Business Plan - POB

K&F DANIEL FARMS LIMITED
OIL PALM PLANTATION
BUSINESS PLAN
Prepared By:
Adejola Olalekan & Co., Chartered Accountants
AMPAK Plaza, Plot 3, Jobifele Way, CBD, Alausa, Ikeja, Lagos
234(0)802 315 9951; lekan.adejola@gmail.com
TABLE OF CONTENT
1. Executive Summary 5
2. Introduction 7
3. Justification of project 10
4. Objective of report 11
5. Study of scope 11
6. Product/Service Description 12
7. The Promoter 15
8. Risk Management 16
9. Marketing Plan 17
10. Market Trend 18
11. Defining Strategy 19
12. Market structure 20
13. Competition Analysis 20
14. Marketing strategy 21
15. Technical Analysis 21
16. Management of Mill and Plantation 22
17. SWOT Analysis 24
18. Critical Success Factors 24
19. Financial Projections 25
20. Conclusion, Finding, Recommendation 37
21. Appendices 39
2 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

TABLES AND FIGURES
TABLE
Page
1. Oil palm hectare in Nigeria 9
2. Estimated yields per hectare planted per year 10
3. Several uses of palm oil 12
4. Summary of oil palm unit of operations 13
5. Potential consumption of palm oil per year 16
6. Estimated yields and monthly distribution pattern 17
7. Variable Cost Analysis 23
8. Financial projections 25
FIGURES
1. Oil palm processing unit operations 14
2. Company Structure/Organogram 21

LIST OF ACRONYMS
CPO - Crude Palm Oil

FAO - Food and Agriculture Organization
FFA - Free Fatty Acid
FFB - Fresh Fruit Bunch
NIFOR - Nigeria Institute for oil palm
PKO - Palm Kernel Oil
PKC - Palm Kernel Cake
SPO - Special palm Oil
RBDO - Refined Bleached Deodorized Oil
TPO - Technical Palm Oil

EXECUTIVE SUMMARY
K&F Daniel Farms Limited is developing a medium scale palm oil plantation and mill
of palm nuts planted approximately on a 750ha farm land in off Idi-Iroko road, Oko-
Ikorodu, Oke-odan, Ihunbo, in Ipokia Local Government Area of Ogun State. The
proposed new plantation is on 100ha land area, out which 90ha has been
cultivated. The ages of the palm trees with output in FFB ton/month is tabulated
below:
AGE HECTARE FFB/MTH CPO YIELD
@16% Extraction
12yrs 90 90tons 14.4tons
The age of existing plantation with output/month is as tabulated below:

AGE HECTARE FFB/MTH CPO YIELD
@16% Extraction
10yrs 250 195tons 31.3tons
2yrs 100 N/A N/A
It is the intention of K&F Daniel Farms Limited to impact the immediate economy of
the community where its palm oil plantation is located through direct and indirect
employment of rural dwellers living around its vicinity and contribute to the gross
domestic products indices of the nation, Nigeria. This will also more importantly
boost rural incomes and raise living standards.
Investment on the farm will be in excess of N400 million in the short to medium term
of which shareholders of K&F Daniel Farms Limited have committed over N200
million in the planting of over:
 About 40,000 palm seedling between years 2013 - 2015
 Installed and commissioned a 5 ton (5,000kg) per day palm oil mill capacity of
fresh fruit Bunches (FFB) of palm fruit
 Construction of Industrial area, which includes the mill, quarters for farm staff,
security post and an administrative building.

In the last quarter of year 2019, it is expected that additional 100hectares of fully
grown palm tree plantation will be acquired to complement existing plantation for
which N60m (Sixty Million Naira only) financial assistance is being required from a
willing financial institutions. Also it is projected that a palm kernel oil processing
plant will be commissioned to optimize gains in the value chain in year 2020. Payback
period is estimated to be between 4-6 years provided more investments continue to be
made to upgrade activities in the value chain within the next five years of the
operations plantation. A moratorium of three years is therefore advised.
This feasibility study is focused on oil palm, its products and direct by-products.
Whereas from the palm tree derives palm oil, palm wine and wood product; three
dominant products of the oil palm are technical palm oil (TPO), special palm oil
(SPO) and palm kernel oil (PKO), with the palm kernel cake and sludge as significant
by-products that serve as input into the production of animal feed. Such is the
versatility of the oil palm tree.
This business plan, based on extensive research has shown that the market largely
exists for three oil palm products namely, technical palm oil (TPO) with free fatty acid
(FFA) of between 5-10%; special palm oil (SPO) with less FFA of less than 5%; palm
kernel oil (PKO), a by-product of the palm oil product whose demand has grown over
the years as an industrial raw material. Present production is estimated at about 2,000
tons per annum.
It is also estimated that the small scale producers of palm oil using traditional methods
account for about 80% of local production (688,500 tons) whilst the medium and large
estates account for 161,500 tons or 20% of total annual production. Lack of
information about how to access the market for SPO supply to secondary processors
and the lack of technical ability to produce to specification of industrial production are
some of the factors militating against the small scale producers.

In conclusion, there is great potential for growth opportunity for the palm oil industry
over the short to long term, especially for medium to large estates due to the huge
demand-supply gap and existing capacity deficiencies. As a corollary, there are major
opportunities along the palm oil value chain to be exploited by investors such like
K&F Daniel Farms Limited

1.0 INTRODUCTION
Palm oil is the world’s yielding oil crop with an output 5-10 times greater per hectare
than other leading oils, such as ground nut, beniseed, coconut, sunflower etc.
Rapidly expanding populating and changing consumption patterns as well as

increasing demand from the food industry have resulted in sustained high prices for
crude palm oil. These market forces have driven the sustained growth the industry has
witnessed in the last decade.
Analyst predict further global demand acceleration for palm oil in the short term
potentially of a 36% increase by 2013 and more than 65% by 2020 (Mielke, 2011).
Rosy as the picture may be, success is not or cannot always be guaranteed. Palm oil
yields vary across the oil palm value chain, based on management practices, genetics
and geography (soil yield).
Yields range from less than 5 to more than 16 metric tons crude palm oil per hectare.
Besides this, the dynamics of the industry can pose challenges such as land and labour
shortages, social conflicts, erratic weather patterns, rising fuel and fertilizer.
Oil palm is indigenous to the coastal plain migrating inland as a staple crop. For
millions of Nigerians, oil palm cultivation and processing is a way of life. Nigeria
used to be the world’s largest producer of palm oil responsible for about 43% total
would production in the early 1960s’. It now accounts for only 0.82% of global
production. Malaysia and Indonesia together account for more than 80% of world
production.
Nigeria’s production of crude oil palm comes from dispersed small holders who
harvest semi-wild fruits and use manual processing techniques. Several hundreds of
thousands are spread over the oil palm belt in an estimated area of 1.65 million to 2.4
million hectares, up to a maximum of 3 million hectares under cultivation. The small

holder is the king of palm cultivation in Nigeria. Small holders cover a range of 1-5
hectares of land. The wild Dura exists alongside the semi-wild plantations which
when put together with the small holdings is accountable for 80% of Nigeria’s palm
oil production. Private estate holdings run by companies are fairly large and account
for 20%
K&F Daniel Farms Limited is projected to grow to a 750hectares of oil palm

plantation over the long term; thus categorizing it as a medium sized plantation. This
said noteworthy is the fact that many of large plantations were the product of past
attempts by the Federal Government in its drive to implement the establishment of
large scale oil palm plantations. Many of these attempts ended in failure. Most were
collaborations between the FGN and the European Union of 1990s. This included the
Rison Palm Limited Plantation in Rivers State on an estate of 66,750 hectares of oil
palm, thought to be one of the largest of such efforts.
International organization such as the World Bank, the UN’s Industrial Development
Organization, UNIDO have continued to play complementary roles to those of FGN,
most with poor results. Attitudinal shifts of governments at local and national levels
have seen to the eventual inheritance of abandoned government oil palm plantations
by private sector producers under various privatization schemes.
In tandem with this shift, the key lies in the promotion of private sector participation
in oil palm plantation which holds the key to the revival of the industry. Private sector
participation has witnessed increased interest and investment from abroad, with the
involvement of firms such as Presco, a subsidiary of Belgian company SIAT, S.A, in
Edo state with 6000 hectares and in Delta State, 3,000 hectares.

Table 1 : Oil Palm He ctare s in Nige ria
Type Hectarage
Wild grove 2,300,000

Small holder 117,625
Estate 96,465
Total 2,514,090
Source: Oil Seeds Association of Nigeria (OSAN) 2003; Raw Materials Research and
Development Council (RMRDC) 2004
The Italian Company Fri-RC Green Power equally has taken over the Abia Palm
Limited at Ohambele, a concessioned plantation of 11,292 hectares, with opportunity
for concession extension up to 100,000 hectares.
The Okomu oil palm company, located in Edo Estate, a Federal Government pilot
scheme in 1976 under its oil palm rehabilitation programme, represents we believe,
the only success oasis in a desert of failures. The success largely owes to the
privatisation of the estate in 1990 and subsequent takeover of the reins of management
by SOCFINAF, of Holland, with a 53.32% share in Okomu Oil Palm Plc,
SOCFINAF, is the single largest shareholder of the company.
Okomu covers a survey area of 15,580 hectares out of which 12,500 hectares could be
planted with oil palm. At present, 8,800 hectares is planted and mature along side an
extension of 4,000 hectares of rubber, a palm oil mill of 30 tons per hour capacity.
Several other major oil palm production plants are dispersed along the coastal plains
of Cross River, Akwa Ibom and Edo States respectively. These are complemented by
numerous local production plants using fruit bunches sourced from wild fruit trees as
well as small holders of between one to 10 hectares of land.
ALEMU Farms, a subsidiary of Nakspec West Africa Limited is a 350 hectares oil
palm plantation situated in Ahoada-West Local Government Area of Rivers State. As
shown overleaf, tree plantings commenced in year 2012 with seedling of 4000, 7000
in 2013 and 10,000 projected for 2014. All these activities, land clearing, preparation
and tree plantings have been under taken by the promoters from funds dedicated from
their earnings elsewhere. Also cited on the estate, is a poultry farm of 8,000 birds,
growing to 30,000 birds in the third quarter of year 2015, a fish farm of between
50,000-100,000 fingerlings, a plantation of 5,000 plantain suckers and sweet potato of
3,000 plantings. With good agronomic and farm management, it is hoped that these
young trees will grow into maturity and begin to yield fruits for harvesting. See table
two below for the estimated yield per hectare planted per year
TABLE 2: ESTIMATED YIELDS PER HECTARE PLANTED PER YEAR
Hectares /Yrs 1 2 3 4 5 6 7 8 9 10 11 12 15 20
66 0 0 198 281 303 396 479 541 568 627 693 726 825 891
190 0 0 0 570 808 1,045 1,140 1,378 1,558 1,634 1,805 1,995 2,375 2,565
800 0 0 0 0 2,400 3,400 4,400 4,800 5,800 6,500 6,880 7,000 8,800 10,000
400 0 0 0 0 0 1,200 1,700 2,200 2,400 2,900 3,280 3,440 4,400 5,500
400 0 0 0 0 0 0 1,200 1,700 2,200 2,400 2,900 3,280 3,440 5,000
Total 0 0 198 851 3,511 6,041 8,919 10,619 12,526 14,061 15,558 16,441 19,840 23,956
Peak month 0 0 30 128 536 906 1,338 1,593 1,879 2,118 2,334 2,556 2,976 3,548
Plant 0.00 0.00 0.09 0.40 1.70 2.80 4.20 5.00 6.00 6.60 7.50 8.00 9.50 11.00
Source: FAO
2.0 JUSTIFICATION OF PROJECT:

Nigeria from analysis is a net importer of crude oil palm, from being the world’s largest
producer in 1950’s and till the mid-1960s at 650,000 metric tons.
According to Index Mundi an online data source, domestic crude oil palm production stands
at 850,000/MT as at 2012 against a consumption of over 1,000,000/MT per annum. Official
figures puts the short fall in consumption at between 150,000 M/T per annum, and a 500,000
MT/PA a gap new investments in crude oil palm production should help to fill.
The market for crude oil palm, is divided into two segments, consumer and industrial, with
the former consumption standing at 90% in the form of technical palm oil or TPO and
industrial or special palm oil SPO at 10%; used for the production of refined vegetable oil
and other food products, annual shortage is also experienced in the TPO and SPO segments
of the market-300,000 MT per annum (TPO) and 200,000TM (SPO) per annum which is
filled through importation.

It has also been established that 90% of palm oil is consumed by the food industry while the
non-food industry consumes the remaining 10%. Foods such as noodles, shortenings, cereals,
washing detergents and soap, all use palm oil in their production process. For instance, the
noodles industry alone consumed 72,000 metric tons of imported palm oil. Due to the failure
of the domestic market meeting the demands of the industrial, some leading industrial
producers like PZ Cussons have integrated backwards in a strategic move to secure for
themselves, a vital stage in the oil palm value chain, by investing in oil palm plantations.
2.1 OBJECTIVE OF REPORT:

The raison deter of this study are:
• to establish the viability of investment in a 50 tons per a day, scalable to 5 tons per
hour oil palm production plant as the promoters contribution towards the reduction in
the gap of domestic production of palm oil.
• to support requests for N60m (Sixty million Naira only) financing by the promoter of
the farm now and in subsequent years.
• the hope of the promoter to integrate forward into the refining and bleaching of oil
palm for the production of refined vegetable oil in a value added process that
increases the profitability of the initial investment.
2.2 STUDY SCOPE

Feasibility is for the purchase of 100 hectares of 10 years old fully cultivated and planted oil
palm to feed the existing palm oil mill with capacity of 5ton FFB per hour. The oil mill has
been operating at 50% capacity because it runs only day shift but will assume night shift with
this purchase. Further investments will therefore be recommended in forward integration of
value addition towards the production of palm kernel oil, PKO, hence to vegetable oil with
further chemicalisation of process.
This study is based on current planting activities by the promoters on a land acquisition of
about 750 hectares of land in off Idi-Iroko road, Oko-Ikorodu, Oke-dan, Ihunbo, in Ipokia
Local Government Area of Ogun State, Nigeria.
A land area of 400 hectares is currently under cultivation with over 60,000 young tenera oil
palm seedlings. A further 100 hectares which has been cultivated and planted is to be

purchased bringing the total cultivated land portion to 500 hectares over a six year period.
Given the gestation period of 3 ½ to 4 years for maturity of the tenera species, projected take
off of the mill in 2016, was with tenera fruits from the farm. The company also buys
harvested oil palm bunches from small neighboring palm plantation to complement those
from the K&F oil palm plantations.
3.0 PRODUCT / SERVICE DESCRIPTION

Crude palm oil production is the focus of this business plan. 90% of crude palm oil is
consumed by the food industry in Nigeria with the remaining 10% consumed by the non-food
industry. Foods like noodles, vegetable oil, biscuits chips, margarines, shortenings cereal,
baked stuff, washing detergents and cosmetics depend on palm oil (business day, 2013)
The noodles industry alone consumes about 72,000 metric tons of imported palm oil, because
domestic production is unable to meet the needs of the Nigeria market, domestic and
industrial. Because of the non-availability of palm oil, some industrial users have integrated
backwards into oil palm production through strategic alliances to invest in oil palm
plantations.
Table three below gives a breakdown of the main uses of palm oil in Nigeria which domestic
production is unable to meet.
Table 3
SEVERAL USES OF PALM OIL PRODUCT
Food products Non-food products
Cooking oil Cosmetics
Deep-frying oils Detergents and soap
Margarine Drugs
Shortenings Candles
Spreads Lubricating oil
Alternative fats Grease
Confectionary fats Chemicals
Ice creams Paints and coatings
Nutrition Electronics
Leather.
For the processing plant under the purview of this plan it is envisaged that a fully integrated
machinery configuration which combines several process operations / digestion pressing and
fiber / nut separation) into one continuous assembly shall be recommended. We have found

out through study that these machines so configured fit into two key process groupings,
namely batch and semi-continuous processes. See figure one for illustration.
A summary of oil palm unit of operations indicated in table four is given as to purpose of
each stage of the operation.
Table 4
S/NO UNIT OPERATION PURPOSE

1. Bunch Reception Bunches are conveyed to the sterilizer with chain conveyor
2. Fruit boiling To sterilize and stop enzymatic spoilage coagulate protein
and expose microscopic oil cells
3. Fruit digestion To rupture oil-bearing cells to allow flow during extraction
while separating fiber from nuts
4. Pulp pressing To release fluid palm oil using applied pressure on rupture
5. Oil clarification To boil mixture of oil and water to remove water soluble
gums and resins in the oil dry decanted oil by further
heating
6. Oil drying To separate de-oiled fiber from palm nuts
7. Second pressing To recover residual oil for use as soap feed stock
8. Nut drying To sun or dry by other means for later cracking processing
as feed stock

FIGURE 1.0 Oil Palm processing unit operations
Bunch reception
Bunch sterilization
Bunch Threshing Separation of bunches
Digestion of fruit
Pulp pressing Nut & fiber Nut recovery

Separation
Clarification Nut drying
Oil drying Nut cracking
Oil storage Nut separation
Refinery
Customer Palm kernel Kernel oil

Storage for Processing
Packaging
Customer

4.0 THE PROMOTER
NAME: K&F DANIEL FARMS LIMITED
ADDRESS: 12, EGBEDEYI CLOSE, SANGO OTA

OGUN STATE, NIGERIA
MOBILE: 234 805 343 1750

EMAIL: kfdaniel@yahoo.com
K&F Daniel Farms Limited is a limited liability company registered in Nigeria. It has been
involved in the management, processing and marketing of palm oil plantation and palm oil in
Nigeria for close to five years; whose chief executive has cognate experience of over 25 years
in industry; more than twenty of which has been spent in project management of complex
procurement supply, engineering and management of palm oil plantation farms and palm oil
production facilities of the sister company Ladipo Daniel Farms Ltd. Promoter has been
involved in the procurement supply and installation of machinery for palm oil production for
various clients since the founding of K&F Daniel Farms Limited in 2008, the decision was
taken to invest in the establishment of an oil palm mill to process the fruits from the
plantation to which a 750(hectare) land acquisition was made. This acquisition has come in
installments as the states land tenure system would hardly permit such huge acquisition in
one fell swoop. Planting of young oil palm trees of the tenera species commenced in 2013. So
far a land area of over 400 hectares has been cultivated with oil palm planting interspersed
with those of plantain sucker. Oil palm seedlings are in excess of 60,000 young trees, with
further plantings planned for 2019 and 2020 to reach 112,500 seeds.
The Chief Executive Officer, Engineer Kayode Daniel is a graduate of Agricultural

Engineering (UNN) with over 30 years experience in mechanized farming and 23 years
experience in oil palm plantation. He is also the pioneer manager of Ladipo Daniel Farms
Ltd, a sister company with an oil palm plantation of 500 hectares.
Dr (Mrs) Folasade Daniel is the second share holder and a director; she is a Consultant
cardiologist with the Lagos State University Teaching hospital with over 25 years
experience in medical practice.

Also, K&F Daniel Farms has on her managerial team an agricultural engineer who
supervises our automated oil mill which processes 5 ton of FFP per hour with an
output of 6 tons of palm oil per day. We also have an agronomist who manages the oil
palm plantation with 4 supervisors working under him. There are three tractor
operators and over 50 casual workers, including men and women.
4.1 Risk Management:
4.1.1 Risks of K&F Daniel Oils
The industry is faced with a lot of risks that could result in unexpected outcomes both
at the macro and the micro levels. However, different firms in the industry face different
levels of unsystematic risks and different measures are undertaken to diversify away or
mitigate those risks.
Common risks such as unstable power supply are a major headache to the industry.
Whiles efforts have been made to curb them by using generator sets or plants to
mitigate the risk, another unfortunate situation of continuous rise in fuel prices has
offset the likely benefits of those efforts. Apart from these risks, other common risks
include fire outbreaks, theft and burglary, and accidents. Other risks are output price risk
which refers to the risk of changes in the prices that a farm can demand for its goods and
services, on the other hand, input price risk is the risk of changes in the prices that a farm
must pay for labor, raw materials and other inputs. The main output and input price risk
that would be faced by K&F Daniel Oils is commodity price risk. The commodity price
risk which arises from fluctuations in the prices of the raw material used is a very mild
problem, since we have our oil palm plantation, the level of our dependence on farmers
and other suppliers, if they change their prices, will not have significant effect on our cost
of production and eventually our output price will be stable.
4.1.2 Risk Management Strategies of K&F Daniel Oils

In order to reduce the impact of the above risks, K&F Daniel Oils has decided to adopt the
following strategies:

1. Precautionary measures to prevent the occurrence of the most likely risks such as
fire, theft and burglary and accidents. Fire extinguishers would be fixed at vantage
points in the farm with strict adherence to their use. The farm would also employ
competent security personnel to take security over business assets and property.
To prevent accidents, there would be no compromise on safety dressing and movement
of people and staff around the premises of production. Well experienced drivers would
be employed to drive our vehicles, frequent servicing and maintenance of plant and
equipment and other movable assets would also be ensured. Other precautionary
measures would include training and seminars relating to safety at work.
2. Aside the above measures, the farm would take a comprehensive insurance policy on
her properties, plants and equipment with a view of cushioning the farm of its losses
upon the occurrence of any such risks.
3. To counter our commodity price risks, the farm would ensure bulk purchases
and increased production whenever the raw materials are available and cheaper to offset
the impact of periods of scarcity and higher prices.
4. Power generation by the farm through the use of its solid wastes would help counter
unstable power supply and reduce the impact of ever-increasing fuel prices.
5. The farm has also made arrangement for escorts with the Nigerian Police Force to wade
off the invasion of land grabbers and other miscreants that may wreck havocs and
crystallise security risks.
5.0 MARKETING PLAN

Market Assessment:
The market for palm oil and its by-products is assured; demand for the product is well in
excess of one million tons per annum whilst local production stands at 850,000 metric tons
palm oil and 200,000 tons (PKO) per annum as at 2012. Official data puts the shortfall at well
over 500,000 metric tons per annum, represented by consumer and industrial consumption.
The domestic market is segmented into consumer and industrial with the consumer sub-
market accounting for 90% of demand, and the industrial segment taking up the rest.
Industrial palm oil, also known as special palm oil, SPO is used as feed stock in the
production of refined oil on the one hand, and food products on the other market gap as
identified above is filled through importation. Backward integration by industrial and food
products of such as noodles, vegetable oil, biscuits, chips migraines, and soap and detergents
and cosmetics have formed alliances to invest in oil palm plantations geared towards crude
oil palm production to satisfy their never ending raw material needs. Seemingly a threat, we
observe however, in the medium to long term, that Nigeria lacks the capacity to satisfy its
ever growing population on one hand, and its ever expanding industrial needs. We also will
state that given the paucity of data generally about the economy, the demand profile of palm
oil may be understated.
Table 5:
Potential Consumption p.a/ton for K&F Palm Oil
Customers Yr1 Yr2 Yr3

Domesti c 500 835 1,165
Food Industry 667 1,000 1,335
Soap & Cosmecti c Industry 833 1,165 1,500
Total 2,000 3,000 4,000
NOTE: The production of palm oil commenced since 2016, with a total output of 2000
tons/annum and projection is put 4000tons/annum.
Finally government policy which seeks to replace crude palm oil importation with increased
domestic capacity production means market opportunities for investment in oil palm milling
is guaranteed to be a viable one in the medium to long term.
5.1 MARKET TREND

The crude oil palm market is basically a generic one with mineral competition, it is a seller
market wherein demand pressure for the commodity is dictated by the demand from
industrial buyers as well as by seasonality. We note the seasonal nature of rainfall patterns in
the West African Region where two rainfall seasons predominate oil palm bears fruit in
response to rainfall patterns in the West African Region where two rainfall seasons
predominate oil palm bears fruit in response to rainfall patterns even though yield is
distributed all year round, but reverently. The peak season is between April and June each
year, up until July sometimes depending on the rainfall pattern for the year. In particular peak
seasons experience glut with attendant price/demand moderation, spiking during the rains
when fruiting is low.
Table 6 : Estimated yields and monthly distribution pattern of oil palm production
Seasonal
Months % Yield Distri bution
March 9
Apri l 12
May 16
June 13 50%
Jul y 8
August 7
September 8
October 11 34%
November 7
December 5
January 3
February 1 16%
Peak season of April of June/July, which represents 50% of annual yield is generally
available for processing. Plant must ensure therefore, capability of processing the peak season
output. By this time plant personnel are expected to work two shifts to be able to cope with
fruit yield.
Off Peak  November – Fe bruary (4 months)

Peak  March – June (4 months)
Mid point  July – October (4 months)
5.2 DEFINING THE MARKET

Data available to this study through the Oil Palm Grower Association of Nigeria (OPGAN),
states that about 200,000 persons are employed in the oil palm trade alone in Imo state. The
producer group of farm owners account for over 35% of all actors in the CPO value chain
which means over 70,000 small holders, farmers and plantation owners are involved.
Another 20,000 processors and 100 millers are also involved, with about 100,000 trading in
palm oil as wholesalers or retailers with agency. The remaining 30,000 constitute the labour
force involved in plantation maintenance, harvesting of FFb and logistics. 50% of these
numbers constitute actors in the palm oil value chain in Ogun State, which in turn influences
the price of CPO in the environ of this project. the influence of demand supply gap need not
be overstated.
Nigeria’s position in the world in the oil palm trade-production, export, import and
consumption (for food and non-food purposes) in 2010/2011. All figures are in million tones

Production 47.9 (Indonesia, 23.6, Malaysia, 18.2 Thailand 1.3, Nigeria 0.85,
Columbia 0.8 other 3.2)
Exports 36.8 (Indonesia 16.2, Malaysia 16.3, other 4.1)`
Imports 35.6 (India 6.7; China 5.7; EU-27, 4.9, Pakistan 2.1, Bangladesh 1.0;
USA 1.0, other 14.2)
Consumption 47.1 (India 7.1, Indonesia 6.7; China 5.8; Malaysia 3.4; Pakistan 2.0,
Nigeria 1.2; Thailand 1.0, USA 1.0, Bangladesh 1.0, others 12.9)
Sources: Lipid library, 2012 adapted by Aidalan Associates Limited
5.3 MARKET PRICE STRUCTURE

The crude oil palm market price sensitivity is relative to availability which in turn obeys the
seasonality law. The oil palm market experiences price spike during the difficult rainy
season, with accompanying reduced production activities due largely to low yields from oil
palm trees during the period. Speculative pricing and hoarding during the peak season, offen
leads to price hiking by speculators during the off peak season when supply is limited. This
activity requires that the crude oil palm must be kept in ambient temperature to ensure quality
and taste before its release into the market.
This activity requires large amount of capital to stock in plastic barrels and drums storage of
processed oil palm is usually in 200kg plastic drums for long term storage sales to the trade
however are in 20ltrs Jerry cans. For the bulk breaking takes place at the retail end into 1.5 –
3.5 ltrs plastic bottles which sell at the retail price of between N880 – N1,900.00 respectively.
Large oil palm companies like Okomu in Edo State are adding value by branding their retail
offerings and selling through modern outlets such as supermarkets and departments area. We
are unable to ascertain how well this method of marketing is at present as at the time of
writing this report. Suffice to say however marketing activities such as this does point to
future developments that the promoter may explore and exploit.
5.4 COMPETITION ANALYSIS

The crude oil palm is a seller market; it is one devoid of competition in the sense that we
know it to be. This is so because of the supply gap identified in our introduction to this study,

a gap of over #500,000 M/T per annum for which production facilities are unable to fill in the
short to medium term. The paucity of investment in oil palm production of any worth further
exacerbates the supply gap. Large scale producers such Okomu Presco,as well as Presco all in
Edo State, Ceat/Risonpalm in Rivers State, Abiapalm Limited in Abia State, along side a
plethora of small scale village based producer using traditional method of oil palm production
are unable to fully meet the supply needs of Nigeria.
5.5 MARKETING STRATEGY:

A key component of market accessibility in the oil palm industry is used of wholesalers who
buy and hold stock, either to resell to the retail trade supply to industrial users as raw material
inputs or speculate this later tactic is done to optimize higher prices during the low peak
season, November-February. Our proposal shall be for a two track approach, namely:
1) Direct marketing to large buyers such as:
 Al Rachid Ventures Limited, Owode
 Tropical Naturals, makers of Dudu Osun range of products
 DUFIL Prima Foods Plc, makers of Indomie Instant noodles;
2) Registered distributors in the company’s books who shall be pre-qualified on the

basis of ability to purchase a minimum of between 5-10 metric tones per month or
between 60-120 metric tones per annum to qualify.
Packaging for sale are in 200litres plastic drums, which is the arrant industry standard for
delivery. This in turn can be broken-down into 20litres plastic jerry can for retail sale for
domestic use. It has been established that the 20litre Jerry cans are further broken down into
lower litrages of 1 – 3 and sold in super stores and road side kiosks
6.0 TECHNICAL ANALYSIS

As shown in figure 1, the extraction and processing of palm oil can be accomplished either
using the batch (or wet) process or the semi-continuous dry process, driven partially by
machinery. The semi-continuous dry process is the preferred method of palm oil extraction
and is hereby recommended (please section on product/service description for a fully
treatment of the subject). The mill under consideration is a fifty (50) tones per day oil mill
scalable to 5tons per hour in the medium term

7.0 MANAGEMENT OF MILL AND PLANTATION:
Management of the K&F palm oil mill requires a production manager who is in charge of all
production and operational oversight for oil palm processing activities. He is supported by a
mill/technical manager whose background was in agricultural engineering; responsible for the
smooth and operational running of the mill. A plantation manager is also with a background
in agronomy; who is in charge of the plantation currently under cultivation; as well as fruit
bunches received from third party suppliers. The fruit bunches from the farm form the initial
supply sources for processing since maturity of the first plantings (2012) took place in the
first quarter of year 2016.
Figure 2: COMPANY STRUCTURE / ORGANOGRAM
Board of Directors
Managing Director
Plantation Farm
Mill Mgr Fin/Admin Mgr Sales Mgr.
Mgr.
Agronomist Supervisor Accountant Sales officer
Harvesters, Cutters, Mill Operators Admin Officer Sales Clerk

farm laborers
Maintenance Admin. Asst.

technician

7.1 CAPABILITIES:
Existing managerial capabilities assures the project of efficient management.
It is the expectation that experienced hands will be recruited from outside the environs of the
palm oil plantation to augment existing competences already acquired during the project
phase of the planning and development of the oil mill.
7.2 SWOT ANALYSIS

Strength:
 Strong demand for products,
 Large market all year round.
 Well Capitalized with strong entrepreneurial drive by promoter.
 Location advantage
Weakness:
 Low skills base,
 Depends on Gen for daily operation
Large labour to be controlled
Opportunities:
 Suitable climate for oil palm
 development
 Surplus labour skilled and unskilled Growth potentials enhanced due to value chain
extendibility
 Availability of raw materials (Dura species which grows in the wild, small holders)
Threats:
 Security challenges: cattle herdsmen, land grabbers (Omo onile), etc..
 Seasonal nature affects output of FFB’s hence production
 Low entry barrier for new entrants
 Losses and theft of FFBS and poor handling during harvesting and quartering for
production.
 Backward integration by secondary processors.
7.3 CRITICAL SUCCESS FACTORS:

1. Adequate working capital availability particularly during the peak and midpoint
periods for purchase of FFB’s. This will minimize down times of production
during the first few years of the plantation. Bear in mind young trees planted in
year 2012 has started producing fruit in the third or last quarter of 2016.
2. Adequate security to prevent or minimize poaching by villagers and runagates.
Day and night patrols, especially during peak and midpoint months of harvesting
is most critical.
3. Minimization of losses due to internal thefts of FFBs and processed palm oil by
staff.
4. Minimization of overhead costs.
5. Optimization of peak harvesting months for peak production.
6. Organizational capabilities built on the foundation of sound business enterprise
management both for the palm oil plantation and the Mill Operations.
8.0 FINANCIAL ANALYSIS

The size of the palm oil market is in the region of the N220 billion per annum
contributing about 4.5% to Nigeria’s Gross Domestic Product, GDP. An annual
growth rate is estimated at 8% to 15% which when considered means that the palm oil
market will continue to expand in tandem with population growth and economic
development. Future volume projections annually will be between N237 Billion and
N253 billion over the next decade.
Below in tables 10 and 11 we provide unit analysis of production using a 10 ton per
day profile. Next to this is the financial projection for five years 2019-2023. These
projections are highly conservative as they reflect the paucity of actual data. They
represent only figures for oil palm plantation and palm oil production.
Analysis of variable cost and revenue involved in the processing of fresh fruit
bunches, based on 12 tons FFB.
Table 7:
S/No DESCRIPTION COST REVENUE
N N
1 Cost of palm fruit processed 12 tonnes 480,000
2 Cost of processing 100,000
3 Palm oil sales 725,000
4 Palm kernel sales 100,000
5 Total 825,000
6 Profi t on 12 ton of FFB processed 245,000

Note that cost and revenue variability reflects the seasonal nature of the palm oil plantation
business as it fluctuates with the quantum of harvested FFB’s and attendant processing cost
as well as revenue derivable there from.

Table 8:
FINANCIAL PROJECTIONS
P ROJECTED BALANCE SHEET

Notes 2019 2020 2021 2022 2023
ASSETS
Fixed Assets 1 258,475,000 268,475,000 270,783,343 272,391,686 265,500,029
Trade Receivables 42,575,550 48,961,883 53,858,071 57,897,426 60,792,297
Cash at Hand 28,550 30,690 38,365 51,790 46,350
Bank balances 2 (70,796,802) (61,824,558) (40,724,172) (18,685,863) 25,371,692
TOTAL ASSETS 230,282,298 255,643,015 283,955,606 311,655,040 351,710,368
LIABILITIES
Trade Creditors 3 17,153,160 16,295,500 13,851,175 12,466,060 11,531,105
Other Payables 4 60,750,000 55,606,600 48,613,931 41,150,169 32,958,428
Taxation 2,875,000 3,306,250 3,802,188 4,372,516 5,028,393
TOTAL LIABLITIES 80,778,160 75,208,350 66,267,294 57,988,744 49,517,926
NET ASSETS 149,504,138 180,434,665 217,688,313 253,666,296 302,192,442
CAPITAL AND RESERVES
Share Capital 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Directors Current Accounts 214,652,532 233,156,447 233,701,025 229,289,888 219,536,640
Profit/(loss) for previous years 5,548,408 (66,148,395) (53,721,782) (17,012,712) 23,376,408
Profit/(loss) for the period (71,696,802) 12,426,612 36,709,070 40,389,120 58,279,394
SHAREHOLDERS FUNDS 149,504,137 180,434,665 217,688,313 253,666,296 302,192,442
TOTAL LIABILITIES AND EQUITIES 230,282,297 255,643,015 283,955,606 311,655,040 351,710,368
PROJECTED PROFIT AND LOSS ACCOUNTS

NOTES 2019 2020 2021 2022 2023
TURNOVERS
Sale of Palm Oil 5 112,462,425 124,958,250 137,454,075 149,949,900 174,941,550
Other Incomes 6 7,028,902 14,218,975 17,059,056 22,383,743 46,845,608
119,491,327 139,177,225 154,513,131 172,333,643 221,787,158
Cost Of Sales 7 (140,318,314) (75,880,798) (82,117,028) (93,705,130) (120,495,776)
GROSS PROFIT -20,826,988 63,296,427 72,396,102 78,628,513 101,291,382
Administrative Expenses 8 31,665,443 31,665,443 22,843,196 24,210,595 26,036,120

Staff Costs 9 15,429,371 15,429,371 8,343,836 8,837,141 10,084,211
Other Costs 10 3,775,000 3,775,000 4,500,000 5,191,657 6,891,657
OPERATING EXPENSE 50,869,814 50,869,814 35,687,032 38,239,393 43,011,988
PROFIT BEFORE TAX (71,696,802) 12,426,612 36,709,070 40,389,120 58,279,394

NOTES TO THE PROJECTED ACCOUNTS
2019 2020 2021 2022 2023

1 Fixed Assets
Fixed Assets 262,250,000 276,750,000 284,250,000 292,750,000 292,750,000
Depreciation (3,775,000) (8,275,000) (13,466,657) (20,358,314) (27,249,971)
258,475,000 268,475,000 270,783,343 272,391,686 265,500,029
2 Bank balances
First Bank Nig Limited (70,796,802) (61,824,558) (40,724,172) (18,685,863) 25,371,691
(70,796,802) (61,824,558) (40,724,172) (18,685,863) 25,371,692
3 Trade Creditors 17,153,160 16,295,500 13,851,175 12,466,060 11,531,105
17,153,160 16,295,500 13,851,175 12,466,060 11,531,105

4 Other Payables
Bank Loan 60,000,000 54,669,100 47,723,306 40,125,949 31,815,908
Others 750,000 937,500 890,625 1,024,220 1,142,520
60,750,000 55,606,600 48,613,931 41,150,169 32,958,428

6 Turnover
Sales of Palm Oil 112,462,425 124,958,250 137,454,075 149,949,900 174,941,550
Sales of Palm Kernel 7,028,902 9,718,975 10,309,056 11,246,243 26,241,233
Other incomes 0 4,500,000 6,750,000 11,137,500 20,604,375
119,491,327 139,177,225 154,513,131 172,333,643 221,787,158

7 Cost Of Sales
COGS - RM used (Plantation) 55,768,218 30,158,122 31,941,133 36,448,567 46,869,348
COGS - Farm salaries and Wages 18,285,659 9,888,448 10,473,074 11,951,002 15,367,838
COGS- Plant and Machinery Rep. 11,412,434 6,171,572 6,536,448 7,458,852 9,591,365
CGOS- Farm Building Rep. 0 0 1,750,000 1,996,955 2,567,891
CGOS-Electricity and Fuel Exp. 16,035,934 8,671,851 9,184,549 10,480,644 13,477,099
CGOS-Water Exp. 3,943,575 2,132,591 2,258,675 2,577,412 3,314,303
COGS - Oil Mill Exp. 18,583,674 10,049,608 10,643,761 12,145,776 15,618,299
COGS - Harvest/Weeding Exp. 16,288,821 8,808,606 9,329,389 10,645,923 13,689,632
140,318,314 75,880,798 82,117,028 93,705,130 120,495,776

8 Operating Expenses
Employer's contr P.F 181,864 98,348 104,163 118,862 152,845
Medical 1,303,271 704,778 746,446 851,782 1,095,310
Vehicle Maintenance 3,472,537 1,877,865 1,988,888 2,269,554 2,918,428
Travelling & Accomodat 8,634,984 4,669,593 4,945,669 5,643,587 7,257,110
Office Equiment Maintenance 643,314 347,889 368,457 420,452 540,661
Electricity & Fuel Exp 3,895,764 2,106,736 2,231,291 2,546,164 3,274,121
Audit and Accountancy 600,000 624,398 674,048 722,809 760,374
Legal Fees 1,337,226 723,140 765,893 873,974 1,123,846
Prtg, Postages, Tel & Stationeries 527,409 285,210 302,072 344,700 443,251
Bank Charges & Int. 811,695 438,945 464,897 530,501 682,174
Security Exp 7,735,874 4,183,376 4,430,706 5,055,953 6,501,469
Insurance Expenses 2,072,628 2,217,628 2,292,628 2,377,628 2,377,628
Bank Loan Interest 0 4,322,547 4,638,343 3,986,779 3,274,095
Subscriptions & Journals 448,878 242,743 257,094 293,374 526,758
31,665,443 22,843,196 24,210,595 26,036,120 30,928,069

9 Staff Costs
Staff Salaries & Wages - Admin 15,429,371 8,343,836 8,837,141 10,084,211 12,967,325
15,429,371 8,343,836 8,837,141 10,084,211 12,967,325
10 Other Costs
Deprecitaion 3,775,000 4,500,000 5,191,657 6,891,657 6,891,657
3,775,000 4,500,000 5,191,657 6,891,657 6,891,657

Projected Cashflow format
K&F Daniel Farms Nigeria Limited BRANCH: Ogun State
January To December 2019
MONTH JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
MONTH 1 2 3 4 5 6 7 8 9 10 11 12
CASH INCOME: N N N N N N N N N N N N
Loan Introduced 0 0 0 0 0 0 0 0 60,000,000 0 0 0
Equity Contribution 0 0 0 0 0 0 0 0 5,000,000 0 0 0
Other Income 0 0 0 0 0 0 0 0 0 0 0 0
Sale of Palm Oil 4,677,498 4,677,498 4,677,498 14,066,239 14,066,239 14,066,239 14,066,239 14,066,239 14,066,239 4,677,498 4,677,498 4,677,498
Sale of Palm Kernel 467,993 467,993 467,993 703,490 703,490 703,490 703,490 703,490 703,490 467,993 467,993 467,993
(A) TOTAL INCOME 5,145,492 5,145,492 5,145,492 14,769,729 14,769,729 14,769,729 14,769,729 14,769,729 79,769,729 5,145,492 5,145,492 5,145,492
CASH EXPENDITURE
Loan Repayment 0 0 0 0 0 0 0 0 0 0 0 0
Procurecument of raw material (Seeds) 19,518,876 0 0 0 0 0 0 0 0 0 0 0
Procurecument of raw material (Ferterli 0 0 0 0 0 0 36,249,341 0 0 0 0 0
On Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0
(i) Land and Buildings 0 0 0 0 0 0 0 0 0 0 0 0
(ii) Plant & Equipment 0 0 0 0 0 0 0 0 0 0 0 0
(iii) Others (Plantation) 0 0 0 0 0 0 0 0 60,000,000 0 0 0
Cash -Based Fixed Costs 0 0 0 0 0 0 0 0 0 0 0 0
Operating Expenses 0 0 0 0 0 0 0 0 0 0 0 0
(ii) Packing Materials 262,568 262,568 262,568 394,694 394,694 394,694 394,694 394,694 394,694 262,568 262,568 262,568
(iv) Salaries, Wages, Bonus 2,244,791 2,244,791 2,244,791 3,374,381 3,374,381 3,374,381 3,374,381 3,374,381 3,374,381 2,244,791 2,244,791 2,244,791
(v) Transport & Freight 574,929 574,929 574,929 864,235 864,235 864,235 864,235 864,235 864,235 574,929 574,929 574,929
(vi) Factory/Office Expenses 5,682,802 5,682,802 5,682,802 8,542,418 8,542,418 8,542,418 8,542,418 8,542,418 8,542,418 5,682,802 5,682,802 5,682,802
Income Tax 108,902 108,902 108,902 108,902 108,902 1,677,083 108,902 108,902 108,902 108,902 108,902 108,902
Other Expenses
(i) Interest Charges 0 0 0 0 0 0 0 0 0 0 0 0
( ii) Other bank charges, COT, Mgt Fee 0 0 0 0 0 0 0 0 1,800,000 0 0 0
(B) TOTAL EXPENDITURE 28,392,868 8,873,992 8,873,992 13,284,630 13,284,630 14,852,812 49,533,971 13,284,630 75,084,630 8,873,992 8,873,992 8,873,992
SUMMARY
Cash Income (A) 5,145,492 5,145,492 5,145,492 14,769,729 14,769,729 14,769,729 14,769,729 14,769,729 79,769,729 5,145,492 5,145,492 5,145,492
Cash Expenditure (B) 28,392,868 8,873,992 8,873,992 13,284,630 13,284,630 14,852,812 49,533,971 13,284,630 75,084,630 8,873,992 8,873,992 8,873,992
Monthly Cash Surplus/Shortage -23,247,376 -3,728,500 -3,728,500 1,485,100 1,485,100 -83,082 -34,764,242 1,485,100 4,685,100 -3,728,500 -3,728,500 -3,728,500
Opening Bank Balance 0 -23,247,376 -26,975,876 -30,704,376 -29,219,277 -27,734,177 -27,817,259 -62,581,501 -61,096,402 -56,411,302 -60,139,802 -63,868,302
Closing Bank Balance -23,247,376 -26,975,876 -30,704,376 -29,219,277 -27,734,177 -27,817,259 -62,581,501 -61,096,402 -56,411,302 -60,139,802 -63,868,302 -67,596,802
Loan Balance 0 0 0 0 0 0 0 0 0 60,000,000 60,000,000 60,000,000
MONTH 1 2 3 4 5 6 7 8 9 10 11 12
Loan Introduced 0 0 0 0 0 0 0 0 0 0 0 0
Equity Contribution 0 0 0 0 0 0 0 0 0 0 0 0
Other Income:
Sale of Palm Oil 8,319,883 8,319,883 8,319,883 12,506,492 12,506,492 12,506,492 12,506,492 12,506,492 12,506,492 8,319,883 8,319,883 8,319,883
Sale of Palm Kernel 647,102 647,102 647,102 972,727 972,727 972,727 972,727 972,727 972,727 647,102 647,102 647,102
Others 299,616 299,616 299,616 450,384 450,384 450,384 450,384 450,384 450,384 299,616 299,616 299,616
(A) TOTAL INCOME 9,266,601 9,266,601 9,266,601 13,929,603 13,929,603 13,929,603 13,929,603 13,929,603 13,929,603 9,266,601 9,266,601 9,266,601
CASH EXPENDITURE
Loan Repayment 0 0 631,532 636,269 641,041 645,849 650,692 655,573 660,489 665,443 670,434 675,462
Procurecument of raw material (Seeds 10,555,343 0 0 0 0 0 0 0 0 0 0 0
Procurecument of raw material (Ferterl 0 0 0 0 0 0 19,602,779 0 0 0 0 0
On Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0
(i) Land and Buildings 0 2,900,000 2,175,000 5,075,000 4,350,000 0 0 0 0 0 0 0
(iii) Others (Plantation) 0 0 0 0 0 0 0 0 0 0 0 0
Income Tax 125,237 125,237 125,237 125,237 125,237 1,928,646 125,237 125,237 125,237 125,237 125,237 125,237
Other Expenses
(i) Interest Charges 0 0 450,000 445,264 440,491 435,684 430,840 425,960 421,043 416,089 411,098 406,070 (
ii) Other bank charges, COT, Mgt Fee 0 0 0 0 0 0 0 0 0 0 0 0
SUMMARY
Cash Income (A) 9,266,601 9,266,601 9,266,601 13,929,603 13,929,603 13,929,603 13,929,603 13,929,603 13,929,603 9,266,601 9,266,601 9,266,601
Monthly Cash Surplus/Shortage -6,246,926 1,408,417 1,051,884 382,922 1,107,922 3,654,512 -14,144,858 5,457,922 5,457,922 3,226,884 3,226,884 3,226,884
Opening Bank Balance -67,596,802 -73,843,728 -72,435,312 -71,383,427 -71,000,506 -69,892,584 -66,238,072 -80,382,930 -74,925,008 -69,467,087 -66,240,202 -63,013,318
Loan Balance 60,000,000 60,000,000 59,368,468 58,732,199 58,091,158 57,445,310 56,794,617 56,139,045 55,478,555 54,813,112 54,142,678 53,467,216

MONTH 1 2 3 4 5 6 7 8 9 10 11 12
Loan Introduced 0 0 0 0 0 0 0 0 0 0 0 0
Other Income:
Sale of Palm Oil 9,151,872 9,151,872 9,151,872 13,757,141 13,757,141 13,757,141 13,757,141 13,757,141 13,757,141 9,151,872 9,151,872 9,151,872
Sale of Palm Kernel 686,390 686,390 686,390 1,031,786 1,031,786 1,031,786 1,031,786 1,031,786 1,031,786 686,390 686,390 686,390
Others 449,424 449,424 449,424 675,576 675,576 675,576 675,576 675,576 675,576 449,424 449,424 449,424
(A) TOTAL INCOME 10,287,686 10,287,686 10,287,686 15,464,502 15,464,502 15,464,502 15,464,502 15,464,502 15,464,502 10,287,686 10,287,686 10,287,686
CASH EXPENDITURE
Loan Repayment 680,528 685,632 690,774 695,955 701,175 706,434 711,732 717,070 722,448 727,866 733,325 738,825
Procurecument of raw material (Ferterli 0 0 0 0 0 0 20,578,109 0 0 0 0 0
On Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0
(ii) Plant & Equipment 0 0 7,500,000 0 0 0 0 0 0 0 0 0
Income Tax 144,022 144,022 144,022 144,022 144,022 2,217,943 144,022 144,022 144,022 144,022 144,022 144,022
Other Expenses
(i) Interest Charges 401,004 395,900 390,758 385,577 380,357 375,099 369,800 364,462 359,084 353,666 348,207 342,707 (
SUMMARY
Cash Income (A) 10,287,686 10,287,686 10,287,686 15,464,502 15,464,502 15,464,502 15,464,502 15,464,502 15,464,502 10,287,686 10,287,686 10,287,686
Monthly Cash Surplus/Shortage -7,206,811 3,873,710 -3,626,290 6,439,685 6,439,685 4,365,765 -14,138,424 6,439,685 6,439,685 3,873,710 3,873,710 3,873,710
Loan Balance 52,786,688 52,101,056 51,410,282 50,714,327 50,013,152 49,306,718 48,594,986 47,877,917 47,155,469 46,427,603 45,694,277 44,955,452

MONTH 1 2 3 4 5 6 7 8 9 10 11 12
Loan Introduced 0 0 0 0 0 0 0 0 0 0 0 0
Other Income:
Sale of Palm Oil 9,983,860 9,983,860 9,983,860 15,007,790 15,007,790 15,007,790 15,007,790 15,007,790 15,007,790 9,983,860 9,983,860 9,983,860
Sale of Palm Kernel 748,790 748,790 748,790 1,125,584 1,125,584 1,125,584 1,125,584 1,125,584 1,125,584 748,790 748,790 748,790
Others 741,549 741,549 741,549 1,114,701 1,114,701 1,114,701 1,114,701 1,114,701 1,114,701 741,549 741,549 741,549
(A) TOTAL INCOME 11,474,199 11,474,199 11,474,199 17,248,075 17,248,075 17,248,075 17,248,075 17,248,075 17,248,075 11,474,199 11,474,199 11,474,199
CASH EXPENDITURE
Loan Repayment 744,366 749,949 755,574 761,241 766,950 772,702 778,497 784,336 790,218 796,145 802,116 808,132
Procurecument of raw material (Ferterlize 0 0 0 0 0 0 23,402,641 0 0 0 0 0
On Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0
(ii) Plant & Equipment 0 0 0 0 0 0 0 8,500,000 0 0 0 0
Income Tax 165,626 165,626 165,626 165,626 165,626 2,550,634 165,626 165,626 165,626 165,626 165,626 165,626
Other Expenses
(i) Interest Charges 337,166 331,583 325,959 320,292 314,582 308,830 303,035 297,196 291,314 285,387 279,416 273,400 (
SUMMARY
Cash Income (A) 11,474,199 11,474,199 11,474,199 17,248,075 17,248,075 17,248,075 17,248,075 17,248,075 17,248,075 11,474,199 11,474,199 11,474,19
Monthly Cash Surplus/Shortage -8,256,582 4,344,840 4,344,840 7,158,763 7,158,763 4,773,754 -16,243,879 -1,341,237 7,158,763 4,344,840 4,365,300 4,365,300
Loan Balance 44,211,086 43,461,137 42,705,563 41,944,323 41,177,373 40,404,671 39,626,174 38,841,838 38,051,619 37,255,474 36,453,358 35,645,226

MONTH 1 2 3 4 5 6 7 8 9 10 11 12
Loan Introduced 0 0 0 0 0 0 0 0 0 0 0 0
Other Income:
Sale of Palm Oil 11,647,837 11,647,837 11,647,837 17,509,088 17,509,088 17,509,088 17,509,088 17,509,088 17,509,088 11,647,837 11,647,837 11,647,837
Sale of Palm Kernel 1,747,176 1,747,176 1,747,176 2,626,363 2,626,363 2,626,363 2,626,363 2,626,363 2,626,363 1,747,176 1,747,176 1,747,176
Others 1,371,866 1,371,866 1,371,866 2,062,196 2,062,196 2,062,196 2,062,196 2,062,196 2,062,196 1,371,866 1,371,866 1,371,866
(A) TOTAL INCOME 14,766,879 14,766,879 14,766,879 22,197,648 22,197,648 22,197,648 22,197,648 22,197,648 22,197,648 14,766,879 14,766,879 14,766,879
CASH EXPENDITURE
Loan Repayment 814,193 820,299 826,452 832,650 838,895 845,187 851,526 857,912 864,346 870,829 877,360 883,940
Procurecument of raw material (Se 16,214,382 0 0 0 0 0 0 0 0 0 0 0
Procurecument of raw material (Fe 0 0 0 0 0 0 30,112,424 0 0 0 0 0
On Fixed Assets 0 0 0 0 0 0 0 0 0 0 0 0
Income Tax 190,469 190,469 190,469 190,469 190,469 2,933,229 190,469 190,469 190,469 190,469 190,469 190,469
Other Expenses
(i) Interest Charges 267,339 261,233 255,081 248,882 242,637 236,346 248,882 223,620 217,186 210,703 204,172 197,592
( ii) Other bank charges, COT, Mgt 0 0 0 0 0 0 0 0 0 0 0 0
SUMMARY
Cash Income (A) 14,766,879 14,766,879 14,766,879 22,197,648 22,197,648 22,197,648 22,197,648 22,197,648 22,197,648 14,766,879 14,766,879 14,766,879
Monthly Cash Surplus/Shortage -10,241,366 5,973,016 5,973,016 9,618,746 9,618,746 6,875,986 -20,512,554 9,618,746 9,618,746 5,973,016 5,973,016 5,973,016
Loan Balance 34,831,033 34,010,733 33,184,282 32,351,632 31,512,737 30,667,550 29,816,024 28,958,112 28,093,766 27,222,937 26,345,577 25,461,636

9.0 CONCLUSIONS, FINDINGS, RECOMMENDATIONS
Given the numerous activities and investable opportunities in the palm oil plantation value chain, it is
a verifiable fact that the business has a future provided sound business and investment practices are
undertaken both on the plantation side as well as processing and marketing aspects.
A business succession plan is therefore imperative to secure these both in the present and post
investment phases of the business. We also highlight the need to put in place an organizational
culture that conveys a sense of seriousness of purpose, shared value, mission and objectives as to
why the project was embarked upon by the promoter(s) ab initio.
Furthermore, the social and economic impact an investment of this magnitude will have on the local
economy of the village of Agosu and its neighbours through employment, supply of FFBS and other
ancillary services to the industry will be very impactful. Living standards will be lifted; just so other
services will be attracted into the vicinity of the industry. We foresee the creation of an oil palm
plantation cluster, attracting other services in the value chain with K&F Daniel Farms Limited
serving as the cluster’s governor provided it is able to develop the needed and relevant competencies.
9.1 FINDINGS
It is established through the course of field data gathering for this study that the Umuagwo – Umuapu
axis of Imo State actually dictates the price movement of palm oil and its derivatives. This assertion
is validated by the PIND report on the value chain scoping study of the palm oil industry 2012. It is
also established that secondary processors of special palm oil, SPO, are concentrated in the Lagos
and Onitsha axis of Nigeria; that most of them are producing at about 40% of their installed capacity.
Golden oil industry Limited, situated in Onitsha, for instance, imports the bulk of its, SPO, from
Malaysia in order to meets its annual production/ commercial target of over 15,000tons of vegetable
oil. It is also established that the demand-supply gap of over 500,000 tones for SPO and PKO will
increase due to population increases and continuous improvements in living standards.
This supply gap may exacerbate in the short to medium term, as lack of funding and clear policy
initiatives for the industry have not spurred new investments in the sub-sector; thus leaving the space
to the small holder traditional producer who may hold sway into the foreseeable future.
We also establish that the demand-supply gap will continue to hold sway; stabilizing the prices of
various products in the short to medium term. A price band of N200,000 – N290,000.00 naira per ton
is established for SPO and PKO and has held over the last five years. However, the price of imported
SPO is lower at N144,000.00 per ton of lower quality. The Nigeria palm oil industry needs to
improve its efficiency to be able to produce at lower costs for competitive pricing of products.
We further establish that more large estate plantation investments need to be put on stream to close
the huge demand-supply gap which may continue to spiral due to increase in population and higher
standards of living.
9.2 RECOMMENDATIONS
The following are our recommendations for the future growth of this start-up. K&F Daniel Farms
Limited, should from the start-up of operations ensure the institution of proper corporate governance
practices as an organizational culture. Proper accounting books must be kept.
The best and only the best should be recruited to fill posts available. Every effort should be made to
avoid over manning as this increases overhead costs. We recommend that a three to five year
strategic plan for the growth of the plantation should be instituted as a follow-up to this study, as it is
by no means exhaustive given the constraints of data and record keeping the authors experienced
during the preparation of this report.
We recommend good agronomic practices for the sound growth of young trees and health of those
that will mature from year 2019/2020. An appropriate measure of fertilizer and herbicides in quantity
and time ensures this.
We also recommend continuous investment into the poultry, plantain and fisheries business, basically
to optimize the synergy and strategic fit between the businesses.

APPENDICES.
Appendix1
PALM OIL PLANTATION VALUE CHAIN
A graphic illustration of the palm oil industry value chain and applications
Upstream:
Plantation
Fresh fruit bunches
Milling
Crude palm oil

palm kernel oil
Trading / transport
Mid Stream
Down Stream
Refining
RBD Palm oil
Fractionation
RBD stearin (20%)

Olein (80%)
Double Hydrogenation Oleo

Fractionation Interesterification Chemical
Palm mid Processing
Fractionation

Splitting
Glycerol/fatty acids
Reduction
Fatty alcohols
Ammidisation
Fatty nitrogen

APPENDIX 2
PALM OIL MARKETING CHAIN THE CHAIN VARIES FROM COUNTRY TO

COUNTRY DEPENDING ON THE STAGE OF ITS PALM OIL INDUSTRY
DEVELOPMENT
Oil palm plantation
Fresh fruit bunches
Crude palm oil CPO Mill Palm Kernels
Refinery Crushing plant
Palm kernel oil Palm kernel

Refined bleached PKO Cake/meal
deodorized palm oil
(RBDO)
Oleo chemical plant Refinery
Refinery
RBO/PKO
RBD Olein RBD Stearin Fatty acids, alcohols,

esters glycerin
Food industry Detergents and cosmetics Chemical and other Animal feed
industry industry industry
Source: Van Gelder J-W (2004); UNITED NATIONS Conference on Trade And Development, 2014
APPENDIX 3

VALUE CHAN MAPPING OF PALM OIL PLANTATION CLUSTERS IN OGUN STATE
End Markets HH consumers TPO Commercial uses Industrial users

TPO P=N230,000 SPO/PKO
IT
Rural P=N240,000 Urban

Ton P=N2560,000 ton
Palm oil retailers

Retailing P=N230,000 ton
Presco automated
Secondary plant & refinery
processing Palm oil dealers Palm kernel
P=N200,000 ton collectors
Aggregation &
whole sale Traditional Mini/Medium
processing processors
Primary processing
Wild groves Wild groves

N91,655HA small/medium holder Large Estate SIAT
N=57,000Ha Nig. Ltd UBIMA
Estate
Production
NIFOR IRCHO
Seedling
Channel 1 Channel 2 l TPO /

traditional TPO SPO

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K&F DANIEL FARMS LIMITED

OIL PALM PLANTATION

2 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

3 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

CPO - Crude Palm Oil

4 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

The age of existing plantation with output/month is as tabulated below:

5 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

6 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

7 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

Rapidly expanding populating and changing consumption patterns as well as

8 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

K&F Daniel Farms Limited is projected to grow to a 750hectares of oil palm

9 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

Wild grove 2,300,000

TABLE 2: ESTIMATED YIELDS PER HECTARE PLANTED PER YEAR

2.0 JUSTIFICATION OF PROJECT:

11 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

2.1 OBJECTIVE OF REPORT:

2.2 STUDY SCOPE

12 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

3.0 PRODUCT / SERVICE DESCRIPTION

13 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

S/NO UNIT OPERATION PURPOSE

14 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

Bunch Threshing Separation of bunches

Pulp pressing Nut & fiber Nut recovery

Clarification Nut drying

Oil drying Nut cracking

Oil storage Nut separation

Customer Palm kernel Kernel oil

15 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

NAME: K&F DANIEL FARMS LIMITED

ADDRESS: 12, EGBEDEYI CLOSE, SANGO OTA

MOBILE: 234 805 343 1750

The Chief Executive Officer, Engineer Kayode Daniel is a graduate of Agricultural

16 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

4.1 Risk Management:

4.1.1 Risks of K&F Daniel Oils

4.1.2 Risk Management Strategies of K&F Daniel Oils

17 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

5.0 MARKETING PLAN

Customers Yr1 Yr2 Yr3

5.1 MARKET TREND

Off Peak  November – Fe bruary (4 months)

5.2 DEFINING THE MARKET

20 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

5.3 MARKET PRICE STRUCTURE

5.4 COMPETITION ANALYSIS

21 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

5.5 MARKETING STRATEGY:

2) Registered distributors in the company’s books who shall be pre-qualified on the

6.0 TECHNICAL ANALYSIS

22 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

Figure 2: COMPANY STRUCTURE / ORGANOGRAM

Agronomist Supervisor Accountant Sales officer

Harvesters, Cutters, Mill Operators Admin Officer Sales Clerk

Maintenance Admin. Asst.

23 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited

7.2 SWOT ANALYSIS

7.3 CRITICAL SUCCESS FACTORS:

8.0 FINANCIAL ANALYSIS

26 Business Plan: Oil Palm Plantation | K&F Daniel Farms Limited