How to Start Groundnut Oil Production in Nigeria

Edible vegetable oil is oil produced from any of the edible oil bearing seeds that exist in nature. Many of these seeds are produced in large quantities in Nigeria. Amongst them are: groundnut, oil palm fruit, soybeans, cotton seed, sesame seed, melon seed, etc.

This write up will focus on the processing of groundnut into oil and cake. Although the production process is almost the same for almost all the seeds with just slight differences in the production line.

The production line of oil from groundnut is: seed preparation, seed pressing/oil extraction and filtration. A typical groundnut oil mill has the following facilities: decorticator, cooking kettle, baby boiler, oil expeller and filter press.

For a small/medium scale mechanized groundnut oil mill, the start-up capital is between five to six million naira. This will cover the cost of land, construction, furniture, procurement and installation of machinery, vehicle and operational expenses.

One tone of groundnut seed produces an average of 500ltr of groundnut oil, 420Kg of groundnut cake, and 40Kg of groundnut sludge. As at last two weeks, the average price of the following is true (in kaduna state):

1tone of groundnut seed = N180,000

1ltr of groundnut oil = N260
 
1Kg of groundnut cake = N160
 
1Kg of groundnut sludge = N100

So if you process 1tone of groundnut seeds, you are likely to get an average profit of N20,000. The oil milling machinery referenced in this write-up has the capacity to process 3.5tone of groundnut per day. Which means an average of N70,000 profit is realisable per day, which translates to N2,100,000 per month. Monthly cost of labor, staff welfare, fuel, and transport will not exceed N700,000.

It should be noted that there is a ban placed on the importation of vegetable oil into Nigeria so as to encourage local investors to go into its production. This gave birth to a very high demand in the country, as the present production level doesn’t meet demand. 

You get dealers paying in advance for your products the moment you start production. Study shows that over 80% of the populace of Nigeria consumes or use vegetable oil and its products.

Serious minded investors can be provided with more detailed information and technical assistance in setting up this project. 

Written by I.A Bello for WealthResult.com