26-12-2012, 03:08 PM
PROFILE ON THE PRODUCTION OF NIGER SEED OIL
PROFILE ON THE PRODUCTION.pdf (Size: 182.91 KB / Downloads: 100)
SUMMARY
This profile envisages the establishment of a plant for the production of niger seed oil with a capacity of 240 per annum.
The present demand for the proposed product is estimated at 83,000 tonnes per annum. The demand is expected to reach 128,995 tonnes by the year 2020.
The plant will create employment opportunities for 38 persons.
The total investment requirement is estimated at Birr 6.06 million, out of which Birr 2.85 million is required for plant and machinery.
The project is financially viable with an internal rate of return (IRR) of 25% and a net present value (NPV) of Birr 4.16 million, discounted at 8.5%.
PRODUCT DESCRIPTION AND APPLICATION
Nigerseed oil has high oleic acid content. It is non drying and has a specific gravity (at 15o c) 0.911. The oil is mainly used for cooking. The by-product of Nigerseed oil processing is expeller cake which is left from expeller press. Its major use is as animal feed.
MARKET STUDY
Past Supply and Present Demand
Niger seed in Ethiopia is widely grown by smallholder farmers on fragmented land holdings. It is the leading oil crop in production and area coverage in the oil seeds category.
Niger seed in Ethiopia is cultivated mainly for the production of edible oil and direct consumption fried and mixed with sunflower seed. The pressed cake from oil extraction is used for livestock feed especially in and around cities and large fattening and dairy farms.
The country’s requirement for edible oil has been met through domestic production and imports. The apparent consumption of edible oil, comprising both domestic production and import is shown in Table.3.1
Projected Demand
The demand for edible oil is influenced mainly by urbanization (and the consequent change in taste) and income. Assuming modest growth in income, a growth rate of 3.45% (i.e., an average of the total and the urban population growth rates) is considered in projecting the demand for edible oil (see Table 3.2).
Pricing and Distribution
The current retail price of imported edible oil ranges from Birr 12 to Birr 15 per litre. And the average retail price for locally produced edible oil is Birr 12 per litre. Allowing for wholesale and retail margin, the envisaged plant is expected to sale its product at Birr 7 per litrer. The factory gate price for oil cake is Birr 80 per quintal. The product is currently distributed through wholesale-retail network. The envisaged plant can use the existing network, which includes department stores, merchandise shops and supermarkets to distribute its product.
PLANT CAPACITY AND PRODUCTION PREGRAMME
Plant Capacity
The annual production capacity of the envisaged plant is 240 tones of Nigerseed oil, based on 300 working days per annual. The press section and refinery are operated in Sigel shift and three shifts, respectively.
Production Programme
Table 3.3 indicates the production program of the project. At the initial stays of the production period, the plant requires some years to penetrate the market. Therefore, in the first and second year of production, the capacity utilization rate will be 70% and 90% respectively. In the third year and then after, full capacity production can be attained.
ECONOMIC BENEFITS
The project can create employment for 38 persons. In addition to supply of the domestic needs, the project will generate Birr 2.84 million in terms of tax revenue. The establishment of such factory will have a foreign exchange saving effect to the country by substituting the current imports.