Market and Cost Analysis of Palm Oil Processing Business in Brazil

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If you are planning to start your palm oil processing business in Brazil, you must have deep understanding of the local palm oil market, project construction cost, production cost and return. Here, ABC Machinery is going to talk about the things you should know before invest in palm oil extraction industry in Brazil.

Cost of Setup a Palm Oil Processing Mill in Brazil

setput a palm oil mill in Brazil
Set Up a Palm Oil Mill in Brazil

Referring to the cost of setup a palm oil processing mill, many factors should be taken into consideration including production capacity, included equipment, factory layout, automation degree of the production line, requirements of the final palm oil (crude oil or refined oil). Here is some cost references for you. You are welcome to get in touch with us and get free service on estimating project cost.

  • 5~10 TPD Project: The cost of starting a 5~10 tons per day palm oil processing plant is about $20,000~$30,000.
  • 10~20 TPD Project: The cost of starting a 10-20 tons per day palm oil extraction plant is about $70,000~$80,000.

Over the earlier decennary, the government is actively promoting palm oil processing in Brazil in the shrew timberland as a replacement biofuel to soy. Since the oil palm's yielding capacity is comparatively at high extent, it helps being less challenging on land than soy and thus granting less compulsion on the wild forest. Albeit palm oil has been a major driving force of deforestation and societal dispute in most production countries of Asia, the Brazilian government has kept several implementations to make sure that palm oil is fertilized supportively, and the area is all-embracing needy. (Read more about palm kernel oil crushing and extraction >>)

palm oil processing business plan
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Project Report: 4TPH Palm Oil Extraction Plant

The analysis coordinated in Brazil's prime palm oil manufacturing kingdom, Para, which states that the development and oscillation of palm oil value chain and the profitability, territorial and societal challenges are still major turned off tasks that needs to be addressed by the sector. While addressing them, it depicts that if correct procedures are regulated under ideal conditions, palm oil processing in Brazil can grow on a vast scale inclusively within ecosystem. This obviously comes with giant effect of production costs for manufacturers hence diminishing the foreign cut-throat of Brazilian palm oil sector.

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Cost of Invest in Oil Palm Production in Brazil

oil palm production in Brazil
Oil Palm Tree Production

When discussed the cost of palm oil production by independent farmers, the action items were classified according to five cost sub-centers named as upkeep, fertilizer implementation, harvesting, conveyance, other costs and labor. (Related Post: How much does it cost to start palm oil processing plant in India? )

  • Upkeep: This cost segment encompasses the general field preservation of the independent smallholders. For keeping the upkeep of roadways, bridges, pathways, etc. The prime cost item was weeding of dead palms, which engrossed about half of the total tariff. The other half of the tariffs was due to cropping, substitution of dead palms and upkeep of roadways, bridges, path ways, etc.
  • Fertilizer implementation: The outlay incorporated in this function are the expenses of buying fertilizers and labor. The results show that fertilizer purchase, incorporated 93% of the total fertilizer expense.
  • Harvesting: The expenses engrossed in this function are harvesting and collection, and fertilizing tools. Based on the weight harvested, the price was RM 33.25i't, also accounting for 93% of the total fertilizing cost
  • Conveyance: Conveyance involves in-field conveyance and transfer of goods to the mill. A total of 7.4% of independent smallholders used equipment’s for their in-field collection.
  • Labor Cost: Labor is a noteworthy input and therefore accounts for many of the manufacturing cost. Use of equipment in oil palm industry is mainly in the in-house cluster work. Only 7.4% of farmers equipped their in-field cluster work by using power carts.
  • Other Cost: The expenses grouped in this segment incorporate quit rent and other payments. It engrosses to the sum of cost being itemized as other payments in upkeep, fertilization, harvesting and conveyance.

Prospects of Palm Oil Market in Brazil

Year Palm Oil Production (1000MT) Growth Rate
2014 400 8.11 %
2015 415 3.75 %
2016 485 16.87 %
2017 500 3.09 %
2018 525 5.00 %

Brazil and international organizations are firmed for the prime extension of palm oil harvesting because if done right, palm oil could contribute as a major source to save the Amazon. Accountable production could even enforce amendments in Indonesia and Malaysia as both have been extensively condemned for their indigent performance on preserving forests.

Palm oil market in Brazil
Red Palm Oil and Refined Palm Oil in Brazil Edible OIl Market

Palm oil processing in Brazil could eventually bring a lot of benefits for Amazon. If seeded on the lower grazing land that proliferate in the Brazilian forest, palm oil could help with larger number of occupation and upgraded salaries for natives than supreme form of land use in the sector. Lesser potency oxen harvesting than harming larger area of rainforest for more cattle grazing, native harvesters could start working in palm oil business and got advantages from its higher revenue.

Prospects of Palm Oil Processing in Local Market

Substituting oxen grazing with palm oil seeding also furnishes remarkable environmental merits as palm plants albeit not nearly as prized ecologically as forest sequester carbon and evapotranspiration humidity being so much important to the geophysical cycle of forests.

Brazil palm oil production by year
Brazil Palm Oil Production by Year

With palm oil prices revolving around $1,000 a metric ton and the Brazilian government proposing a larger extension of the crop, a lot of revolutionary activities are taking place. Some archers and the state-run oil company Biofuels have also declared prime Amazon palm oil deals in the past 18 months. Several other vital firms are going to extend manufacturing in the sector. Brazilian government's goal of having 19,000 square miles (5 million hectares) for the palm oil processing in Brazil sounds too high.

The prime authorities hope that Brazil is efficient to seed more than ten percent of the proposed goal by 2020 being seed and labor the major constraints. Also, seasonal flooding would limit palm oil orchard in segments of the Amazon.

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