still raw materials for other companies

solreb:


I have a ton of PKSL for sale at the rate of N60k per ton. Also I will appreciate if you cann give me the contact of refineries that pay in advance for PKO. We can supply them 10 tons weekly.

How many tons of PKSL do you have and what is your location. Contact us with whatsapp number 08037788438 or call our normal phone number 08181926534 for further assistance.

Now that we have seen the current prices of these items, the next step would be to look at a pro-forma income statement for a given level of activity.

Let us assume to crush 10 metric tonnes palm kernel nuts per day,

And let use Prices at Enugu, our base, which we 100% sure of as at 30th day of January 2018,

Palm Kernel Nuts (PKN) = N125,000 per tonne
Palm Kernel Oil (PKO) = N350,000 per tonne
Palm kernel Cake (PKC)= N42,000 per tonne
Palm kernel Sludge(PKSl)=N80,000 per tonne

YIELD:

At normal yield of 40%
When you input 2.5 tons of PKN (kernel nuts) into our expeller you will get one ton of oil (PKO), 1.20 tons Cake (PKC) and about 0.30 tons of Sludge (PKSL)

Then
10 tonnes of PKN costing 125,000 x 10= 1,250,000 would yield thus;

4 tonnes of PKO =350,000 x 4 = 1,400,000
4.8 tonnes of PKC=42,000 x 4.8 = 201,600
1.2 tonnes of PKSL=80,000 x 1.2 = 96,000
Total Sales Revenue = N1,697,600

Gross Margin 1,697,600 less 1,250,000 = N447,600 per day
To be conservative assume 50% charge as operation and other expenses
447,000 divide by 2 = N223,800
In six working days 223,800 x 6 =N1,342,800
In four weeks 1,342,800 x 4 = N5,371,200

All things being equal and you work consistently daily without break and you manage well, you could take home a net profit of N5,371,200 per month

NOTE:The factory can be operated on 24 hrs bases using electric generating plant that uses converted condesate or (black-oil) fuel which costs less instead of 180 naira per litre of pure diesel using the system called 'decarbonizing plant system' thereby cutting costs by half and increasing profits. We can supply the client with the technology.
Again our new design expeller can be operated with a diesel engine instead of electric motor or fitted with a combination of electric motor and diesel engine at a slightly extra cost. We can also attach an electric Alternator to the expeller diesel engine and from there tap electricity to power both the filter press and the toaster. In this way you operate your factory without NEPA electricity thereby operating all round the clock.

Also for investors with enough capital fund in their budget, we can set up a factory with Malaysian expellers. However our expellers are affordable and we can guarantee an excellent performance.

We are a firm engineers and business consultants with more than 20 years experience in the industry. We can prepare a customized and bankable business plan for interested investors. We can secure/fabricate machines and equipment, install the factory, train you and/or your workers, link you up with suppliers of raw materials, and buyers of finished products and generally stand in as your consultant on a continuing basis if you desire. Call 08181926534 or whatsapp 08037788438 for more details and discussions.

Folks, questions,contributions and comments are welcome for the thread to be lively and intersting

Next we shall look at the practical aspect of the palm kernel oil extracting business, the machines and equipment and the different levels and scales of operation.