A BUSINESS PROPOSAL ON THE ESTABLISHMENT OF PALM OIL MILL INDUSTRY | FEASIBILITY STUDY | BUSINESS PLAN



INTRODUCTION:
The abundance of palm tree plantation in different Local Government Areas in Nigeria makes the area a good site for establishing the palm oil mill. The proposed palm oil mill will be called SWAG Oil Mill. The oil mill will focus on the production of palm oil, palm kernel oil and palm kernel proceeds needed for the making of soaps, pomade and even snacks. The products for this oil mill serve as raw material for cosmetic industries, food and snacks making industries. In the oil mill, palm fruits will be processed into different products such as palm oil, palm kernel and by products for fire making. In the industry, there would be machines for crushing and pounding of palm fruits, extraction of palm oil, kernel oil and other by products. 

 This is a business plan for any/different Local Government Areas in Nigeria. We are Professionals in writing business plans, proposals, feasibility study, etc.
The establishment of this mill industry will cost about Ten Million, Five Hundred Thousand Naira (N10,500,000) [Please note that this is an estimation for the government only, the business starting capital can be smaller and affordable for personal/single business men]. Since the project is a community based project that will bring about development in Nigeria, there would not be any financial spending for land acquisition; the community is willing to give out one of the community’s land for the project. The only amount of money needed for the land acquisition is about N300,000 for compensating the owners of the land before the community takes over the ownership of the land.

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EXECUTIVE SUMMARY
In establishing this mill, three main objectives are targeted:
·        Creating employment opportunities
·        Providing avenue for growth and development
·        Raising the standard of living of the people.

Among the various villages that make up different Local Government Area, the oil mill will be producing some products as palm oil, palm kernel oil, palm kernel powder and other stuffs used as raw materials for subsidy industries in Imo State within the south eastern region. Industries that will benefit from this oil mill include; the soap industry, cosmetic industries, beverages industries, food industries etc. the oil mill will generate most of the local government revenue as the products will make the village very big market for raw materials for the above named industries. Also, it is possible that the industry will contribute up to 60% of the local government financial generation. It is estimated that the revenue generated by the mill will be up to N3 million a month.

Considering the financial need of the proposed oil mill, the local government stands to benefit more as it will not spend up to N1,000,000 in a month for the mills maintenance and payment of worker’s salary.

Also, given that, there is much soap, cosmetics, food and beverage industries in neighbouring cities and state, the mill will experience increase in sales of its products. Before now, these industries that depend on palm products for production go as far as neighbouring countries for the raw materials but with the establishment if an oil mill in different Local Government Area in Imo State, most of them will divert to SWAG Oil Mill for their raw materials.

BUSINESS DESCRIPTION:
As stated in the introductory page, the name of the enterprise is SWAG Oil Mill. It is a partnership business owned by a group of 5 individuals in collaboration with the Different Local Government. Nigeria community will be the major source of raw materials for the mill. The major materials are the palm trees plantation in the area. Though the community have abundant palm plantation which is part of its natural endowment, the local government will establish improved breeds or species of palm that can produce palm fruits very fast. This is to ensure constant production of the palm products.
 Also, the proposed oil mill industry in Nigeria would be established in a new factory building in the community. The community has large land mass and it will be easy for us to have enough space for the location of the industry.

MACHINES:
Digestion of the fruit:- Digestion is the process of releasing the palm oil in the fruit through the rapture or breaking down the oil bearing cells.

BUSINESS ENVIRONMENT:
The land proposed for the establishment of SWAG Oil Mill is located at Nigeria community in Different Local Government. The community is known for its palm plantation which is in abundance and the fertility of its soil. The land is vast, measuring about 2 hectares. In the land, we would erect a building which will serve as a hall for the materials. There will be lass transport cost since the mill is near the source of raw materials. Warehouses will be built for the storage of the already processed palm.

MARKETING ANALYSIS:
The palm oil mill has a very good prospect for surviving in the raw material market for industries. Firstly, most of the small scale industries in Different will patronize the mill industry, hotels, palm kernel oil and palm oil sellers in the area can buy directly from SWAG Oil Mill in bulk. Secondly, the various soap, cosmetics and food industries within Imo State can come to SWAG Oil Mill for their raw materials. Industries in Aba, Enugu, and Port Harcourt can easily locate the mill and buy the products. This will thereby reduce the transport cost. SWAG Mill will increase the production and sales of palm produce in its environs. This will result to increase in profit and profitability since there are no too many competitors in the south east region market. The cost of production will be low because most of the staff will be recruited from the community and the source of raw materials for the mill is gotten from the natural endowment within the environs.

MARKETING PLAN:
SWAG Oil Mills have a team of good marketers and sales forces who will create public awareness of the mill’s products. There would be an integrated marketing communication between the mill and its target market. The mill’s product would be communicated to the public through advertisement, public relations, sale promotion and publicity.
There will be proficient marketing professionals recruited for this purpose. Again, the industry will make use of customer based pricing one of its pricing strategy. It will also emphasize on quantity discount as a pricing strategy also. The industry will make use of sales representatives and agents instead of middlemen to avoid hoarding of the products, excessive price hike and low customer’s satisfaction.

OPERATING PLAN:
The production process for palm oil making is very vital and the procedures of making palm oil are of 2 patterns: the old or ancient pattern and the new or modernized pattern. Both patterns will be used.

The following stages in palm oil making using the old pattern include the following:
a.         The first stage: the palm will be cut from the tree in a bunk.
b.         The second stage: cut it from the bunk and after few days it will be selected.  
c.         The third stage: cook the selected with a very big pot.
d.         The fourth stage: pound in a big mortar.
e.         The fifth stage: sieve out the oil and turn into a container.
f.          The sixth stage: package the container and the oil is ready for sale.

After this process, the kernels and the chaff will be separated from others for domestic uses and consumption.


The industry will have different departments which will be divided into sub sections room such as crushing room, the cooking room, the extracting room and the canning room. There will be administrative and personal department and marketing department. There would be machines for cooking, crushing and extracting of the palm products. The cooking, crushing and extracting units will work hand in hand in order to bring out the end products of the industry. The marketing departments would be concerned for sourcing customers for the products. The industry will also have its own palm plantation from where it gets its raw material and the palm plantation will be made up improved breeds to ensure constant supply of raw materials. There would also be warehouse for stoning the products.
MANAGEMENT AND ORGANIZATION:
The management team works hard to increase the sales, market shares and profit by understanding the customers and the competition.  He team is collectively building cohesive marketing strategies for the products and creating maximum impact.

The business is partnership between five people and these people collectively run the business.

1.         Mr. A: A gentleman with class and a business mogul. He is a well trained manager. With his vast experience in management and entrepreneur, he assumes the post of the General Manager. His knowledge will lead to efficient and effective management of the industry.

2.         Mrs B: An elegant lady and a B. Sc holder in Management and M. Sc in Marketing from the University of Ghana, Legron. She takes the role of assistant general manager. Her skills when applied will take the industry to greater height.

3.         Mr. C: The business guru, versatile in all aspect of business takes the post of the Production Manager. His skills are needed for the development of the industry.

4.         Mr. D: With his educational background and qualification on Accounting and Finance, his skills will be needed in recording the business operations and analyzing our financial prospect. He will be the Financial Manager.

5.         Miss E: A business oriented lady, she get all the skills needed in the taking the business to the next level. Therefore, she will be the Marketing Manager.

With this team, we believe our collective efforts will take the industry to greater heights, enabling we to have market power in the industry.

FINANCIAL PLAN:
The financing and funding of the project will come from the collective contribution if the partners and also from the local government. Subsequently, the revenue generated from the industry will be re-invested into the business and some of the income will be shared among the partners. Hence, the financial requirement of the proposed industry is analyzed below:

PROJECT ESTIMATE:
1.
Compensation given t owners of land
N300,000
2.
Erecting of industrial buildings
N3,000,000     8.3m
3.
Acquisition of machines and equipment
N5,000,000
4.
Payment of workers for the 1st 3 months
N1,500,000
5.
Palm plantation and cultivation
N500,000        2.2m
6.
Miscellaneous
N200,000

Grand Total
N10,500,000

Interest rate   =          N60%
NPV                            =          pvif0
(In millions “000”)



Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
(16,750)
12,500
14,500
16,800
17,500
18,200
 

NPV = 12,500 (1+60%) + 14,600 (1+60%) + 16,800 (1+60%) + 17,500 (1+60%) + 18,200 (1+60%) – 16750 (1+60%)

12,500 + 14,600 + 16,800 + 17,500 + 18,20016,750
1.6         1.62         1.6          1.64        1.65           1.60
7812.5 + 5703.125 + 4101.56 + 2670.1 + 1734.9 – 16750
NPV    =         N5,272,185.

The assuming rate of interest rate of returns is 82%.

CONCLUSION:
It is clear from the foregoing that the proposed oil mill in different Local Government Area of Imo State is an attempt to promote human development project in the area, create employment opportunities for the youths and create means of generating more revenue for the local government. Hence, it is clear that the proposal presents a new dimension of development.

CONCEPTUALIZATION:
The proposed palm oil mill in different Local Government Area will be a very big industry specialized in the production of palm products such as; palm oil, palm kernel oil, palm kernel powder and other by-products from palm, which subsidiary industries can used as raw materials for their production. Up to 100 tons of palm oil will be ready for sales and distribution on daily basis. Having established business contact with most of the soap, cosmetics, and beverage industries in Aba, Port Harcourt, Enugu, Onitsha, Kano, Kaduna, Lagos, Abuja etc, the mill will distribute to them at any quantity they want.

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