The cost of planting oil palm per hectare is shown in the below tables.
Cost Analysis for One Hectare of Oil Palm
| Year 1 | |
| Cost of Land Acquisition | 100,000.00 |
| Cost of Oil Palm Seedlings | 150,000.00 |
| Fertilisers | 75,000.00 |
| Manure | 10,000.00 |
| Pesticides | 10,000.00 |
| Cost of Transplanting | 10,000.00 |
| Labour Cost | 50,000.00 |
| Herbicides | 15,000.00 |
| Farm Tools and Machines | 20,000.00 |
| Farmland Preparation | 50,000.00 |
| 490,000.00 |
| Year 2 | |
| Fertilisers | 85,000.00 |
| Manure | 5,000.00 |
| Pesticides | 10,000.00 |
| Labour Cost | 50,000.00 |
| Herbicides | 15,000.00 |
| Farm Tools and Machines | 25,000.00 |
| 190,000.00 |
| Year 3 | |
| Fertilisers | 95,000.00 |
| Manure | 5,000.00 |
| Pesticides | 10,000.00 |
| Labour Cost | 50,000.00 |
| Herbicides | 15,000.00 |
| Farm Tools and Machines | 25,000.00 |
| Cost of Harvesting | 20,000.00 |
| 220,000.00 |
Revenue Analysis (Palm Oil)
| Revenue Analysis (Palm Oil) | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 |
| Yield of Palm Oil (tons) | 0.5 | 0.75 | 1 | 2 | 3 | 4 | 4 |
| Price of Palm oil/ton | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 | 1,000,000.00 |
| Total Revenue | 500,000.00 | 750,000.00 | 1,000,000.00 | 2,000,000.00 | 3,000,000.00 | 4,000,000.00 | 4,000,000.00 |
Profit Analysis (Palm Oil)
| Profit Analysis (Palm Oil) | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 |
| Total Revenue | 500,000.00 | 750,000.00 | 1,000,000.00 | 2,000,000.00 | 3,000,000.00 | 4,000,000.00 | 4,000,000.00 |
| Total Cost | 490,000.00 | 190,000.00 | 220,000.00 | 220,000.00 | 220,000.00 | 220,000.00 | 220,000.00 |
| Profit (Palm Oil) | 10,000.00 | 560,000.00 | 780,000.00 | 1,780,000.00 | 2,780,000.00 | 3,780,000.00 | 3,780,000.00 |
Revenue/Cost/Profit Analysis (Palm Kernel Oil)
| Revenue/Cost/Profit of Palm Kernel Oil (PKO) | |||||||
| Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | |
| Yield of PKO (tons) | 0.1 | 0.15 | 0.2 | 0.4 | 0.6 | 0.8 | 0.8 |
| Price of PKO/ton | 650,000.00 | 650,000.00 | 650,000.00 | 650,000.00 | 650,000.00 | 650,000.00 | 650,000.00 |
| Total Revenue on PKO | 65,000.00 | 97,500.00 | 130,000.00 | 260,000.00 | 390,000.00 | 520,000.00 | 520,000.00 |
| Cost Incurred on PKO | 26,000.00 | 39,000.00 | 52,000.00 | 104,000.00 | 156,000.00 | 208,000.00 | 208,000.00 |
| Profit (PKO) | 39,000.00 | 58,500.00 | 78,000.00 | 156,000.00 | 234,000.00 | 312,000.00 | 312,000.00 |
Total Profit Analysis
| Total Profit | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 |
| Profit (Palm Oil) | 10,000.00 | 560,000.00 | 780,000.00 | 1,780,000.00 | 2,780,000.00 | 3,780,000.00 | 3,780,000.00 |
| Profit (PKO) | 39,000.00 | 58,500.00 | 78,000.00 | 156,000.00 | 234,000.00 | 312,000.00 | 312,000.00 |
| Total Profit | 49,000.00 | 618,500.00 | 858,000.00 | 1,936,000.00 | 3,014,000.00 | 4,092,000.00 | 4,092,000.00 |
Assumptions of the Cost Analysis of a One Hectare Farmland of Oil Palm
In year 1, total cost or expenses is expected to be N490,000. These costs include cost of land acquisition, cost of oil palm seedlings, fertilizers, manure, pesticides, cost of labour, farmland preparation, cost of transplanting and herbicides.
In year 2, total cost is expected to be incurred is N190,000. These costs include cost of fertilizers, manure, herbicides, farm tools and machines, pesticides and labour cost.
In year 3, total cost is expected to be N220,000. These costs include cost of fertilizers, manure, herbicides, farm tools and machines, pesticides and labour cost.
We envisage that the cost will increase by the annual inflation rate till the foreseeable future. Please note that an oil palm tree can fruit for above 25 years. So you would be expected to incur some costs till the foreseeable future.
Assumptions of the Revenue Analysis of a One Hectare Farmland of Oil Palm
It is assumed that the oil palm will start fruiting from the end of year 3. 0.5 tons of palm oil is expected to be the palm oil yield in year 3. With an expected price of palm oil to be N1 million, the revenue from palm oil sales in year 3 will be N500,000.
The yield of palm oil in year 4 is expected to be 0.75 tons with a revenue of N750,000. By year 7, the palm oil yield is expected to be 3 tons with a revnue of N3 million per hectare.
The total revenue on Palm Kernel Oil (PKO) in year 3 is expected to be N65,000. In year 7, the revenue on PKO is expected to be N390,000.
Assumptions of the Profit Analysis of a One Hectare Farmland of Oil Palm
Profit on palm oil in year 3 is expected to be N10,000. Profit in Year 5 is expected to be N780,000. Profit beyond year 5 is expected to rise significantly because of the expected increase in yield of the oil palm.
Profit on PKO in year 3 is expected to be N39,000 and will hit N312,000 in year 8.
Note to Computations
The data in the computations were gotten from public records. We did not take into cognizance the effects of inflation and the volatility in the value of the Naira.
Also, note that the oil yield we assumed for these computations is very conservative. Some oil palm varieties like Tenera hybrid oil palm variety can do double and thrice the yield figure we used for this analysis.
Also, take note that the prices of palm oil and palm kernel oil can vary for as high as 100% in a year. There is always a yearly peak and off peak times for these commodities in Nigeria.
You are advised to do your own due diligence and cost/profit analysis before going into oil palm cultivation.
Should you need a detailed business plan, market research or feasibility studies for oil palm cultivation in Nigeria, kindly reach us through sales@vegieconcept.ng.
