How do I Start a Palm Oil Business?

by Martin Muchira; Updated September 26, 2017
A palm oil business can become lucrative if planned well.

Selling palm oil can become an extremely lucrative business venture. The business boasts a readily available market and less competition as the demand for palm oil has enjoyed a steady rise—especially in European Union countries—as of 2010. This growth had mainly occurred because palm oil is a cheap alternative to the other types of oil. Palm plays a role in the manufacturing of margarine, soaps and detergents. This edible oil contains fatty acids, glycerol and vitamin E, making it a major component in processed foods. As of 2010, the major leading exporters for palm oil are Indonesia and Malaysia.

Step 1

Define your market. Obtain a local purchasing order (LPO) from companies, and identify appropriate sources with credible free fatty acid (FFA). These practices will establish main buyers and sellers. Having a readily available market and suppliers plays an essential role in a palm oil business, as it helps you save on storage costs and losses resulting from storage of oil for long periods.

Step 2

Establish a stocking program. Stock palm oil during the peak season, when the market price is low—between March and May of every year. During these months, palm oil prices drop drastically to between $400 and 700 per ton due to the ease of its availability. Take advantage of this low price; stock enough palm oil in plastic kegs or containers.

Step 3

Store the palm oil appropriately. Do not store palm oil on the ground directly. Place the plastic drums containing the oil on a wooden platform in a cool, dry place to help preserve the oil for a longer period.

Step 4

Sell your product during the lean season—between September and December—when the product supply is low. During these months, the price of palm oil increases by more than 100 percent to about $1,400 per ton.

Tips

  • A palm oil business requires a good choice in suppliers. The supplier should provide you with palm oil free of fatty acid—the healthiest version.

    As with all businesses, register your palm oil business and acquire the licenses and certifications necessary for starting the business.

About the Author

Martin Muchira has been writing content for online businesses since 2008. He has written content for major companies like Air Asia and Comcast. Muchira graduated at the top of his class from Moi University with a Bachelor of Science in wood science and industrial processes.

Photo Credits

  • Oil Palm Plantation image by fongliew from Fotolia.com