ESTABLISHING AN OIL SEED EXTRACTION PLANT IN UGANDA

 ESTABLISHING AN OIL SEED EXTRACTION PLANT IN UGANDA

Introduction

Seed oil falls under the category of high value products and the demand for it keeps growing .The market size is big as it is used in almost every household. The project idea is designed with an aim of producing 39,000litres of seed cooking oil with estimated annual revenue of US$128,700 in the first year of active operations, a net profit margin of 34% and a payback period of 1 year and 6 months.

Production Capacity, Technology & Process

The production process involves drying and cleaning oil seeds to remove foreign materials like stones, sand and sometimes it is washed to remove dirt. The outer coat is removed through a process called dehulling and then grinded using small motor powered hammer mills. The broken down components are passed through the expeller where they are heated to kill enzymes .The oil collects at the bottom of the expeller and then it is filtered and stored in the storage tank and packaged. The technology used is very simple as it involves drying, cleaning, crushing, heating and filtering.

Investment Scale and Capital Requirements Equipment

The investment scale varies according to the intended objectives of the entrepreneur and the production capacity of the equipments used.

Capital Investment Requirements in US$

Capital investment item units Qty @ Total
Moisture tester No. 1 710 710
Huller(Disintegrator) No 1 900 900
Seed Cleaner No 1 660 660
Oil expeller No 1 800 800
Filter press No 1 3,500 3,500
Oil tank No 1 480 480
Weighing scale No 1 200 200
Steam pipeline No 1 200 200
Delivery Van(2.5 tones) No 1 10,000 10,000
Other tools No 3,000
Total 20,450

Production and Operating Costs (a)Direct materials, Supplies and Costs

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ mth Pdn cost/yr
Direct Costs
Seeds (Sunflower, cotton, ground nuts, Soybeans) Kgs 0.85 189 160.65 4,177 50,123
Packaging materials Pieces 0.05 48 2.4 62.4 748.8
Other materials Kgs 212.5 2,550
Sub-total 237 163.05 4,452 53,422

General Costs (Overheads)

Rent 600 7,200
Labour 617 7,404
Utilities 833 9,996
Selling & distribution 0
Cleaning & Toiletries 104 1,248
Miscellaneous expenses 88 1,056
Depreciation 426 5,113
Sub-total 2,668 32,017
Total Operating Costs 7,120 85,439

1) Production costs are assumed for 312 days per year with daily capacity of
processing 125 litres of seed cooking oil.
2) Depreciation (fixed asset write off) assumes 4-years life of assets written off at
25% per year for all assets.
3) Direct costs include: materials, supplies and other costs that directly go into
production of the product.
4) Total monthly workdays assumed are 26-days.
5) The valuation currency used is United States Dollar

Market Analysis

The market is wide as oil is a household item with major consumers such as hotels, restaurants, retail & wholesale shops. The major players in the field include; Mukwano industries ltd, BIDCO and imported oil from USA.

Project product costs and Price Structure

Item Qty/ day Qty/yr @ Pdn cost/yr UPx T/rev
Seed Oil 125 39,000 2.2 85,439 3.3 128,700

Profitability Analysis Table

Profitability Item Per day Per Mnth Per year
Revenue 412.5 10,725 128,700
Less: Production and Operating Costs 273.84006 7,120 85,439
Profit 138.65994 3,605 43,261

Government Facilities and Incentives

The office of the Vice president & the Busiro Development Association are financing such projects plus Uganda Investment Authority; incentives include Vat input refunds on starter up costs.

 

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