Are you looking for a comprehensive shea butter processing business plan to present to investors, NIRSAL, BOI or CBN? Then this is the perfect business plan extract for you.
Shea butter is an essential local product in Nigeria and some other countries in Africa. The shea butter is gotten from the sedes of shea trees, which are grown in the Savannah region from East Africa to West Africa.
Production of shea butter in Africa has been happening for centuries. People in this part of the world mostly use shea butter for skin care and also cooking oil.
Shea butter is now a commonly used organic ingredient found in cosmetics. People use it as a moisturizer or lotion, and also as raw butter with no additional ingredients. One can use it for all kinds of skin and all parts of the body – from the scalp up to the feet.
We have compiled a full shea butter processing/ production business plan, which you can make use of to get loans, grants, and some other financial support you need nationally and internationally. It has all the content, sections and information required to know about the production of shea butter.
PRICE OF SHEA BUTTER IN THE INTERNATIONAL MARKET
Shea butter, a versatile natural product derived from the nut of the African shea tree (Vitellaria paradoxa), has been an integral part of skincare and culinary traditions for centuries. Renowned for its nourishing properties and wide-ranging applications, shea butter has gained global recognition, resulting in a thriving international market. Nigeria, as one of the largest producers and exporters of shea butter, plays a crucial role in shaping the industry’s pricing trends. In this article, we delve into the factors influencing shea butter prices in the international market, with a particular focus on Nigeria’s role in its export.
As at July 2022, Grade A (unrefined) shea butter costs between $2,200 and $2,600 per metric ton (1,000 kilograms) in the international market (i.e. $2.2/kg to $2.6/kg).
The production of shea butter has deep roots in African culture, with women in rural communities often leading the traditional methods of extraction. Over time, the demand for shea butter has grown beyond local use, reaching international markets for cosmetics, pharmaceuticals, and even the food industry.
Factors Influencing Shea Butter Prices
- Global Demand and Supply: The international demand for shea butter has been steadily rising, driven by an increasing awareness of natural, eco-friendly products. This heightened demand can exert upward pressure on prices, particularly during periods of limited supply.
- Climatic Conditions and Harvest Variability: The climate significantly affects the quality and quantity of shea nuts produced. Erratic weather patterns or prolonged dry spells can lead to reduced harvests, which can subsequently impact the availability of shea butter and its price.
- Quality and Processing Standards: Shea butter is available in various grades, with higher-quality products typically fetching premium prices. Processing methods, including traditional vs. industrial extraction, also play a role in determining the final product’s price point.
- Government Policies and Regulations: Government interventions, such as export quotas, tariffs, and subsidies, can influence the pricing of shea butter in the international market. For example, export restrictions may lead to reduced supply and potentially higher prices.
- Transportation and Logistics Costs: The cost of transporting shea butter from producing countries to international markets is a significant factor. Fluctuations in fuel prices, shipping fees, and other logistical expenses can impact the final retail price.
- Currency Exchange Rates: The exchange rates between the local currency of the producing country (in this case, Nigeria) and the currencies of major importing countries can influence the competitiveness of shea butter in the global market.
Shea Butter Export from Nigeria
Nigeria stands as one of the largest producers and exporters of shea butter in the world. The country’s shea butter industry has experienced significant growth in recent years, thanks to concerted efforts by both government and private sector stakeholders.
- Government Support and Initiatives: Nigeria has implemented various policies and initiatives aimed at promoting the shea butter industry. These include training programs for local producers, investment in processing facilities, and the establishment of quality standards.
- Increased Processing Capacity: The country has seen a rise in the number of processing units, both traditional and modern, contributing to higher production volumes. This increased capacity has positioned Nigeria as a key player in the global shea butter market.
- Partnerships with International Buyers: Nigerian producers and exporters have established strategic partnerships with international buyers, ensuring a steady market for their products. This collaboration has contributed to stabilizing prices and ensuring a consistent supply of shea butter.
The international market for shea butter is dynamic and influenced by a multitude of factors. Nigeria’s significant role in the production and export of this valuable natural resource has allowed the country to exert a notable influence on global pricing trends. As the demand for natural and sustainable products continues to grow, understanding the dynamics of the shea butter market is crucial for all stakeholders involved. With careful attention to quality, sustainability, and market trends, Nigeria and other producing countries can continue to thrive in this burgeoning industry.
FEASIBILITY AND BUSINESS PLAN SAMPLE FOR SHEA BUTTER PRODUCTION
1.0. EXECUTIVE SUMMARY
Ola Shea is a dynamic and socially responsible company dedicated to harnessing the natural goodness of shea butter to create high-quality, eco-friendly products. Located in the heart of West Africa, where the shea tree thrives, Ola Shea is committed to sustainable sourcing and production practices. Our mission is to empower local communities, promote self-sufficiency, and provide customers with premium shea butter-based products that enhance beauty and well-being.
2.0. Mission Statement:
At Ola Shea, our mission is to transform the rich heritage of shea butter into exceptional products that nurture and rejuvenate. We are driven by a commitment to sustainability, community empowerment, and uncompromising quality. Through responsible sourcing and ethical practices, we aspire to enrich lives, preserve natural ecosystems, and deliver the finest shea butter experiences to our valued customers worldwide.
3.0. Vision Statement:
Ola Shea envisions a world where the healing and nourishing properties of shea butter are accessible to all, promoting holistic well-being and celebrating natural beauty. We strive to be a global leader in the shea butter industry, recognized for our unwavering dedication to sustainability, innovation, and positive social impact. With every product we create, we aim to inspire self-care, confidence, and a deeper connection to the planet we call home.
4.0 OVERVIEW OF THE SHEA BUTTER INDUSTRY
Aside from hydrocarbon, Nigeria is also very vibrant in the Agric sector, in which it produces several types of products because of the excellent soil condition, great climate condition, and the fact that more than 70% of the whole landmass of Nigeria is arable.
When it comes to the cultivation, production, and export of raw shea butter, Nigeria possesses a comparative advantage when compared to her counterparts in Africa. This is because we have vast arable land for processing and our favourable climate condition.
Nigeria is currently the top exporters of shea butter and nuts worldwide, having a total trade with an estimated value of $400,000.
Shea butter is a little bit ivory or yellowish coloured organic fat gotten from the African shea tree’s seed by smashing and boiling. It’s greatly used in cosmetics as a salve and moisturizer. It’s basically grown in Central and West Africa in the semi-arid Sahel, which is also called the “Shea Belt” by traders.
The extraction of shea butter involves acquiring dried nuts from suppliers. Then you put them into the machine to extract the fats. You then collect and store the fats into containers. After that, you pack the cake in bags, making it ready to be sold to the feed millers.
Presently, Nigeria exports around 50,000 tonnes of shea butter yearly, which is said to account for a massive 60% of the total supply of ahead butter worldwide, with an allied derivative value of around $3.8 billion yearly.
The quest for the government to diversify the revenue of the country from crude oil exports can be gotten if it’s able to claw back losses that have an estimated value of around $2.166 billion (around 750 billion naira) yearly via smuggling of Shea butter across the border of Nigeria.
How To Download The Complete Shea Butter Processing Business Plan Template
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