Investing in Cassava Production, Processing and Export

According to United Nations Report, world food prices hit all time high in March, 2022 following Russian’s invasion of Ukraine, the agricultural powerhouse of the world, which is pointing towards risk of global hunger. The disruption of production and export of foods from Ukraine and International sanctions against Russia has spurred fears of global hunger crisis especially across the Middle East and Africa where the effects are already playing out. For instance in Nigeria, the prices of wheat flour has been on an increase and the prices of all baked foods like bread and confectioneries have gone up.

Russia and Ukraine whose vast grains growing regions are affected by the war are among the world’s main breadbaskets account for huge share of the global exports in several major commodities including wheat, vegetable oil and corn.

For the past 3 years Russia and Ukarine together accounted for about 30% of global wheat supply and 20% of maize world exports. Within one month after the commencement of the war, the world price of maize has gone up by over 20%, while world index for wheat has gone up by 28%. Also the world price index of vegetable oil has surged up by 23.2%, driven by prices of sunflower seed oil of which Ukraine is the world’s leading exporter.

This the time Nigerians should start looking for local alternatives to importation of wheat, vegetable oil, corn and other consumable products.

The Federal Government has been working very hard to discourage importation of some of these items that can be easily 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. However, more efforts are required and private serious investors needed in these areas. Cassava can be produced, processed to flour that can replace wheat flour.

Cassava production, processing into chips & pellets, industrial starch, ethanol, garri, cassava flour and foo-foo is still a very lucrative agro- industrial project. 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. Cassava flour can be used in place of wheat to produce flour for bakeries; Alcohol is also extracted from cassava for production of beverages. Cassava starch is used by Textile industries and food industries need starch.

Production

Nigeria is a major producer of this tropical crops with output conservatively put at over 50, 000 metric tons. However, until 1996, cassava and its allied products were on the export prohibition list. From 1996, its ban was lifted. With this policy action, Nigeria exporters were given the opportunity to develop export markets for this product.

Apart 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 percent 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.

Direction of export

The direction of cassava export is mainly Europe and North America with European Union accounting for about 90 percent 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 percent of cassava production globally s used for starches and other industrial products and only less than one percent 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 percent of total agricultural output. The compound feed formulation is the main attraction for cassava. About 90 percent 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 percent), sub Saharan Africa is yet to contribute significantly to world trade in cassava with about three (3) percent recorded in the early part of the millennium.

The principal buyer of cassava in the Europe is Netherlands, (accounting for over 40 percent of total Europe imports); Germany (about 20 per cent), Belgium and Luxembourg (about 13 percent), France (eight percent), U.K (10 percent) and Italy (two percent). Details breakdown would be given to prospective investors the exportable quality standard.

Transportation and 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 percent, 70 percent and 62 percent stand for chips, flour and pellets respectively while moisture content is 14 percent, fibre five percent and ash-three percent 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 odors. 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.

Packaging

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. Pelletizing equipments 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 4,500 DM per ton, industrial starch $3,500 US per ton as at January 2022(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. However, arrangements can be made for foreign machines on request. There are foreign machines from Brazil, South Korea, Japan, India etc. Prospective investors would be given the details and would be comprehensively worked out in the bankable feasibility studies report. The raw materials, labor and all other required inputs are locally available.

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.

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.

Uba, Godwin

Global Trust Consulting,

56, Ishaga Road (1^st floor), Surulere, Lagos

Tel: 08034494437(what SAPP), 08023664368

Email: ubagodwin@yahoo.com