How to Buy and Sell Palm Oil in Nigeria
Palm oil business is a lucrative business as history has proven. It is a business that has given many Nigerians and foreigners massive income. In fact, one of Nigeria’s billionaires by name Orji Uzor Kalu started out trading in palm oil where he made millions as the records have it. You can buy and sell palm oil and make a lot of money from it.
One good thing about this palm oil business is that it’s not a heavy investment area where you have to be ready to part with millions before venturing in. you do not need to set up a processing company or a palm plantation to be able to involve in the palm oil business. All you need is just that little capital to buy and sell palm oil.
You can start this business as an unemployed person or a retiree. Even employed people who can find time out of their busy schedules can also get involved.
For the sake of those who don’t have the basic knowledge of palm oil and how marketable it is, please permit me to take some time into that field. This will enable you understand why you should buy and sell palm oil. Thank you!
4 Reasons Why You should buy and sell palm oil for Profits
- Palm oil is a byproduct of the palm fruit. It is orange or yellowish red in colorand is extracted from the red palm fruit.It is widely produced in West African countries and in Far East countries such as Malaysia and Indonesia. In these countries, it is widely consumed by the natives, and it is also exported to neighboring countries.
- Palm oil is in heavy demand in African countries and all over the world due mainly to its health benefits and its high productive value. Palm oil is a good source of vitamin E, which promotes healthy skin. It is also rich in carotene, which enhances vision. And most importantly, unlike most other oils, it doesn’t promote the accumulation cholesterol and low-density lipoproteins that are harmful to the body. Palm oil is also used in the production of other consumer goods like bathing soap, detergents, and the rest.
- Palm oil is in heavy demand in African and Far East countries because of its relative cheapness when compared with other edible oil, and its relatively long shelf life. Palm oil can last up to one year without losing its quality when properly stored.
- Virtually every household in Nigeria and other West African countries cooks with palm oil. So it’s up to you to calculate how much profit you can make from the market in these countries.
Having taken some time discussing the vital things you need to know about the palm oil product, it’s time to know how to make money simply from buying and reselling this product.
There are two basic methodologies of running the palm oil business; and you are free to choose any of the two or even combine both. They will help you understand how to buy and sell palm oil and make money from it.
How to Make Money Buying and Selling Palm Oil: Choosing your palm oil business model
The marginal model:
The first model I’m going to talk about here is the marginal model. In the marginal model you only make regular marginal profit. Under this model, you buy the commodity, add some profit margin, and sell to the next available buyer.Note that theprofit margins are always small.Under this model, you won’t make huge profits with this model, you will make smaller profits but it will be regular.
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The downside of this model is that you may be badly hit by sharp drops in the price of the commodity, which happen occasionally.There are two sides to this possibility; you can make huge profits during occasional price surges as well.
The seasonal model:
The second model is the seasonal model. In this model, you buy the product during the time of the year when the commodity is abundant, and sell only when it becomes scarce. As has been proven over time, in Nigeria, palm oil sells cheapest between February and April (because it is abundant during that time of the year), and market prices go up between September and January.
So one can take advantage of this price fluctuation when one decides to buy and sell palm oil. You can make good money by hoarding the product. However, this model involves higher cost as you have to budget for a storage facility to preserve the product till the time of resell.
This model if properly adhered to gives better profit but is more stressful. It also involves bigger capital than the marginal model. It is advised that you have enough capital and good storage facility before venturing into this model as any failure in storage can lead to spoilage and total loss.
On the profitability of the seasonal model, let’s examine the following case scenario. In Nigeria, a 20 liter can of palm oil sells for N3, 000 – N4, 000 during the abundant season (depending on your location).
During the scarcity period, that same 20 liter can goes for N6, 500 – N8, 000.In Nigeria, palm oil can be sourced at a cheap price in places such as Edo, Delta, Abia, Imo, etc. and resold at a profitable price in places such as Kano, Lagos, Kaduna, Abuja, etc.
Having explained the methods of running a palm oil trading business; it’s time to discuss the steps involved in starting the business.
How to buy and sell palm oil for Profits
Get your storage space
The first step you need to take when you want to buy and sell palm oil is to secure some space for storing your palm oil, not minding the business model your choice. It’s best to have your storage space close to where your customers are because that would save you the cost of transportation to deliver to your customers if it were to be at home.
So, renting a shop near a local market around you is a very smart idea. In Nigeria, palm oil is best stored in big blue drums / barrels, in a cool place away from direct sunlight. It takes about 8 – 10 (20liter) gallons to get a barrel filled.
Arrange with suppliers
You need to satisfy customers by always delivering quality products. Ensure your products are sure quality and your success in the business is guaranteed. You need to conduct thorough research to know where to get the best of palm oil in Nigeria.
When you want to buy and sell palm oil, it is best you know some of the places to source it from. Good palm oil can be sourced from Imo state in places such as Ngor Okpala, Ihitte Uboma, Orlu, etc.
Decide on transport arrangements
You need to make a viable arrangement on how to transport your product from the point of supply to your storage facility and possibly to your customers. You can make more money charging your customers for delivery and they will be willing to pay for such services because of the convenience.
For delivery, palm oil is best transported in gallons and if you are transporting from Eastern Nigeria to either the Western or Northern part of the country, you can use the services of popular transport companies such as The Young Shall Grow Motors, G.U.O Motors, etc. you can as well do well to get yourself a van or truck when you can afford it as that can cut your transportation cost significantly.
You should endeavor to find reliable customers for yourself and make some good profit.If you offer high quality palm oil for unbeatable prices, you will definitely get yourself a large market portion and make good profit.
Depending on your chosen model, you can choose to sell your commodity to the next available buyer, or wait until prices go up before selling. The choice is all yours. Don’t forget that marketing the product is the reason you decided to buy and sell palm oil.