NEEM OIL EXTRACTION

• Manufacturing
• Edible oil products

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 $945 annually with a total capital investment of US $ 6,299.

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.

Market Analysis

Neem has become the favorite flora of business firms abroad; these firms are now buying tonnes of seeds to produce Neem-based bio pesticides. With the medicinal value attached to Neem trees, Neem oil can be used in different cosmetics industries. This industry is not yet developed in Uganda.

Scale of Investment
1. Capital Investment Requirements in US$

Capital Investment Item	Units	Qty	Unit Cost	Amount
Storage bins	No	3	65	195
Solvent Extraction plant	No	1	2,111	2,111
Boiler	No	1	2,746	2,746
Feed bins	No	3	149	447
Neem oil storage unit	No	1	800	800
Total	5,871	6,299

 

2. Production and Operation Costs in US$

Cost Item	Unit s		Unit cost	Qty /day	Prod Cost /day	Prod Cost /month	Prod Cost /Year1
Direct costs3:
Neem seed	Kgs		15	100	1500	39,000	468,000
solvent	Ltrs		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

 

6. Production is assumed for 312 days per year.
7. Depreciation assumes 2 year life of assets written off at 50% per year for all assets.
8. A production Month is assumed to have 26 days.

3. Project Product Costs and Price Structure

Item	Qty /day	Qty/yr	Unit Cost	Prod/ yr($)	Unit price	T/rev($)
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