Feasibility of Setting Up a Palm Oil Processing Plant

Palm oil is one of the major sources of edible oil. It is extracted from a fleshy mesocarp of the palm fruit. Setting up a palm oil production plant is necessary since global demand is on the rise. It will meet both domestic and industrial demand. Palm oil is used in food and non-food industries to manufacture soap, margarine, waxes, polish bases, candles, lubricants, biodiesel, lipstick bases, palm cheese among others. There are many requirements for setting up a palm oil processing plant which demands a feasibility study. These requirements include machines, available market, equipment, and labor. The project of setting up the plant should be technically, financially and environmentally feasible.

Opportunity

First, you need to identify if there is a business opportunity in a given area, country or region. A growing demand for palm oil provides an economic opportunity. The abundance of palm trees guarantees a continuous supply of palm fruits. Palm oil processing is labor intensive. The youthful workforce provides cheap labor depending on area of operation. There should also be an opportunity to manufacture further refined products.

Technical Feasibility

Advanced methods of production require new equipment which can be expensive. You need a purifier, conveyor, digester, fan extractor, screen, among others. High costs can discourage intending processors from investing and setting up new plants. You can choose to hire processing equipment. But you must expect some delays during the processing period. There needs to be adequate infrastructure like roads for moving final products and machines. A piece of land is also required for setting up the plant. Adequate space is required away from residential areas. There should be a constant supply of palm fruits, or you can choose to cultivate your own farm.

Financial Feasibility

Setting up the palm oil processing plant and purchasing equipment requires funds. It also takes into consideration wages and salaries to be paid to employees. Available funds determine the size of the plant and amount of palm oil produced. Economic stability and profitability of palm processing need to be analyzed. There should be demand for palm oil to guarantee profits in the long run. A feasibility study will help determine if the business plan has enough resources to fund the project. Financial implications of oil processing form the basis of the processing business. Palm oil economics uses profitability models like Benefit-Cost Ratio to determine the cost of palm fruits, transportation, hiring/purchasing equipment, availability of labor and market price.
 

Environmental Feasibility

An environmental impact assessment needs to be carried out as provided by the law. It helps to determine any negative impacts when establishing and operating the plant. Fortunately, all by-products from a palm oil processing plant are recyclable. Palm shells can be used to make renewable energy fuel pellets. Boiler ash is used as a cleaning agent or fertilizer. A social impact assessment is also done to determine the level of poverty elevation, job creation and any disturbance to the local people.
 
In conclusion, a financially, technically and environmentally feasible project benefits all whenever an opportunity presents itself. The owner of the palm oil processing plant will earn profits. Local people will get jobs, palm oil, and refined products. The products are also recyclable. Carrying out a feasibility study and following laws of the land determines the success of a palm oil processing enterprise.