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close this bookSmall Scale Processing of Oilfruits and Oilseeds (GTZ, 1989, 100 p.)
View the document(introduction...)
View the documentAcknowledgements
View the documentPreface
close this folder0. Introduction
View the document0.1 Economic aspects
close this folder0.2 Technical aspects
View the document(introduction...)
View the document0.2.1 Processes for oil fruits
View the document0.2.2 Processes for oil seeds
View the document0.3 Development potentials
close this folder1. Oil Plants and their Potential Use
View the document1.1 Characteristics of vegetable fats and oils
close this folder1.2 The major oil plants
View the document1.2.1 Oil palm
View the document1.2.2 Coconut palm
View the document1.2.3 Soyabean
View the document1.2.4 Groundnut
View the document1.2.5 Sunflower
View the document1.2.6 Sesame
View the document1.2.7 Rape and mustardseed
View the document1.2.8 Other oil-yielding plants
View the document1.3 By-products
View the document1.4 Further processing
close this folder2. Target Groups and Technologies
close this folder2.1 Family level
View the document(introduction...)
View the document2.1.1 Oil palm fruit
View the document2.1.2 Oil seeds
close this folder2.2 Village level
View the document(introduction...)
View the document2.2.1 Oil palm fruit
View the document2.2.2 Oil seeds
View the document2.3 District level
close this folder3. Case Studies
View the document3.1 Shea nut processing by women in Mali
View the document3.2 Hand-operated sunflowerseed processing in Zambia
View the document3.3 Oil palm fruit processing as a women's activity in Togo
close this folder4. Financial Analysis of the Case Studies
View the document(introduction...)
View the document4.1 Shea nut processing in Mali
View the document4.2 Sunflower seed processing in Zambia
View the document4.3 Oil palm fruit processing in Togo
close this folder5. Selected Equipment
close this folder5.1 Hand-operated equipment
View the document5.1.1 Hand-operated processing of palm fruit
View the document5.1.2 Hand-operated processing of oil seeds
close this folder5.2 Motorized equipment
View the document5.2.1 Motorized processing of oil palm fruit
View the document5.2.2 Motorized processing of oil seeds
View the document6. Ongoing Research and Development Work
View the documentAnnex


The case studies presented in Chapter 3 include different improved processes for extracting shea nut butter and oil from sunflower seed and oil palm fruit as applied in current projects in Mali, Zambia and Togo. In the present chapter, these projects are financially analyzed in their specific local contexts, which means that all costs and prices involved were taken from recent field experience. It also means, that the results presented are not necessarily the same for other countries or for other times in the future; since, for example, margins between rawmaterial and sales prices, wages and other variables might change considerably.

For each of the case studies, alternatives were calculated, using the same costs for variables like local wages, sales price of oil and by-products, etc. In this way, the profitability of the processes described as case studies can be compared with the technical alternatives.

Finally, for all the case studies and their alternatives a sensitivity analysis has been made, the results of which indicate the profitability of each process in relation to certain critical assumptions. Keeping all others constant as originally, the variables that were modified for this analysis are in each case:

- shea butter/oil recovery of the process,
- capacity utilization of the equipment,
- local wages.

The results are illustrated in graphical form (see Figures 22, 23 and 24). As a guide to interpreting these figures, one might say that the steeper the curve, the more sensitive is the process to a modification of a specific variable.

For all calculations, the same procedure was applied and the same indicator used. The procedure is described in the “Manual for the Preparation of Industrial Feasibility Studies" by the United Nations Industrial Development Organization (UNIDO). Following this procedure, the input-data for all the cases was entered into the computer programme COMFAR (Computer Model for Feasibility Analysis and Reporting), which computes a whole set of output tables. Computations were done for a 10 year project period in each case. For reasons of space and simplicity, the output tables have been reduced to only one indicator.

As the indicator for the results of all case studies, the so-called "internal rate of return" (IRR) was chosen, which is a percentage figure and can - in simple terms- be compared with the long-term interest for a bank deposit. For any investor (i.e. in equipment for oil processing), the IRR is an indicator of whether it is more profitable to put his money in a bank account or to invest in this or that kind of technology and start production under given assumptions. An explanation on how to calculate the IRR is given as Annex 3.

One might argue that the procedure and the indicator are neither appropriate nor relevant for a traditional context where usually no money value is attached to inputs like labour, energy, etc. Nevertheless, a proper financial calculation even for the traditional technologies can introduce a scale on which all alternatives can be measured. In this way, the IRR can serve as a uniformly comparable figure which allows the analysis of profitability. However, it must be kept in mind that it is a capital-based indicator.