Commodity
export
Commodity export is a lucrative
business but capital intensive. This goldmine is largely untapped in Nigeria
because of the singular focus on oil and gas business.
Nigeria is blessed with abundant
commodities, and lots of mineral and precious stones. Many of the commodities
found in Nigeria attract favorable rates when processed for exportation.
Some of the leading commodities
exported by commodity merchants are sesame seed, Shea nut (butter) and cashew
nuts. Other commodities that are highly sort after include palm kernel, ginger,
garlic, and yam flour.
Luckily, commodity export business
is slowly gaining ground and making huge profit for the commodity traders.
Other things exported to foreign country under strict packaging are yam flour,
shell garlic, pineapples, and charcoal.
Although the business requires lots
of funding the Federal, Government of Nigeria has put in place agricultural
policies including agricultural credit, loans, and financing.
How to Start a Yam Flour Production Company
How to Start a Yam Flour Production Company
Benefits
of exporting commodity
1 The exporter makes huge profit in
foreign currency
2 They get government support
3 Low/medium start-up capitals
4 Commodities are abundant in
Nigeria
5 Price of commodities at source are
relatively cheap
6 Duty-free taxation
7 Access to subsidized agricultural
loans via NEXIM Bank
8 Easy local product sourcing
Benefits
of commodity trading
Commodity trade although capital
intensive attracts huge profit margins mainly due to the foreign exchange.
Profit on some of them range from a third of the total expenditure to as high
as double total expenditure.
The benefits of trading commodities
in Nigeria include moderate start-up capital and access to finance. You also
get cheap and easy local product sourcing, access to government’s credit
programs and duty free taxation.
Huge profit and short turn around
period are some of the advantages trading in commodities.
Things
to know about commodity trading
1 Planning is very important
2 Quality control is very important
3 Insurance is necessary
4 Find many local sources for the
commodities
5 Get financial support
6 Learn the trade thoroughly before
investing your hard earned cash
7 Learn how to secure export
contracts
8 Consider the payment methods,
loans and liabilities
9 Means of transportation and
documentation is important
10 Remember that the risk factor is
very real
How
to start commodity export
The most important aspect of
commodity export business is training. The exporter should know where to source
commodities, pricing and packaging.
Before he can export any product,
the exporter needs to have a comprehensive plan. In addition, the exporter
should be familiar with procedures for exporting commodities.
Some commodities like hard wood
charcoal costs almost a million naira to load a 40ft container. The exporter
should develop a financial strategy on how to finance the export.
Other considerations include proper
documentation for export, and payment methods. Things like insurance, local
sourcing of product and quality control.
If the quality of the product falls
short of expected standard, the exporter would lose money. Without adequate
care and quality control, an exporter can become broke.
Some important destination points
for Nigerian commodities are Belgium, Poland, and Germany, Another equally
important trading outlet is the United States of America, especially Houston.
Building
an import/export business
Planning
for export
When planning for export a few
parameters to consider are the cost and profit profile and initial cost of
purchase. The transportation to the seaport and metric ton expected for each
product.
Others are the documentation and
agents fees, GIT insurance Ness fees, and local inspection/supervision fees.
The exporter then sums up the total cost after all fees have been paid.
Commodities have a standardized
selling price abroad and payment is usually made in the countries currency.
Before you can export commodities, you need an export license, and a secured
export contract from a reputable company.
After securing an export contract
the exporter, execute the export contract to the letter. Quality control can
make or break an export so you need to be extra careful.
Every commodity has a standard
quality, packaging and international price, which makes commodity, export a
very transparent and interesting business.
Commodity
trading
Trading
tips
|
Benefit
|
Commodities
|
Quality control
|
Government support
|
Shell garlic
|
Packaging
|
Cheap prices
|
Cashew nuts
|
Secure export Contract
|
Duty free
|
Ginger
|
Insurance
|
Access to loans
|
Charcoal
|
The
dangers
Recent development in Europe has
given Nigerian commodity exporters some worry. Between December 2014 and
February 2015, twenty-five commodities failed the strict laws guiding commodity
export to European countries.
The commodities were seen to have
contaminants like asbestos, insecticides, bug problems, low standard
commodities, and poor packaging. Although a few passed the certification, most
of the exports were destroyed and only a few were accepted buy European buyers.
Due to this unfortunate loss in
revenue NAVDAC have decided to help Nigerian exporters test their commodities
free so exporters can raise their standards to meet international requirements.
This commendable intervention would help commodity exporters to ward against
contamination, pest control, poor packaging, and have quality products.
Types
of commodities and minerals exported
Listed bellow is some of the
commodities exported to foreign countries.
1 Shell garlic
2 Yam flour
3 Palm kernels
4 Ginger
5 Sesame seed
6 Shea butter
7 Cashews
8 Charcoals
9 Pineapples
10 Topazes
11 Cassava
12 Coca bean
Conclusion
Commodity export is big business but
requires meeting international standards. Once the right regulatory agents
certify the commodities, pass international standards you are good to go.
Fortunes are made and loss in the
commodity business so make sure you know what you are doing before trading in
commodities.
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