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|
|Delivery Van(2.5 tones)||No||1||10,000||10,000|
Production and Operating Costs (a)Direct materials, Supplies and Costs
|Cost Item||Units||@||Qty/ day||Pdn cost/ day||Pdn cost/ mth||Pdn cost/yr|
|Seeds (Sunflower, cotton, ground nuts, Soybeans)||Kgs||0.85||189||160.65||4,177||50,123|
General Costs (Overheads)
|Selling & distribution||0|
|Cleaning & Toiletries||104||1,248|
|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
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|
Profitability Analysis Table
|Profitability Item||Per day||Per Mnth||Per year|
|Less: Production and Operating Costs||273.84006||7,120||85,439|
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.