Coconut Oil Production – A Beginners Guide

Coconut Oil Production.
Coconut Oil Production.

Coconut Oil Production Guide:

The following is all about Coconut Oil production.

Coconut Oil Production Business Overview

Coconut is vastly found in the coastal regions of India, and other tropical countries of Asia, South and Central America and Africa. At all these places the byproducts of coconut are used in some way or other in people’s daily life. Every part of the coconut tree and its fruits are used or converted into other valuable products. The coconut fruit contains coconut meat/kernel and coconut milk /water. Both of these products are most popular edible commercial products in the industry. Coconut meat is rich in dietary fiber, protein, dietary fat, carbohydrates and micro minerals such as potassium, phosphorous and vitamins such as niacin and riboflavin. While the coconut milk contains micro minerals and nutrients that are essential to human body. Based on these health benefits, the young coconuts, as well as matured coconuts, have great demand in domestic and export markets.

Coconut meat is not just for eating in its raw form or coconut oil is not just for cooking alone. Much research is going on the uses of coconut oil. Coconut oil is popularly used in beauty, skin and hair care industry. The most important ingredient in soap industry is coconut oil. Coconut has magical features on the skin and helps in reducing skin aging by hydrating the skin. It acts as a natural moisturizer on dry skin as well as on other skin types. Virgin coconut oil helps hair by nourishing hair roots and follicles and gives hair a healthy shiny look. The soap industry depends on coconut oil for Production its soap as they are more soluble in hard and salt waters allowing lathering more.

Coconut Oil Production Business Market Scope

Coconut oil can be broadly based on two categories – edible oil and non-edible oil. Edible coconut oil is highly in demand in the southern part of India, especially in Kerala and Karnataka states. It is also widely used as the edibleoil or cooking oil in most parts of Asian countries and South and Central parts of America. Apart from frying and cooking, it is used as a source of fat in infant foods and formulas, used to enhance flavor as spray oil in crackers, cookies, and cereals, and used as an ingredient in confectionery items.

There are far more uses of inedible coconut oil. It is used as a raw material in many industries such as – in Production laundry and bath soaps, in biodegradable detergents, shower gels, shampoo, and many other cleaning agents, in the cosmetic industry, toiletries, production of synthetic resins, and much more.

America is the main consumer of coconut products such as coconut oil and dried coconut kernels. Many countries in Europe such as Netherlands is high importer. Germany and France show the huge demand for refined coconut oil for its cosmetic industry. The major countries that import virgin coconut oil are USA, Hawaii, Norway, Korea, Japan, Netherlands, Singapore, Malaysia, and South Africa. Being highly in demand both in domestic and in international markets, coconut oil Production is a viable, profit-making business for young entrepreneurs.

Coconut Oil Production Business Prerequisites

Define Business Action Plan: After the conception of venturing into coconut oil business, obviously, the entrepreneur must have things to do list or an action plan. This is truly a lucrative business but how you work on it will justify your dream. A practical approach to the business planwill lead to success.While an unclear approach might lead you into troubles. Design your business model that includes every aspect of the industry from raw materials, plant & machinery, fixed and miscellaneous expenses, technical and non-technical staff, vehicles and transport all these are what your business plan should address and treat diligently.

Procuring Raw Materials in Coconut Oil Production Business: There should be a consistent supply of raw materials and in this business, it is the coconut fruit. The Production plant must either have easy raw material sourcing system or must have cordial dealings with farmers to outsource the raw materials.  Identify potential farmers who can supply raw materials at competitive price letting you have adequate stock of raw materials in the storehouse to work successfully with your project.

Site Requirement for Coconut Oil Production Business: To run a small scale coconut oil Production business demands about 5000 sq.ft of land area to get operated. The land is divided into two segments, Open and Shed area. Shed area about 1500 sq.ft will accommodate plant machinery and equipment while the remaining 3500 sq.ft is used for drying. This proportion of land will accommodate coconut oil production capacity of 90 to 100 MT per annum.

Business Registration for Coconut Oil Production Business: For a serious entrepreneur the firm registration is extremely basic. Enrollment of business brings full right to explore your business with legal backing and also credits your business value and expands your chances. To run your business smoothly the firm must have prior approvals from concerned departments and below are the following list:

  • Register the firm or company with Registrar of Corporates (ROC).
  • Register with Udyog Aadhaar from MSME.
  • GST Registration.
  • FSSAI Registration.
  • Factory license (for large-scale production).
  • Obtain BIS Certification.

Work Knowledge and Training for Coconut Oil Production Business: In any business, accumulate fundamental concepts and in-depth learning about the business must be procured. Learn tofigure out how to control assets to expand production and change in accordance with current economic circumstance. You must have intensive preparation about the business before diving into it; this will open you the ups and downs in the business.

Coconut Oil Production Business Capital Investment

S.No Item Amount (Rs. in lakhs)
1 Plant Site inclusive of shed and compound wall (5000 sqft) Leased
2 Machinery and equipment’s 21.05
3 Electrification 3.00
4 Effluent treatment plant 5.00
5 Preliminary & Pre-op. expenses 2.11
6 Working capital margin 4.40
Total 35.56

Coconut Oil Production Business Machinery and Equipment

All vital machinery and equipment hardwaremust be procured to guarantee the smooth running of the business; avoid using crude tools in the production, it incredibly lessens the production efficiency.
In this business the two primary investments that keep business and production growing is subject knowledge and plant machinery. Get proper branded machinery from registered dealers and install them with an experienced technician. Below is the list of equipment required to produce 300 liters per shift.

Sl No Item Qty Unit cost (Rs. in lakhs) Amount (Rs. in lakhs)
1. Dehusker 2 0.75 1.5
2 Desheller 2 0.6 1.2
3 Paring unit 2 0.5 1
4 Coconut disintegrator 1 1.65 1.65
5 Tubular bowl centrifuge 1 7 7
6. Spare bowl for centrifuge 1 1.75 1.75
7. Hydraulic press screw press 1 3.5 3.5
8. Mixing vessel 1 0.8 0.8
9 Filter press 1 1.75 1.75
Total 21.05

Coconut Oil Production Business Processing

Ensuring all the above steps are done effectively, processing takes after. Processing is the fundamental part of the business. The strategy for processing decides the quality of the final product. The fundamental procedure involved in the generation of coconut oil is as follows:

Coconut Oil Production Flow Chart.
Coconut Oil Production Flow Chart.
  1. Coconuts are fed into the dehusking machine. The machine removes the entire husk on the coconut. Husk can also be removed manually but you need more labor to finish this task.
  2. Coconuts must be deshelled and this should be managed without breaking the kernel.
  3. The deshelled kernels are passed through paring machine to remove brown testa/skin of the kernel.
  4. Pared kernels or coconuts are plunged in boiling water for a few of minutes in a blanching tank.
  5. The excess water present in the blanched coconuts is drained with the help of vibratory screener.
  6. Pared coconuts are fed into a disintegrator machine where they are cut into little pieces and will be prepared for extraction.
  7. Shredded coconuts are put into a milk extractor, the screw press machine or hydraulic press machine whichever is installed will extract milk from coconut. Extracted coconut milk is then filtered to remove if any small coconut pieces or hard particles are present. The leftover coconut residue is dried in an oven and packed as dried coconut flour.
  8. The extracted milk without any coconut meat or particles is a homogeneous mixture of coconut oil and water. The coconut milk is passed through centrifugation machine. After centrifugation, oil and skim milkareseparated. Coconut oil is isolated from coconut milk.
  9. Finally, in the filtration stage, the oil is passed through the filter press and stored in a tank for packing. Packing can be done in tin containers, polymeric nylon barrier pouches or HDPE containers depending on market demand.

Coconut Oil Production Business – Oil Quality as per APCC

The produced coconut oil must be sent to laboratory analysis. Coconut oil must meet the domestic and international standards for marketing approval. Quality characteristics of coconut oil produced from the plant must meet the following standard limits:

Sl No Parameters Limits
1 Moisture (%) Max 0.1
2 Matters Volatile at 1200 C (%) Max 0.2
3 Free Fatty Acid (%) Max 0.2
4 Peroxide Value meq/kg Max 3
5 Relative density 0.915 – 0.920
6 Refractive index at 400 C 1.4480 – 1.4492
7 Insoluble impurities per cent by mass Max 0.05
8 Saponification Value 250 – 260 min
9 Iodine Value 4.1 -11
10 Unsaponifiable matter % by mass, max 0.2 – 0.5
11 Specific gravity at 30 deg./30 deg. C 0.915 – 0.920
12 Polenske Value, min 13
13 Total Plate Count < 0.5
14 Color Water clean
15 Odor and Taste Natural fresh coconut scent,free of sediment, free fromrancid odor and taste

Coconut Oil Production Business – Marketing

There are different ways to market the end product from the Production plant.

  1. E-commerce (online sales through website)
  2. Domestic Market ( door to door, retail outlets)
  3. Sell your virgin coconut oil as raw material (Industries – soaps, cosmetics, pharmacies, etc.)

The coconut oil Production business is an extremely lucrative business when completed with incredible industriousness and assurance.

For Coconut Growing: Read here.

For Aloe Vera Gel Manufacturing: Read here.


  1. Hello,

    I am excited with this and I would like to know more health benefits of coconut oil and I will start producing an organic coconut oil to help humanity.

  2. I am already into coconut oil production in Ghana, my factory is at the volta region of the republic of Ghana. The company is already registered with all agencies required with all licenses obtained, and it happens to be the 1st and the only coconut oil processing factory in the region. Production commences soon. looking for interested organisations in the global market to contact me so as business kicks off…


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