Investing In Groundnut Oil Production Business

Nigeria is the largest groundnut producer in the African continent, and the fourth producer of the crop in the world. The country produces around 1.5 million metric tons of groundnut annually and derives its oil which is an extremely nutritious product. In Nigeria’s topography, one can produce five metric tons of groundnuts per hectare. From a ton of groundnuts, one can extract 500 litres of oil.

Hence, groundnut oil production business is a profitable one with huge export potential. The market is one the Nigerian government has been very supportive of, particularly, edible oil production, in recent years.

To seize the opportunity this market presents, you can start a groundnut oil production business through setting up small or medium scale oil mill, based on the desired output and project cost. Considering that groundnuts are widely produced in Nigeria, and almost all of the population uses its byproducts, it seems to be profitable to build and operate groundnut oil processing machines.

Requirements For The Business:

Registration: The first thing to do is to register with the National Agency for Food and Drug Administration and Control (NAFDAC), in order to start a business in this sector in Nigeria. You can get help from companies that provide consultation regarding the sector, and registration.

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Investment: After registration, you should be ready to invest in the sector. The equipment required to build your groundnut oil manufacturing business can be supplied from the local market at affordable prices. The machines are easy to set-up and use. With the help of three-four pieces of equipment, such as a cooking kettle, corresponding with your production quantity, a boiler, filter press, and an oil expeller, you can start producing peanuts.

Raw Materials: The primary raw material is peanut. Groundnut is mainly grown in the northern part of Nigeria, and West Africa, in larger quantities compared to other regions of the country. The below listed states – Kano, Kaduna, Taraba, Bauchi, Borno and Adamawa – account for about 83-88 percent of groundnut production in the country.

Equipment: The main processing machinery include, seed cleaning equipment, de-hulling machine, oilseeds cooker or roaster, peanut oil press, filter press, oil refinery machine and oil filling or bottling device.

Capital: For small scale businesses, the estimated start-up cost is about N10.5 million to N15 million; medium to large scale groundnut production business costs between N25 million and N65 million.

Profitability: Small scale groundnut production businesses can yield N15 million and N22 million; while profits for large scale production yields about N35 million to N70 million. So, the more you invest, the higher the profit.