Palm kernel oil

Uses and Benefits of Palm Kernel Oil

Cholesterol-free
One benefit of palm kernel oil is that it is completely free of cholesterol, which is not the case with animal-based fats like butter. Due to the cholesterol-free nature of vegetable-based oils and margarines, like palm kernel oil, there has been some speculation that these types of oils and fats are healthier than butter. However, this may not be the case. According to the Cleveland Clinic, margarines contain trans-fats that can lead to heart disease.
Vitamin K
Palm kernel oil also contains vitamin K. Vitamin K is an essential fat-soluble vitamin that is important in bone health and as a coagulation factor in the blood. While you could potentially get 67 percent of your daily recommended allowance of vitamin K in a cup of palm kernel oil, you would be highly advised not to do so. The same serving size would deliver 94 percent of your daily calories, and nearly nine--times the recommended allowance for saturated fats in a single day. This would be one benefit of palm kernel oil that does not outweigh the risks.
Long Shelf Life
While the overall health benefits of palm kernel oil may not be overwhelming, there are benefits that are touted by the commercial food industry. According to the American Palm Oil Council, palm oil resists oxidation under high cooking temperatures and upon storage, which makes it a better alternative than other vegetable oils for commercially fried products like doughnuts, ramen noodles, potato chips and french fries.

An excellent source of antioxidants
One of the main advantages is the amount of antioxidants this oil contains. It’s proven that palm kernel oil has the highest level of tocotrienols - sources of vitamin E when compared to other oil. This antioxidant helps protect your skin. It is okay to include a small amount of palm kernel oil in your diet. In addition, tocotrienols can reverse the formation of atherosclerotic plaques in the carotid arteries, thereby reducing the risk of stroke.

Anti-aging agent
Little is known about this fact, but palm kernel oil is also an excellent anti-aging agent. The bright red colour of the oil is provided by a special substance called beta-carotene. As for carotenes (carrots has them too), everyone knows that they increase immunity, improve vision, accelerate metabolic processes in the skin and slow aging.

Contains vitamin K
The significant amount of vitamin K in palm kernel oil helps improves the coagulating and anti-coagulating system of blood.

Contains vitamin A
This oil contains a sufficient amount of vitamin A to protect the eyes and increase visual acuity. Also, vitamin A is necessary for good immunity, the health of your hair, skin, and nails.

It does not contain trans fats
This is excellent news: palm kernel oil does not contain trans fats at all! It means that such oil can safely be included in your diet, even for those watching their weight.

Medicinal uses of palm kernel oil:
Prevention of vitamin A deficiency;
Control of blood pressure Weight loss;
Prevention of oncological diseases;
Lowering cholesterol;
Prevention and treatment of diseases of the nervous system.

Industrial uses of palm kernel oil:
Application in the food, confectionery and bakery industries (manufacturing of cream, chocolate, ice cream as well as margarine, cooking oil, melted cheese, etc.);
Lengthening of the shelf life of products;
Making of cosmetics (cream, lotions, and soaps).
A safe quantity of palm kernel oil is already contained in some products (chocolate, margarine, ice cream).

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Because of the higher cost of vegetable oil made from other sources like sunflower, olive, cotton seed, groundnut, soya bean; up to 80% ordinary Nigerian housewives use vegetable oil made from palm kernel oil (PKO) and that is how high the demand is.

The oil palm tree is one of the most important cash crops globally because the benefits that is gotten from all parts of the tree, from the palm fronds, to the palm oil extracted from the fruits and the palm kernel oil extracted from the palm nuts. Apart from traditional method, there are two main forms of palm kernel oil extraction on a commercial bases; the mechanical and the chemical. While the mechanical method is easier to set up and requires mechanical screw press machines, the chemical method is more capital intensive and requires a more complex chemical processing and distillation plant. We shall discuss the mechanical method here.

The demand for palm kernel oil has increased globally as more than 54 million tons were produced in 2011. The demand is due to the cheap nature of the oil for those who use it to cook, as it is a close substitute to and cheaper alternative to vegetable oil from other sources; and palm kernel oil has higher saturated fat that is close to the amount contained in coconut oil.
The demand is also spiked by those who manufacture cosmetics, candles, detergents, as well as food products due to its properties which make it very versatile in the industry, especially as it has a high melting point.

Globally, Malaysia is the highest producer of palm kernel oil and is responsible for 44% of world exports. Malaysia started refining its crude palm oil in the early 70s which came about as a resolve of the country’s government to increase industrialization. Oil palm trees mainly grow in countries that have rainforests such as Asian countries and African countries.

As at 2013, 55 million metric tons of palm oil was consumed globally, this was nearly four times of what was consumed two decades back. Asides Malaysia, Indonesia is the second highest producer of palm oil. The two countries meet 85% of global demand.
The increase in the demand for tropical oils in the United States started when in 2006, when the United States Food and Drug Administration, mandated that food labels listed Trans fats. Trans fats was regarded as a major cause of heart disease and as such manufacturers especially those in the food industry started moving towards the use of palm oil and palm kernel oil in its products, especially as the benefits of the oil to the heart and brain were expounded recognized by a renowned medical professionals.

There are some consequences to producing oil palms which are deforestation and habitat destruction, but this has however not made the few replaceable alternatives attractive enough for most of the food and industrial manufacturers, as even the alternatives will lead to more destruction to the forests and climates. Also, the alternatives do not have a sustainable nature like the palm kernel oil and might not be able to meet the growing global demand.

The comprehensive business plan of palm kernel oil production business is surely beyond the scope of this thread, however we shall try to highlight the relevant parts of the complete work

This is what the table of content of a business plan on palm kernel oil production business will look like

The Table of Content
1.0 An Overview of The Palm Kernel Oil Industry = 5
1.1 Executive Summary = = = = = = 6
1.2 Mission and Objective = = = = = 7
1.3 Keys to Success = = = = = = 8
1.4 Critical success factors of the business = = 8
1.5 Vision and Mission Statement = = = = 10
2.0 Company Summary = = = = = = 11
2.1 The Business opportunity = = = = = 11
2.2 The Business of palm kernel crushing = = 12
2.3 The Raw Material = = = = = = 13
2.4 Generally Strategy and Implementation Summary= 16
3.0 Economic contribution to local and national
Economy = = = = = = = = 17
3.1 Environmental factors = = = = = 19
4.0 The machines and equipment = = = = 19
4.1 The product = = = = = = = 21
4.2 The Market = = = = = = = 22
4.3 Marketing Analysis plan = = = = = 23
4.4 Our Market Trend = = = = = = 24
4.5 Our Competitive Advantage = = = = 25
4.6 Sources of Income = = = = = = 26
4.7 Sales Forecast = = = = = = = 27
4.8 Marketing and Sales Strategy = = = = 28
4.9 Publicity and Advertisement Strategy = = = 29
4.10 Our Pricing Strategy = = = = = = 30
5.0 Organizational and Management plan = = = 35
5.1 Key personnel of the organization = = = 35
5.2 Roles and Responsibilities of the senior staff = 36
5.3 Manpower requirement = = = = = 35
5.4 Management team = = = = = = 38
5.5 Production process = = = = = = 39
6.0 Milestones = = = = = = = 40
6.1 Estimated capital expenditure needs = = = 41
6.2 Financing plan = = = = = = = 41
6.3 Financing requirements = = = = = 42
7.0 Business risk and mitigation factors = = = 42
7.1 Swot Analysis = = = = = = = 43
8.0 Assumptions = = = = = = = 44
8.1 Production plan = = = = = = 45
8.2 Comprehensive production budget = = = 47
8.3 Segregation of costs = = = = = 48
8.4 Sales forecast = = = = = = = 49
8.5 Projected cash flow = = = = = = 50
8.6 Loan repayment plan = = = = = 51
8.7 Loan repayment schedule = = = = = 51
9'0 Projected income statement = = = = 54
9.1 Projected balance sheet = = = = = = 57
9.2 Project Investment Decision and Viability Analysis = 60
9.3 Conclusions = = = = = = = 63

in writing your business plan you should be able to follow the sequence of topics as it appears in the above Table of Content depending on your peculiar situations and circumstances. However we shall try to highlight and talk about some aspects of the comprehensive Business Plan

THE BUSINESS OF PALM KERNEL CRUSHING.
The Palm Kernel expelling business is primarily a raw material processing business. This is because the end product is still a raw material for the refineries that use it to produce edible vegetable oil. The basic raw material in this industry is palm kernel nuts (PKN) and the finished products are palm kernel oil (PKO), palm kernel cake (PKC) and palm kernel sludge PKSL). The business is an all-year round business. The end products are in hot demand all-year-round. Because of the high demand, producers do not stock finished products. Buyers always book for the products in advance.

It is also done on cash and carry basis. Sometimes, buyers even pay in advance in order to secure an expected batch of products. Prices of the main products i.e. PKO and PKC fluctuate up and down depending on the season of the year. However, the prices of the raw materials i.e. palm kernel nuts also fluctuate along with the PKO. That is, if the price of the PKO falls then the price of palm kernel nuts also falls and vice versa. A good strategist can make a fortune if he takes advantage of these price movements

The major threat to the business is scarcity of palm kernel nuts. If a factory lacks palm kernel nuts, it may not enjoy periods of rising prices. Another problem is irregular supply of electricity. However, if an entrepreneur knows the various localities and villages or employs the services of an experienced consultant, then the sourcing of palm kernel will be very easy. If the entrepreneur has sufficient funds in working capital, the sky will be his limit as he is likely to out compete his colleagues in the business. The issue of power outage can be arrested if an electric generating plant is bought. Again, on a small/medium scale basis, crushing machines equipped with diesel engines have been developed. These diesel engine powered expellers can operate even when there is no NEPA electricity. Finally, the business is very rewarding with very little risk or fear of failure.

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There are some critical factors to take into account for efficient running of the business
To efficiently organize raw materials supply to the factory of the new venture
To give incentive and high purchasing prices to supplies who deliver good quality palm kernel nuts with low moisture content, low shell content and low impurities content on a regular basis.
To produce palm kernel oil and palm kernel cake of high-quality matching industry standards and chemistry expectations
To deliver to buyers of finished products with punctuality and at competitive and guaranteed prices.
To constantly evaluate our strengths, weaknesses, threats and opportunities with deft adjustments made as warranted.

The raw material for this project is palm kernel nuts (PKN). Palm Kernel trees which bear the nuts are indigenous to the Southern part of Nigeria. They are particularly the main stay of the economies of the people of the old Eastern Nigeria, Mid-Western Nigeria, and a large part of the old Western Nigeria,the old Mid-West, Benue and Kogi States in the Middle Belt. The palm trees are also found in commercial quantity across the border at the Southern parts of the Republic of Benin and the Cameroun. Palm Kernel nuts are oil bearing seeds. Normal palm kernel nuts of Nigeria origin contain between 40% and 55% of oil, 55% and 40% of cake 5% of sludge and debris. There are different species of palm kernel nuts. Some yield more oil than the others. The percentage of oil in any specie depends on the locality in which the tree comes from. Example, Palm Kernel nuts from Calabar in Cross River State will not yield the same amount of oil as palm kernel nuts from Abakaliki in Ebonyi State, so also nuts from Ekpoma in Edo State are different from nuts from Nsukka in Enugu state. Again, nuts from Akwa Ibom and Cross Rivers are different from nuts from Edo States and nuts from Osun or Ekiti States are different from those from Imo or Anambra States. They differ according to the soil on which the trees grew on. However, an experienced buyer will be able to differentiate and classify the nuts and then price them accordingly. They are normally bagged in 80kg bags and brought to the local markets from where middle men purchase and gather for onward supply to factories and crushing companies.
They are plentiful in the various localities from where they are transported to the factories by suppliers who take a margin for their efforts. A good buyer can enlist these suppliers for constant supply of palm kernel nuts all year round.

NOTE: In palm kernel crushing business, it is a norm to use 40% oil extraction rate as bench mark. That is you expect to extract 40% of the oil in a given batch of palm kernel nuts crushed. You may extract more or less but in pricing your raw materials you must target this 40% extraction. At 40% extraction rate, 2.5 tons of palm kernel nuts crushed should give you 1 ton of oil, about 1.20 tons of palm kernel cake and 0.30 of sludge. This means that as an example, if crude palm kernel oil sells for say 350,000 naira per ton you should strive to buy your raw material at 127,000 naira or less per ton as 2.5 multiply 127,000 naira would give you 317,500 naira. This will allow you a margin of 32,500 naira from one ton of oil sold. Then add revenue from the palm kernel cake and palm kernel sludge to arrive at a total margin on raw material bought. Considering the price of palm kernel cake to be N40,000 per ton and palm kernel sludge tob N90,000 per ton you be looking at a gross margin of not less than N100,000 after crushing 2.5 tons of palm kernel nuts and selling the finished products namely PKO, PKC and PKSL.
This will guide you in pricing your raw materials.

Palm kernel oil extracting business can be carried out on a large scale, medium , small and micro scale. At every level or scale of operation, the business is lucrative and profitable. It is not in doubt that the process of converting the raw materials which is palm kernel nuts (PKN) into the finished products which are palm kernel oil (PKO), palm kernel cake(PKC), and palm kernel sludge(PKSL); is a process of value addition. This value creation is a premium on the raw material. That raw material has increased in value. This added premium and value creation is the reward which the investor or the entrepreneur must claim as his profits.

That an investor or an entrepreneur has failed to succeed in the business does not make it unprofitable or not lucrative. Most of the time it is the short comings of the investor or the entrepreneur that is the cause and to be blamed for the failure. Many jump into the business without adequate preparation and as in every business, this will lead to failure. Some others lack experience and knowledge of the industry. Others fail to invest in quality machines or they choose to patronize inexperienced and cheap professionals and consultants. Many buy poorly built machines and equipment offered to them at a very cheap rate and when they fail, they will turn around and blame it on the industry by saying that the business in not profitable. We are here to correct all these notions and abnormalities because the industry is actually a gold mine waiting to be tapped.

Let us look at scales and levels of operations. There is the very large scale where the extraction process involves the use of a chemical solvent to dissolve the palm kernel nuts and by a distillation process, the PKO is extracted leaving a powdery PKC with almost no oil content ( less than 3%). This process is called solvent extraction method where a chemical called Hexane is used to dissolve the raw materials. This method is most efficient in terms of achieving the highest rate of extraction of the PKO from the PKN. However, it is very expensive to set up and could run into hundreds of millions of Naira.
Solvent extraction processes can be divided into three main unit operations: kernel pre-treatment, oil extraction, and solvent recovery from the oil and meal. For the purposes of small-scale operations it is sufficient to mention the solvent extraction process is an alternative for high capacity mills. However the process is not recommended for small enterprises.

Maur Ban Lee, a company from Malaysia, which we have a link with, is in the forefront of oil palm related industry and almost the best in the world. The company builds one of the most modern solvent extraction plants. Investors and entrepreneurs who are interested should contact us for professional advice.

Then there is another fairly large scale or level of operation. This one is a mechanical process where a machine called Expeller is used to extract the PKO and PKC. In this mechanical process, the palm kernel nuts are fed into the expeller through its hopper and a large shaft, ringed with iron worms would propel the nuts through an iron cage lined with iron bars and knives and in the process the kernel nuts are crushed and the PKO squeezed out while the PKC is forced out from the front end of the expeller. We shall pay more attention to this method as it is most budget friendly considering a majority of the folks reading this thread. For those interested in the Solvent Extraction method details, we can also provide insights on reqest

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Since we decided to pay more attention to the mechanical extraction method of palm kernel oil (PKO) production, let us describe in more details the mechanical extraction method.

Mechanical extraction
Mechanical extraction processes are suitable for both small- and large- capacity operations. The three basic steps in these processes are
(a) kernel pre-treatment,
(b) screw-pressing, and
(c) oil clarification.

Diagram 2 below showa Mechanical extraction of palm kernel oil.

Line (A) is for direct screw-pressing without kernel pre-treatment;
Line (B) is for partial kernel pre-treatment followed by screw-pressing; and
Line C is for complete pre-treatment followed by screw-pressing.

Kernel pre-treatment
Proper kernel pre-treatment is necessary to efficiently extract the oil from the kernels. The feed kernels must first be cleaned of foreign materials that may cause damage to the screw-presses, increasing maintenance costs and down time, and contamination of products. Magnetic separators commonly are installed to remove metal debris, while vibrating screens are used to sieve sand, stones or other undesirable materials.
A swinging hammer grinder, breaker rolls or a combination of both then breaks the kernels into small fragments. This process increases the surface area of the kernels, thus facilitating flaking. The kernel fragments subsequently are subjected to flaking in a roller mill. A large roller mill can consist of up to five rollers mounted vertically above one another, each revolving at 200-300 rpm. The thickness of kernel cakes is progressively reduced as it travels from the top roller to the bottom. This progressive rolling initiates rupturing of cell walls. The flakes that leave the bottom nip are from 0.25 to 0.4 mm thick.
The kernel flakes are then conveyed to a stack cooker for steam conditioning, the purpose of which is to:
· adjust the moisture content of the meal to an optimum level;
· rupture cell walls (initiated by rolling);
· reduce viscosity of oil;
· coagulate the protein in the meal to facilitate separation of the oil from protein materials.
The meal flows from the top compartment down to the fifth compartment in series. At each stage a mechanical stirrer agitates the meal. Steam trays heat the cookers, and live steam may be injected into each compartment when necessary. The important variables are temperature, retention time and moisture content. In the palm kernel, the meals are normally cooked to a moisture content of 3 percent at 104-110°C.
Screw-pressing
The properly cooked meal is then fed to the screw-press, which consists of an interrupted helical thread (worm) which revolves within a stationary perforated cylinder called the cage or barrel. The meal is forced through the barrel by the action of the revolving worms. The volume axially displaced by the worm diminishes from the feeding end to the discharge end, thus compressing the meal as it passes through the barrel.
The expelled oil drains through the perforation of the lining bars of the barrel, while the de-oiled cake is discharged through an annular orifice.

Direct screw-pressing
Some mills crush the kernels directly in the presses without any pre-treatment. Double pressing usually is required to ensure efficient oil extraction. The screw-presses used normally of 10,15,20 or 25 tonnes per unit per day.

Partial pre-treatment
The kernels are first broken down to smaller fragments by grinding prior to screw-pressing. In some cases, cooking is also carried out.

Complete pre-treatment
The full pre-treatment processes described earlier are carried out prior to screw-pressing. Plants with larger capacities (50-500 tonnes per day) choose complete pre-treatment and the equipment is usually imported from mainly from Malaysia. Here at Dews Enterprises, we offer a complete solution and consultancy services

Oil clarification
The expelled oil invariably contains a certain quantity of ‘fines and foots’ that need to be removed. The oil from the presses is drained to a reservoir. It is then either pumped to a decanter or revolving coarse screen to remove a large part of the solid impurities. The oil is then pumped to a filter press to remove the remaining solids and fines in order to produce clear oil prior to storage. The cakes discharged from the presses are conveyed for bagging or bulk storage.
As can be seen from Diagram 2 below, not all crushers use the same procedure for mechanical extraction of kernel oil. There are three variations: direct screw-pressing, partial pre-treatment, and complete pre-treatment.

Diagram 2 Shows the Different Methods of Mechanical Extraction

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In looking at mechanical extraction method, we shall examine the various machines that is required to operate this method

Let us consider the direct screw pressing option.

Here the basic machines needed are Expellers, Filter press and maybe hammer mill. In this option we shall assume the use of Malaysian Muar Ban Lee expellers. It is important to note the expellers are the main palm kernel nuts crushing machine and Muar Ban Lee which is a Malaysian company is one of the best in the world when it comes to oil palm related industrial machines

By adopting this direct screw pressing method, it means we shall employ the double press system. In double press system, one expeller will doing the first press while another expeller will be doing the second and final press. The essence is that since the palm kernel nuts have not been pre-treated, the first expeller is adjusted and set to loosely crush the kernel nuts thereby extracting a large amount of the oil content and breaking the nuts into smaller particles. The second expeller is tightly adjusted to re-crush the output of the first expeller thereby finally extracting the remaining oil in cake down to as low as 5% of oil content in the final cake. The recommended oil retention in the final cake is 7% for mechanical extraction method.