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Nigeria has the reputation of being the leading producer of palm oil, but, also a significant importer of palm oil. This suggests a greater demand than is locally produced. In times past, it had contributed reasonably to the economy of the nation; this has however declined in recent times. The study was conducted in Ikwerre and Etche local government Areas of Rivers State. Palm oil processing in Rivers state is largely a rural based enterprise and the species processed varied from the wild species to the hybrid forms. However, most processors processed both simultaneously. This study focused primarily on palm oil processing cottage industries. Data collection was through multistage random sampling method. Structured questionnaire and personal interviews were used to collect data from palm oil processors. Gross margin and regression analyses were used to capture the objectives of the study. Gross margin and mark-up of these enterprises were moderate but outputs were inelastic to the inputs of labour and capital. This implies that returns to investment are lower than it should be. Low returns to investment of labour and capital suggest production process is technically inefficient. Improved oil extraction technology from fresh fruit bunches (FFB) is suggested to revise elasticity of oil in terms of FFB use and revenue generated. Improved labour productivity is also advocated.
 
Key words: Economic analysis, oil palm, processing, gross margin, elasticity