Madam Agnes Omale 53, who hails from Benue state and sells palm oil at Garki market is generating serious cash-flow from the business and other condiments. Adeola Tukuru reports.
Madam Agnes who started the business in 2014 with just 4 liters of palm oil at her disposal is now able to supply to markets around her area.
While recounting to Business Starter, She explained that she started the business with the sum of N5,000, but now earn over N13,000 daily from selling to consumers and also distributing to others traders.
She is also able to fend for her family and sponsor her children through school from the business.
While explaining in not too fluent English language ,” When I came to Abuja in 2012 , I looked around for security jobs but I didn’t get any better one. In fact, I worked in one private house as a cleaner for almost 2 years then I realised that my salary was not enough for me and my family.
“So, I gathered all I have in my savings which was just N5,000, I bought 4 liters of oil and displayed it in front my house”
” I realised that my wares get exhausted before evening that customers came back to ask for more. I realised I sold almost all my wares in a day and so I had to get a place in Garki market, where I can display more of my oil. “
“It was like a dream when I realised that I now buy more than before in a day and sell to my customers. Some of them even place order for parties and I also distributes to other customers, ” he said.
Challenges in business
She listed the problems faced by small scale farmers to include inaccessibility to funding for productive seedlings, modern machinery and lack of adequate regulation.
She also lamented the influx of foreign-produced palm oil in the market, adding that this trend makes business hard for herself and other traders and farmers.
“The biggest challenge is that we don’t have funds coming from any external bodies. So, we are dependent on what we can put in. And sometimes, our input is so low that our output is so small,” she said.
Prices fluctuation
She said the prices fluctuate that it becomes unpredictable knowing when to store, “because it’s from storing that we make our money. If the prices are stable, when you produce, you can afford to keep some. At the end of the season when the price goes up, you can sell and make some money.
“But then the government gives licence to some importer, they bring in these products to flood the market. And once the market is flooded, then we make almost nothing.”
According to a PWC report, Nigeria is the fifth largest producer of palm oil in the world, with less than 2% of total global market production of 74.08 million MT.
It is not that I can’t produce more than I am doing right now but where is the money, where is the land? The seedlings are not even there,” she said.
“Palm oil business is capital intensive and [those of us] who have small scale farms like this cannot survive without help, whether from the government or from any other non-governmental organisation.”
CBN intervention
The Central Bank of Nigeria (CBN), in 2015, launched the ABP to provide single-digit interest rates on loans to farmers through deposit money banks and other participating financial institutions.
In the same year, the CBN also announced that palm oil, alongside 40 other products, was ineligible for forex through the Nigerian interbank market. This was done to encourage local production and manage foreign reserves. Also, a duty charge of 35% was applied on crude palm oil (CPO).
But despite these measures, between 2014 and 2018, the country only produced 75% of its consumption needs and relies on importation for the remaining 25%.
PwCs report on palm oil market
According to PwC, the country’s palm oil industry is largely dominated by small-scale farm holders, who account for over 80% of local production, while established plantations account for less than 20% of the total market.
“The dominance of small farm holders in the palm oil market has resulted in low output compared to the country’s production potential,” the PwC report reads.
“This is because local farmers’ manual harvesting techniques are outdated, which often results in significant wastages during the harvesting process.
In Nigeria, lack of investment in palm oil extraction technology and technical incompetence/inadequate training have resulted in poor management of palm oil plantations over the years, causing some of them to cease operations.”
The minister of industry, trade and investment, Otunba Adeniyi Adebayo said the palm oil sector can grow Nigeria’s economy by $1 billion.
The minister announced plans by the federal government to collaborate with investors to implement a backward integration programme across key selected priority products, including palm oil, sugar, cassava starch, cotton textiles and garments.
How to start palm oil business
The first business proposal to start a palm oil business requires to plant a very large number of oil palm trees, which means it needs huge stretches of land. Besides, the natural conditions will have a great impact on the growth of oil palm.
The ideal conditions to cultivate oil palm are hot weather the whole year, abundant sunshine and rain, and deep and rich soil. Therefore, the palm oil plantation business is more popular among countries in Africa, South Asia, including Nigeria, Indonesia, Malaysia, and others. Palm oil plantations are a rent-like business. (Related article: palm kernel cracking machine)
Types of palm oil business
It is divided into two types – a relatively small palm oil selling business and large bulk palm oil selling business. For the palm oil producer, with the palm oil making machines, you can produce palm oil directly for sale, or you can supply the bottled palm oil to the local supermarket.
And for the buyers, they can buy palm oil from local supermarkets, or become the agency for a lower price and then sell it with a relatively higher price.
