Investing in Cassava Farming, Processing Plants

The Federal Government announced its intention to discourage importation of some items that can be easily be produced in this country including cassava, rice and wheat products. At the same time encourages those interested in local production and export to develop the local production of these crops and at the same time encourages self-reliance on local food consumption. The present government has paid attention on the development of agriculture and other non-oil exportable products. Cassava production, processing into chips & pellets, industrial starch, ethanol, garri, cassava flour and foo-foo is still a very lucrative agro- industrial project.

In 2013 the Federal Government has come up with lots of packages to benefit farmers to develop agriculture. Some of them are N4.1Billion for cassava farmers only; N60Billion for Agro-farmers to enable them purchase stocks, seeds, stems, fertilizers etc; N200billion through Bank of Agriculture. These are great opportunities to exploit.
Every hand should be on deck to encourage cassava production either through provision of funds or through encouragement of production for export market.

Here some of those potentials are discussed.
Cassava is an important annual food grown throughout Nigeria.
It is tuberous and has the ability to thrive in poor soils and has considerable resistance to drought. It is also used to refer to the root of this tropical plant. It is botanically called manihot-esculenta and also called maniac or tapioca. Cassava is seen as readily available raw materials for establishment of small and medium scale industries in Nigeria. Nigeria’s staple garri is produced from the root of this crop.

Export Types
Cassava for export includes dry cassava leaves, chips, pellets, cassava meal, flour and starch and ethanol. All these products can be export. Detailed research reports and feasibility studies report on establishment and running of any these aspects of the project are available and would be given to prospective investors.

Uses
Cassava is used mainly for producing animal feed. The dry roots chips and pellets are usually preferred by industrial animal feeds producers in America and Europe. Alcohol is also extracted from cassava. Textile industries and food industries need starch.

Production
Nigeria is a major producer of this tropical crop with output conservatively put at over 89, 000 metric tons as the end of 2017Apart from Nigeria other major tropical developing countries that produce cassava include Brazil, Thailand, Indonesia and Zaire.
Nigeria’s over 60,000 metric tons is almost totally processed and consumed locally.

Export
Globally, only 15 per cent of total production of cassava is exported with Thailand being the major exporter of cassava products. As earlier stated cassava and its derivatives were de-listed from the export prohibition lists since 1996 and any Nigerian can invest and export any processed product(s). Its export is now encouraged among other food crops for which Nigeria is a major producer by present administration.

Directionof export
The direction of cassava export is mainly Europe and North America with European Union accounting for about 90 per cent of the total buyers. Details of the foreign buyers of industrial starch, cassava chips & pellets and cassava flour would be given to prospective investors on contacting the writer. About 30 per cent of cassava production globally s used for starches and other industrial products and only less than one per cent is processed into ethanol particularly in Brazil. It is a choice animal feed material because of its high carbohydrate content. It is however mixed with protein source such as Soya beans.

Europe Market Overview
The Europe is the major importer of cassava for animal production. Details would be given to prospective investors. Animal production being the main attraction of Agriculture in Europe, accounted for about 70 per cent of total agricultural output. The compound feed formulation is the main attraction for cassava. About 90 per cent of the traded cassava in the Europe is from the developing countries, Such as Nigeria. Main suppliers are Thailand (about 85 per cent), Indonesia (about six per cent), sub Saharan Africa is yet to contribute significantly to world trade in cassava with about three (3) per cent recorded in the early part of the millennium.
The principal buyer of cassava in the Europe is Netherlands, (accounting for over 40 per cent of total Europe imports); Germany (about 20 per cent), Belgium and Luxembourg (about 13 per cent), France (eight per cent), U.K (10 per cent) and Italy (two per cent). Details breakdown would be given to prospective investors the exportable quality standard.

Transportationand handling
Transportation and handling constitute high levels of cost of inputs in preparation of cassava for export. This is due to the bulky nature of the product. This cost could be as high as 50 per cent of total cost.
Proper management of cost reduction programme is therefore recommended for those who wish to venture into the export of cassava as reduction of costs will afford better competitiveness. Cassava pellets are usual cheaper to transport and handle than other exportable processed cassava products like industrial starch. The standard of the product is very important.

Quality
Feed millers are very critical about quality. Consistency of quality is very important for them to maintain the standards of their products.
Quality is usually in terms of nutritive value. Minimum standard specifications are as follows 70 per cent, 70 per cent and 62 per cent stand for chips, flour and pellets respectively while moisture content is 14 per cent, fibre five per cent and ash-three per cent content for all the three products. Details would be given to prospective investors on contacting the writer.

Chips are normally white or near white, clean, free of mould, foreign matter insect damage and without off odours. Length of chips should be 4-5mm. It should be noted that if quality standard is not maintained the export project is bound to collapse. Therefore must be worked out carefully.

Packing
Packing is done in sacks of cotton, multi-craft paper bags or clean jute bag; pellets should be uniform in shape and size, less fragile and should be compatible for handling, storage and transportation. Palletising equipment exist for production of pellets. Prospective investors should not afraid of the quality control because the writer through years of experience can guide any investor to success.

The current price of Thailand hard pellets (Nigeria’s equivalent) is as high as 3,500 DM per ton, industrial starch $2,500 US per ton as at January 2011(please note that the international price fluctuates and project plan market price) would be worked out based on the current.

The processing plants
The plants and machinery for setting up the cassava chips and pellets, industrial starch and flour are locally available. The raw materials, labour and all other required inputs are locally available.
Prospective investors would be given the details and would be comprehensively worked out in the bankable feasibility studies report. All other essential details including accommodation, manpower, production technology, packaging and marketing will be embodied in a bankable and comprehensive feasibility report for prospective investor.

Chips & Pellets Industrial
starch flour Garri
Financial Implications as at January 2017 is in our records. Interested investors should contact the writer. 13,100 15,100 14,600 14,100
Investment Analysis
Payback period Within 1 year Within 1 year Within 1 year Within 1 year
Return on investment 52% 68% 40% 60%
Net Cash-flows(surplus) 1st year N68m N85m N76m N258m
Gross profit1st year N33m N48m N43m N78m
Net profit after tax 1st year N23m N26m N38m N43m

There is another good advantage that is worth mentioning that prospective investors will derive from investing into this project. The EPZ (export processing zones) can provide accommodation to serious investors. At the same time would ensure quality processing of their export products. Details would be given to prospective investors on contacting the writer.

The writer will guide prospective investors professionally to ensure that all opportunities are tapped (including government’s incentives and funds for Agriculture) good packaging, quality products and efficient/effective management is installed for profits. The writer will also assist in the sourcing of the required funds (where necessary) and obtaining NAFDAC approval. For details contact the writer

Uba, Godwin
Global Trust Consulting Group,
56, Ishaga Road (1st floor), Surulere, Lagos
Tel: 08034494437, 08023664368
Email: ubagodwin@yahoo.com