NEEM OIL EXTRACTION BUSINESS IN UGANDA

By: wmutenza0 comments

Introduction

Neem oil is a vegetable oil pressed from the fruits and seeds of neem , an evergreen tree which is endemic to the Indian subcontinent and has been introduced to many other areas in the tropics. It is perhaps the most important of the commercially available products of neem for organic farming and medicines. The business idea aims at production of 200 Litres of neem oil per day thus 62,400 litres annually. The revenue potential is estimated at US $ 561,600 annually with a total capital investment of US $ 6928. The project is also estimated to yield a net profit of 10%

Plant Capacity

The plant has a minimum capacity of 200 Litres of neem oil per day.

Production Process

The oil can be obtained through pressing (crushing) of the seed kernel through cold pressing. It can also be obtained by solvent extraction of neem seed, fruit, oil cake or kernel.

Scale of Investment
Capital Investment Requirements in US$

Capital Investment Item Units Qty @ Amount
Storage bins No 3 71.5 214.5
Solvent Extraction plant No 1 2322.1 2322.1
Boiler No 1 3020.6 3020.6
Feed bins No 3 163.9 491.7
Neem oil storage unit No 1 880 880
Total 5,871 6928.6

Production and Operation Costs in US$

Cost Item Units @ Qty/ day Pdn Cost/ day Pdn Cost/ mth Pdn Cost/ Year1
Direct costs3:
Neem seed Kgs 15 100 1500 39,000 468,000
solvent Litrs 10 5 50 1300 15,600
Packing materials No 0.1 150 15 390 4,680
Subtotal 40,690 488,280

General costs (Overheads)

Labour 300 3,600
Utilities 300 3,600
Selling and Distribution 100 1,200
Administrative expenses 150 1,800
Shelter 300 3,600
Depreciation (Asset write off) Expenses 131 1,575
Sub-total 1,281 15,375
Total Operating Costs 41,971 503,655
  1. Production is assumed for 312 days per year.
  2. Depreciation assumes 2 year life of assets written off at 50% per year for all assets.
  3. A production Month is assumed to have 26 days.

Project Product Costs and Price Structure

Item Qty / day Qty/yr @ Pdn/yr ($) UPx T/rev($
Neem oil 200 62,400 8.1 503,655 9 561,600
Total 62,400 503,655 561,600

Profitability Analysis Table

Profitability Item Per day Per Month Per Year
Revenue 1,800 46,800 561,600
Less: Production and Operating Costs 1,614 41,971 503,655
Profit 186 4,829 57,945

Market Analysis

Neem has become the favorite of business firms abroad which firms are now buying tonnes of seeds to produce Neem-based biopesticides. With the medicinal value attached to Neem trees, neem oil can be used in different cosmetics industries.

 

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