dortispalm
In: Uncategorized

BACKGROUND

Oil palm has several uses, both domestic and industrial. There are several businesses within the oil palm industry. The output or sometimes the by-product of one business serves as the input of another and so on. At the beginning of this contiguous businesses is the oil palm cultivation itself. This business feeds several other businesses with its output (palm fruits, palm fronds, palm wine, fibre, etc)

Oil palm cultivation has been an old business in some parts of the country and still remains a good investment for those who are interested in agriculture and others who are looking to diversify their portfolios by including some agric investments. Oil palm cultivation requires high level of attention within the first three years of planting. A palm tree usually begins to bear fruits between 3-5 years after planting, depending on the breed and the farming practices adopted. A palm tree may last between 25-30 years, also depending on the breed. Usually the palm trees may not be able to bear fruits after this period.

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OPERATIONS

Land acquisition is usually the first step, for first timers. There are two options available in the country: to buy or to lease. Once a parcel of land is obtained, oil palm cultivation begins with preparation of the land. The land must be properly prepared in order to enhance growth and good harvest. There are several breeds of the oil palm plant and each has its own advantages and disadvantages. However, most breeds are able to withstand the weather conditions in Ghana. Seedlings can be obtained from major vendors in the country (eg. GOPDC), most of whom are capable of giving good advice and guidance on planting practices. There are internationally accepted breeds that can yield very good harvest when properly cared for.

An acre of farmland can take up to sixty oil palm trees with optimum spacing. It is important to have the seedlings properly planted. Once seedlings are planted, weeding must be carried out periodically to avoid unwanted plants competing with oil palm plants for nutrients. There are plants that can be planted to prevent weeds from growing. The farm must be fertilized twice a year and at the appropriate times to guarantee good yield. Fertilizer application must be carried out well to make it effective.

When the plants grow, pruning becomes necessary. It is a farm practice that enhances good yield. It must be done carefully and done right. It must also be done at the right time. Regarding the labour employed for the operational running of the farms, it is usually advised that experts in this field must be used for most of the farming practices necessary to ensure growth and good harvest.

The farming practices and operations will largely influence the amount of yield, which directly affects the revenue obtained from the business. Timely transportation arrangements are necessary to avoid palm fruits going bad after harvesting.

OPPORTUNITY

Demand for oil palm fruits and other products of oil palm plantations is large and has not been fully met by local production. There is a buying institution in the country that presents a strong demand for the palm fruits throughout the year, once the right breed is cultivated. Besides the major buying institution (GOPDC), there are other numerous buyers of the oil palm fruits scattered across the country. Together, they present a very good market for farmers of oil palm all year round.

Farm Size(In Acres) Estimated Variable Cost Harvest (in tonnes) Revenue Contribution
Poor Practice Average yield Best Practice Poor Practice Average yield Best Practice Poor Practice Average yield Best Practice
0.3 0.4 0.5 GHc GHc GHc GHc GHc GHc
1 3,463 18 24 30 6,300 8,400 10,500 2,838 4,938 7,038
10 34,625 180 240 300 63,000 84,000 105,000 28,375 49,375 70,375
50    173,125 900 1,200 1,500 315,000 420,000 525,000 141,875 246,875 351,875
100 346,250 1,800 2,400 3,000 630,000 840,000 1,050,000 283,750 493,750 703,750
200 692,500 3,600 4,800 6,000 1,260,000 1,680,000 2,100,000 567,500 987,500 1,407,500
500 1,731,250 9,000 12,000 15,000 3,150,000 4,200,000 5,250,000 1,418,750 2,468,750 3,518,750
1000 3,462,500 18,000 24,000 30,000 6,300,000 8,400,000 10,500,000 2,837,500 4,937,500 7,037,500
1000 3,462,500 18,000 24,000 30,000 6,300,000 8,400,000 10,500,000 2,837,500 4,937,500 7,037,500

Estimates based on information gathered from farmers and other assumptions. We advise that you contact us before taking further steps.

RISKS AND CHALLENGES

Major challenges encountered in this business include pests and rodents. Rodents may visit the farms and stay and destroy the fruits and sometimes the young plants. Another challenge is land acquisition for the business. This may become a problem due to the land tenure system and the norms and practices governing land acquisition in certain parts of the country.

Price fluctuations may occur within the year for the farm produce. Prices usually fluctuate with the harvest seasons. Prices are lower in peak periods and higher in off-season. This may distort the income of business if not properly planned for.

 

Summary

Investment type:          Agriculture

Tenor:                           Harvest begins after 4 or 5 years of planting.

Expected Return:         58% contribution margin from year 4 onwards

Payback Period:          5 years

Risk:                             Moderate

Liquidity:                      Low

Attention required:      Moderate

 

We are better placed to assist you in this business.