An accounting statement called the "statement of cash flows", shows the amount of cash

generated and used by a company in a given period. It is calculated by adding noncash charges

(such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project,

or to a business as a whole.

Investment Appraisal Techniques

The above financial statements seem to report on the profitability and the financial position of

the business at any point in time without showing whether it is worth investing into the business

or not and how long it will take to pay back creditors. Therefore other indicators should be used

to appraise the investment. These are known as investment appraisal techniques. Investment

appraisal is used to look at a potential capital investment by a firm and measure its potential

value to the firm (NGFL, September, 2008).

There is more than one method of Investment Appraisal, and each different method allows the

potential return on the investment to be examined in a different way (NGFL, 2008). The most

commonly used ones are the Net Present Value (NPV), the Internal Rate of Return (IRR) and

Benefit Cost Ratio (BCR).

i. The Net Present Value

Present value is the value of today’s dollar or cedi.Net present value (NPV) is the difference

between today’s value of the added returns and today’s value of the added costs (USDA, 1996).
What this definition suggests is that Net Present Value represents the present net cash inflows

and outflows of a particular investment. The Net Present Value is important as an investment

appraisal technique because it takes into account the time value of money as well as the benefits

of a project after its lifetime.

Mathematically, NPV = ∑PV cash inflows - ∑PV cash outflows (ICAEW, 2009).

The result of this computation can be positive, zero or negative. A positive answer is an

indication that the proposed business venture is profitable and worth investing into, a zero result

means a break-even whiles a negative answer means the venture is undesirable and unprofitable

hence should be rejected.

ii. Internal Rate of Return (IRR)

The IRR is the rate of return or yield of the investment, expressed as a percentage. It is the

discount rate which generates a Net Present Value of zero. The higher the IRR, the more

desirable it is to undertake the business venture. IRR that is greater than the interest rates of

financial markets is worth accepting since it is more profitable to invest in the venture rather than

in the financial markets.

The purpose of IRR to the authors is to inform investors that investing into the business is more

profitable than investing in financial markets.

Mathematically,

IRR  LDR  ( HDR  LDR)*(( NPV @ LDR) | NPV @ LDR  NPV @ HDR |)) (ICAG, 2010)

Where, LDR = Lower Discount Rate and HDR = Higher Discount Rate.
Overall, a sensitivity analysis is conducted to find out how sensitive the performance indicators

are when certain factors such as interest rates, inflation rates, and operational costs among others

change. This is done to test whether the appraisal techniques will still show the profitability of

the enterprise when these factors, which have direct impact on the NPV, BCR or IRR change

over time or after the planning process. Generally, when BCR is 1, NPV is negative and IRR is

very low, the venture is highly sensitive meaning it is risky and unprofitable to invest into it

(en.wikipedia.org/wiki/Sensitivity_ analysis accessed on 20th November, 2013).

2.5.3 Production and Operational Plan

This section of the business plan discusses the various activities that take place in producing a

product. The section describes the equipment that are needed for production, the raw materials

and other materials that are used as well as the production process. According to CTA (2012),

the production process is best represented by a process flow chart.

2.5.4 The Management and Organisational Plan

This section explains the levels of management, levels of authority, forms of communication and

who is responsible for what in the organization. Lanquaye et al., (2013), used an organisational

structure to represent the management and organisational plan.

 CHAPTER THREE

METHODOLOGY OF THE STUDY

This chapter discusses the methodology of the study. These include the description of the study

area, and how the data employed in the study was collected and analyzed.

3.1 The Study Area

The study area is the Ejisu-Juaben Municipality of the Ashanti Region of Ghana. Ejisu-Juaben

Municipality is one of the administrative districts in the Ashanti Region of Ghana. The

Municipality is known for its rich cultural heritage and tourists attractions notably the booming

kente weaving industry.

The Municipality stretches over an area of 637.2 km2 constituting about 10% of the entire

Ashanti Region and with Ejisu as its capital (www.ejisujuaben.ghanadistricts.gov.gh, accessed

on 19th July, 2013). Currently it has four urban settlements namely, Ejisu, Juaben, Besease and

Bonwire. The Municipality is located in the central part of the Ashanti Region and provides

enormous opportunity for creating an inland port for Ghana to serve the northern section of the

country. It lies within Latitude 1° 15’ N and 1 ° 45’ N and Longitude 6° 15’W and 7° 00’W.

Ejisu-Juaben Municipality shares boundaries with six (6) other Districts in the Region

(www.ejisujuaben.ghanadistricts.gov.gh, accessed on 19th July, 2013). To the North East and

North West of the Municipal are Sekyere East and Kwabre East Districts respectively, to the

South are Bosomtwe and Asante-Akim South Districts, to the East is the Asante-Akim North

Municipal and to the West is the Kumasi Metropolitan. (www.ejisujuaben.ghanadistricts.gov.gh,

accessed on 19th July, 2013)

The 2010 National Population Census put the population of the Municipality at 143,762

comprising 68,648 males and 75,114 females. With an average 1984 – 2000 inter - censual

growth rate of 2.5 per cent, the municipality will by 2013 have an estimated population of

189,744. The local economy exemplifies the national micro economy. Even though it is

agriculture dominated, it is increasingly becoming service and commerce based. (Republic of

Ghana, the composite budget of the Ejisu-Juaben municipal assembly for the 2013 fiscal year).

The municipality was chosen as the study area because according to Kyei-Baffour& Manu

(2008), it has the highest number of oil palm hectares under cultivation and is as well the highest

producer of fresh fruit bunches in the Ashanti region. The municipality is also a commercial hub

for major trading activities given its excellent proximity to Kumasi, the capital of the Ashanti

region. The study area also has tax advantages to enjoy from government in terms of agro-

processing (Section 11; Part II Section (1) (2) of the Internal Revenue Act, 2000, Act 592). Tax

rebates and holidays are available for agro-processing firms located outside regional capitals and

hence the need to take advantage of it. The target population are the oil palm fruit processors and

marketers of palm oil in the Ejisu-Juaben municipality.

3.2 Data Collection

Primary data was collected from one oil palm fruit processing firm through purposive sampling

whiles data from ten marketers of oil palm was collected using the simple random sampling

technique. Primary data on the processing firm focused on the production and operations,

organization and management, marketing and financing.

Both close and open ended questionnaires were used to collect primary data for the study.
3.3 Data Analyses

3.3.1 Marketing Strategies and Marketing Plan

The marketing plan was analyzed using the marketing mix, SWOT matrix and the competition

strategies. The PEST model was also used to analyze the industry.

3.3.2 Production and Operational Plan

The production and operational practices and processes were determined with a flow chart using

the various stages in the extraction of palm oil and palm kernel oil.

3.3.3 The Financial Plan

The financial plan comprises of the Profit and Loss Account, Cash flow statement and the

Balance Sheet. The financial indicators computed are the net present value, internal rate of

returns, the payback period and sensitivity analysis:

1. The profitability ratios comprise of the gross profit margin and net profit margin

These are computed as:

Gross profit
• Gross profit margin = Turnover(sales)x 100%

Net profit
• Net profit margin = Sales
x 100%

2. Net Present value (NPV) = ∑PV cash inflows - ∑PV cash outflows

Where ∑PV cash inflows is the summation of discounted cash inflows and

∑PV cash outflows is the summation of the discounted cash outflows.

3. Internal rate of return (IRR)

IRR  LDR  ( HDR  LDR)*(( NPV @ LDR) | NPV @ LDR  NPV @ HDR |))
 Where LDR = Lower Discount Rate, HDR = Higher Discount Rate and |NPV@LDR-

NPV@HDR| = the absolute difference between the NPV@LDR and NPV@HDR

Capital Investment
4. Pay Back period = Net annual cash flows

Net annual cash flows = cash Inflows - cash outflows

5. Sensitivity analysis was conducted to determine the effect of changes in expenses, and

sales on NPV and IRR.

3.3.4 The Management and Organizational Plan

The management and organizational plan will be represented with an organizational structure.
 CHAPTER 4

RESULTS AND DISCUSSIONS

This chapter discusses the industry of oil palm fruits processing firms, production and

operational plan, marketing strategies and marketing plan, the management and organizational

plan and the financial plan. The chapter also discusses the risks and risk management strategies

of the proposed oil palm fruits processing firm.

4.1 Executive Summary

BOAMA oil mills is a proposed oil palm fruit processing firm which will process palm oil and

palm kernel oil for sale in the Ejisu-Juaben municipality, Ashanti region, Ghana and elsewhere.

The mission of our firm is to process and sell, in line with international standards, high quality,

conveniently packaged and affordable palm oil and palm kernel oil. Our vision is to be the

leading palm oil and palm kernel oil business in Ghana in the next ten years.

BOAMA oil mills would be a partnership business with five main partners. It will be located at

Ejisu-Juaben in the Ashanti Region of Ghana. The target markets are retailers, wholesalers,

schools, hospitals and industries. The business intends to embark on various marketing strategies

such as the use of various media avenues, personal selling, promotion and advertisement to

create awareness of its product.

Our financial analyses results portrayed for a five-year period, an NPV of GHC 18,026,141.12

and an IRR of 28 per cent. A sensitivity analysis conducted indicated an increase in NPV and

IRR.

BOAMA oil mills will hit a production level of 30Tonnes/month of palm oil in the first year and

will hit 100Tonnes/month in the fifth year. With that of palm kernel oil, production level will be
1.5Tonnes/month and in the first year and will hit a production level of 5Tonnes/month in the 5th

year of operation and fresh fruit bunches are the raw materials which will be used.

Start-up capital of GHC 1,460,883.20 is needed and the source of fund to finance the business

will be equity and loan in the proportion of 30 per cent loan at 26 percent interest rate and equity

of 70 per cent.

The business is expected to commence full scale operations from January 1st, 2015.

4.2 Mission Statement

The mission of our firm is to process and sell, in line with international standards, high quality,

conveniently packaged and affordable palm oil and palm kernel oil.

4.3 Vision Statement

Our vision is to be the leading palm oil and palm kernel oil business in Ghana in the next ten

years.

4.4 Corporate Objectives

4.4.1 Short to Medium Term Objectives (1 to 5years)

 To provide products that satisfy the needs of our consumers; both households and

industry.

 To put a healthy-looking bottle of palm oil and palm kernel oil in every household in

Ashanti, Greater Accra, Western, Eastern and Brong Ahafo regions within 5 years of

operation.

 To create a profitable venture that will ensure high returns for investors.
  To open up a processing facility that will ensure high productivity, minimize processing

losses and ensure efficiency.

 To recruit, train and develop a workforce that will help create and add value to the

business.

 To develop a new product line every two years and add value to existing products as

often as possible.

 To hit a production level of 100T/day of palm oil and 5T/day of palm kernel oil in the 5th

year of operation.

4.4.2 Long Term Objectives

 To effectively utilize the end products of processing in order to derive extra revenue from

them or for reducing production cost.

 To establish an oil palm estate

 To export palm oil and palm kernel oil to other countries.

4.5 Corporate Values

Our values among other things are:

1. Healthy products;

2. Consumer satisfaction;

3. Quality;

4. Environmental sustainability;

5. Integrity and creativity;

6. Protection of workforce and the general public.

4.6 Business Description

4.6.1 Business Name: BOAMA OIL MILLS (aka BOAMA Oils)

Basis for the business name: the first premise for adopting this name is to present a simple name

that would stick in the minds of our prospective customers and the second is to make our

customers feel and know that the firm is a Ghanaian firm. It was derived from the acronyms of

names of owners of the business.

B – Bonsu

O – Osei

A – Anani

M – Mills

A – Afriyie.

4.6.2 Location of business

The business is to be located at Ejisu in the Ejisu- Juaben Municipality.

4.6.3 Reasons for choosing the location:

Ejisu is the capital of the municipality, and hence easy access to market, the town also has a very

excellent road linking Kumasi and Accra, it is also not far from Boankra (the proposed site for

the inland port of Ghana) and that would aid in the exportation of our products in the future.

Ejisu-Juaben is also the municipality in the Ashanti Region with the highest production of fresh

fruit bunches.
4.6.4 Type of Business

BOAMA Oils is a manufacturing concern. It exists to process fresh fruit bunches into two main

products: palm oil and palm kernel, and other products in the future.

4.6.5 Status of Business

BOAMA Oil Mills is a start-up business.

4.6.6 Registration and Licenses

BOAMA Oils would be a partnership and would be registered under Section 5 of the

Incorporated Private Partnerships Act 1962 (Act 152). Upon registration as a partnership,

BOAMA Oils would assume the status of separate legal entity and would have the powers of a

natural person capable of entering into contracts. As a partnership, BOAMA oils has no tax

obligation towards the government of Ghana except for the individual partners as stated under

Section 40(1) of the Internal Revenue Act, 2000 (Act 592).

Other licenses would be from the Ghana National Fire Service (Fire Certificate), Food and Drugs

Authority, Standards Board, Roundtable on Sustainable Palm Oil (RSPO), Environmental

Protection Agency and the Ejisu-Juaben Municipal Assembly.

4.7 Industry Overview

The oil palm industry is composed of large scale processors, small scale processors and other

projects financed by the government, thus the President Kuffuor special Presidential Initiative for

the development of the oil-palm industry. The oil palm industry is mainly made up of locally

produced oil palm and imported ones.

The industry however has bright future prospects due to the ever increasing industrial and

domestic demand for processed oil palm fruit products including palm oil and palm kernel oil.

In order to determine the various components and characteristics of the industry, a PEST analysis

has been conducted as below.

4.7.1 PEST (Political, Economic, Social and Technological) Analysis

Political Factors

There is a stable political environment in the country which will not affect the operation of the

business. Elections are always conducted in a peaceful manner each year, there are no ethical or

tribal conflicts, any conflicts that arise are always solved amicably. The only problem will be

change of government policies which will occur when there is a change in government to another

political party with its own policies. Governmental policies such as the President Kuffuor special

Presidential Initiative for the development of the oil-palm industry is also in progress.

Economic Factors

The economy in the country is not stable as prices of commodities and interest rates keep

changing. The inflation rate for December 2013 stood at 13.5 per cent according to the Ghana

Statistical Service. There was a 0.3 per cent increment from November 2013’s rate of 13.2 per

cent. What this suggests is that, though prices are unstable, the rate of changes in general price

level of goods and services is very marginal and that means that price increments in raw

materials and other goods and services would not be too significant as to affect our operations.

Exchange rates have also increased significantly with our major trading partners and that is likely

to affect trade especially the importation of equipment and machinery and in venturing into
foreign markets. The unemployment rate in the country is high which constitutes undergraduates

and diploma holders. These unemployed would make employees available or make it easy for

outsourcing employees.

Access to credit would not be too difficult as Banks and other lending institutions are ready to

advance loans to firms of manufacturing or processing concern due to the increased growth of

the sector. Interest rates also keep varying due to changes on the stock market. What it means is

that, though credit is accessible, it is rather expensive to borrow. Changes in interest rates can

affect the firm’s cost of capital whiles changes in exchange rates can affect the cost of exporting

goods, and the supply and price of imported goods in the country.

However, due to globalization, some foreign countries now aid African countries in the agro-

processing and agribusiness sectors. Therefore there can be easy funds to support the venture.

In terms of taxation, the nation’s tax laws are a bit favourable to the agro-processing sector,

allowing for rebates and concessions. The firm would tap all this opportunities especially, the

five –year tax holiday.

The business would be in partnership with other countries like Malaysia to outsource some raw

materials, tools or equipment and even training and manpower development.

Social Factors

The Ghanaian population consumes palm oil in one way or the other, either by preparing it at

home to include it in meals or to buy food outside the home which is prepared with palm oil or

the palm kernel oil. Examples of food prepared with palm kernel oil are fried rice, jollof rice,

stews and the likes and those prepared with the palm oil are the, gari and beans, stews etc. The

population keeps increasing and market for palm oil and palm kernel oil will also increase.
People are becoming health conscious creating the alarm to consume palm oil free from

chemicals. Farmers are also gradually becoming aware of the importance of the use of

modernised tools and methods of processing the palm fruits which is gradually shifting from the

traditional methods to the modernised methods. There are no social or religious taboos against

the consumption of palm oil and palm kernel oil produced. The production of palm oil is

environmentally friendly and will help recycle waste, improve the health of consumers, sustain

the land and contribute to better health. Social values would be incorporated into the business

values.

Technological Factors

In terms of technology, Ghana imports almost all her equipment and this can affect our firm due

to unstable exchange rates. Roads in our area of location are of good shape. There are good

communication networks hence such resources would be tapped by the company to enable

research and development. The government is also striving to improve infrastructure in the

country such as roads, electricity and water.

Our challenges still remain the ever increasing prices of fuel, electricity, water and other goods

and services. To avert this anomalies, the firm would strive to generate its own electricity, water

and utilise its end products effectively.

4.8 Production Plan

This section discusses how the available resources would be used to produce a product of

consumers’ choice. The resources include raw materials, labour, plant and machinery and other

important resources.
4.8.1 Direct materials required for production

1. Fresh fruit bunches

2. Palm kernels (to be obtained from the processed FFBs).

Table 4.1 Equipment for processing palm oil

Name of Equipment Function

Weighing bridge For weighing the fresh fruit bunches
Fork lift For lifting the ffbs into the sterilizer
Sterilizer For sterilizing
Stripper For stripping the fruits from the bunches
Milling tank For milling the palm fruits
Settling tank For separating the sludge, palm oil and nuts
Centrifuge For separating the oil from water
Clarified oil tank Clarifies oil from other impurities
Vacuum dryer For drying the clarified oil
Measuring tank For measuring the clarified oil
Storage tank For storing the final oil
Bottle fillers For filling bottles and gallons with the oil
Source: Field survey (2014)

Table 4.1 above lists the equipment needed to extract palm oil from oil palm fruits. Though the

equipment are listed distinctively, they make up a complete process layout in a factory such that

the product moves from one stage to the other automatically.

Table 4.2 Equipment for palm kernel processing

Name of equipment Function

Steam dryer Dries the kernel
Crusher Cracks the kernels and separates the kernels
from the shells
Bucket elevator Lifts the cracked kernels into the cooker
Cooker Cooks the kernels
Oil expeller Expels oil from the cooked kernels
Filter tank Filters the expelled oil
Pump Pumps the oil from the filter tank
Compressor Presses out all the oil
Measuring and storage tank Receives, measures and stores the oil
Bottle fillers For filling bottles and gallons with oil
Source: Field Survey (2014)

The equipment listed in table 4.2 are those required to extract palm kernel oil from palm kernels.

Though the equipment are listed distinctively, they make up a complete process layout in a

factory such that the product moves from one stage to the other automatically.

Table 4.3 Other equipment

Name of equipment Function

Turbine Provides power for the boiler
Induced drying fan For fanning fire
Force dry fan
Freeze water pump (automatic) Freezes the boiler
Feed water pump Feeds the boiler with water
Softener Softens water to the boiler since the boiler does
not use hard water
Boiler chimney Discharges smoke
Incinerator For processing empty fruit bunch into potash
ash (for the purposes of fertilizer production)
Borehole Water supply
Source: Field survey (2014)

Table 4.3 lists other equipment needed for the factory.

4.8.2 Sources of Raw Materials and Procurement

The sources of materials (FFBs) are private farmers and the presidential special initiative on oil

palm. Raw materials would be sourced from the Ejisu-Juaben municipality, other parts of the

Ashanti region, the Kwaebibrim district of the Eastern region and parts of the Brong Ahafo

region.
Procurement of the fresh fruit bunches (FFBs) would be the sole responsibility of the Marketing

and Supply Chain department; procurement officers would be in charge.

4.8.3 The Production Process of Palm Oil

Bunch Reception

This is the first stage at the factory level where the FFBs arrive at the factory and are received.

The fruits purchased must be devoid of bruises as that will increase the free fatty acid level. At

arrival, the consignment would be weighed at the Weighing Bridge and then transferred to the

sterilizer.

Sterilization

At this stage, the palm bunches would be loaded by the forklift into the sterilizer for sterilization.

The fresh fruit bunches would then be subjected to steam-heat treatment. The steam would be

saturated at a pressure of 3kg/cm2 and at a temperature of about 1400C. The FFB would be

heated for 75 to 90 minutes. The following factors make sterilization very important: stop further

formation of free fatty acids by stopping enzyme action, facilitate stripping of fruits, and

minimize kernel breakage during nut cracking.

Stripping

Upon completing sterilization, the FFB would be transferred into a rotary drum-stripper for the

fruits to be separated from the bunch stalks. The rotation of the drum-stripper and the lifting and

dropping of the bunches repeatedly would cause the stripping. The empty bunch stalks would be

collected at the end of the stripper and sent into the incinerator for processing into potash ash.

Milling
This is where the milling of the fruits would take place. The fruits would be mashed and digested

at this stage. The milling tank or digester would be kept full at a temperature of 900C. The

collected mixture of palm oil, water and sludge would then be transferred to continuous settling

tank.

Clarification

The oil is separated from the sludge and water in the centrifuge and the oil is clarified in the

clarifier or clarification tank. From here, the oil would be transferred to the vacuum dryer for

drying and then to the measuring tank for measuring the quantity of oil produced in tons.

Storage

Measured oil is transferred into the storage tank for storage. This would then be used to fill the

bottles and gallons by the bottle fillers.

Packaging

This is where the oil is filled into bottles and labelled. The packed and labelled oil of 300ml,

1liter, 2liters are packed into cartons and together with the other ones in gallons sent to the

warehouse for sale and distribution.

4.8.4 The Production Process of Palm Kernel Oil

Nut drying

Nuts would be dried first after their separation from the fibre and the sludge. The nuts are dried

in a steam dryer. After this process, the dried nuts are transferred into the crusher for cracking.
Nut cracking

This is the process of cracking the nuts in order to get the kernels out of the nuts and separate

them from the shells.

Cooking

Cracked kernels are cooked and roasted in a cooker to soften and break the oil cells in order to

get the oil out of the kernels.

Milling and Expelling

In the miller and the expeller, the kernels are first milled and the oil in the cake expelled.

Compression

This is done in the compressor in order to compress and force out all the oil from the cake. Oil is

then transferred into the measuring and storage tank, to be measured and stored. The oil-less

cake is discharged and can be used as palm kernel cake to feed livestock.

Measuring and storage

The clean oil is measured and stored in the measuring and storage tank to await packaging.

Packaging

The oil is filled into bottles and gallons and sent to the warehouse for sale and distribution.

A process flowchart indicating the various processes and stages explained above is indicated

below.
 RECEPTION OF FFB

STERILIZATION

STRIPPING
INCINERATOR
FIBRE
DIGESTION& PRESSING
CLARIFICATI
OR MILLING
ON AND
DRYING NUT DRYING

STORAGE
SLUDGE SHELLS NUT CRACKING

COOKING

PACKAGING
MILLING AND
PALM OIL
EXPELLING

COMPRESSION

MEASURING
AND STORAGE

PACKAGING
PALM KERNEL OIL

Figure: 1 Process flowchart for palm oil and palm kernel production

Source: Juaben Oil Mills

4.8.5 Indicators of Quality and Quality Assurance

i. Free Fatty Acid (FFA) Index must not exceed 3 per cent

How to achieve it: farmers of fresh fruit bunches would be given education and criteria for

harvesting and handling of the fresh fruit bunches in order not to bruise the fruits as that would

increase enzyme activity and aid free fatty acid accumulation. Transporters from buying fields

would also handle carefully the fresh fruit bunches during transportation. Processing of fresh

fruit bunches procured would occur within 24 hours upon arrival at the factory. Samples of oil

would be taken for analysis by laboratory technicians to ensure that standards are met (Juaben

Oil Mills).

ii. Moisture and Impurities

The oils produced would be devoid of any kind of impurities and moisture. All machines would

be checked to ensure that they are functioning efficiently and effectively. Samples would also be

tested for impurities and moisture (Juaben Oil Mills).

iii. Taste and flavor of oil

As an edible oil, we would ensure that the taste and flavor is very appealing and appetizing and

this would be done by using the appropriate raw materials. Whiles palm oil would have the real

“dzomi” taste, palm kernel oil would have its usual flavoured taste (Juaben Oil Mills).

iv. Colour

Palm oil must have its natural red-yellowish colour whiles palm kernel oil would have a clean

transparent colour (Juaben Oil Mills).

 Table 4.4 PRODUCTION FORECAST

YEAR PALM OIL (Tons) PALM KERNEL OIL (Tons) PERCENTAGE

INCREMENT
QUANTITY/MTH QUANTITY/YEAR QUANTITY/MTH QUANTITY/YEAR (%)

1 30.00 360.00 1.50 18.00 --------

2 45.00 540.00 2.25 27.00 50.00

3 55.00 660.00 2.75 33.00 22.20

4 75.00 900.00 3.75 45.00 36.4

5 100.00 1200.00 5.00 60.00 20.00
Source: Authors’ computations (2014).

From Table 4.4, production of palm oil is projected to be 30tons and 1.5tons of palm kernel oil in

the first year. These would however increase yearly by the respective percentages and hit

100tons of palm oil and 5tons of palm kernel oil in the fifth year.

4.8.6 Raw Material Quantity and Cost Analysis

Table 4.5 Fresh fruit bunches required for production and their cost

YEAR QUANTITY/month QUANTITY/YEAR COST OF FFB PER

(Tons) (Tons) YEAR (GHC)
1 200.00 2,400.00 528,000.00
2 300.00 3,600.00 831,600.00
3 366.67.00 4,400.00 1,067,220.00
4 500.00 6,000.00 1,528,020.0
5 666.67 8,000.00 2,139,200.00
Source: Field Survey (2014)

Table 4.5 indicates the raw materials required to process palm oil and palm kernel oil. Only one

raw material, the fresh fruit bunches, are required to produce the palm oil and palm kernel oil.

The raw material for palm kernel oil is automatically derived from the palm fruits, hence not

bought. According to the table, 2400 tons of fresh fruit bunches valued at GHC220 and totaling
GHC528000 would be needed for production in the first year. The cost of the fresh fruit bunches

is expected to increase by 5 percent annually thereby bringing 8000tons of fresh fruit bunches to

GHC2,139,200 in year five.

4.8.7 Production Assumptions

i. Production levels would increase over that of the prior year by the respective

percentages shown in table 4.5 for palm oil and palm kernel oil.

ii. There would be Oil Extraction Rate (OER) of 15 per cent.

iii. Liters of palm oil and palm kernel oil to be produced would stand at the figures

indicated in the tables below:

Table 4.6 Palm oil

YEAR LITERS/MONTH LITERS/YEAR

1 171,600.00 2,059,200.00
2 257,400.00 3,088,800.00
3 314,600.00 3,775,200.00
4 429,000.00 5148000
5 572,000.00 6,864,000.00
Source: Authors’ computations (2014)

From table 4.6, a total of 2,059,200 liters of palm oil would be produced in the first year and this

would more than triple to 6,864,000 liters in the fifth year.

Table 4.7 Palm kernel oil

YEAR LITERS/MONTH LITERS/YEAR

1 8,580.00 102,960.00
2 12,870.00 154,440.00
3 15,730.00 188,760.00
4 21,450.00 257,400.00
5 28,600.00 343,200.00
Source: Authors’ computations (2014).
Table 4.7 shows that palm kernel oil production would increase from 102,960 liters in year one

to 343200 liters in the fifth year.

iv. 1Tonne of oil is equal to 286gallons (US standard).

v. 1gallon of oil is equal to 20liters.

4.8.8 Plant Maintenance Policy

BOAMA oils intends to adopt the Preventive maintenance policy. Plant and machinery would

have planned and periodic maintenance in order to prevent their breakdown during use or

production or bring it to the barest minimum. Inspection schedules would be prepared and the

engineers and technicians would do the maintenance as and when due.

4.9 Marketing Plan

4.9.1 Marketing Objectives

1. To be able to cover five regions (Ashanti, Brong Ahafo, Eastern, Western and Central),

made up of 3,329,182 households (GSS, 2010) of Ghana in the first five years of

operation. The objective is to reach at least 75 per cent of the total household number.

2. To sell 75 per cent of total production of the first year in the first year.

3. To sell all the closing stock of the prior year and 80 per cent, 85 per cent, 90 per cent and

90 per cent of current year’s production in the second, third, fourth and fifth year

respectively.