NEEM OIL EXTRACTION

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