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Setting Up Cassava Flour Producing Plant for Profits

19 Feb 2013

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Cassava Farm

Uba Godwin

It is estimated that 30 per cent of the cassava tubers are lost as waste due to lack of processing and preservation mechanisms in Nigeria. One of the more acceptable means of preserving cassava, yam, plantain and others is to convert it to flour.

The traditional processing method is out modelled, laborious and grossly inefficient for mass production of quality cassava flour to satisfy the local demand by local industries and make room for the export market to earn foreign exchange.

The Federal Government has given flour mills and bakeries in Nigeria up to 10 months to transit from wheat to cassava flour as the major inputs in production According to 2013 budget; the federal government wants to continue with the development of cassava production and processing in the country.

As a result cassava flour producing equipment importation into the country is now duty free. Also importation of agricultural machinery & equipment will attract zero duty as well. The mandate to flour millers in Nigeria to have input of 10 per cent cassava flour in their production has been increased to 20 per cent. Many investors have started benefiting from the new policy.

Therefore 2013 will be a good year for investment into Agriculture.

In this investment profile, we discuss on how to make profitable investment into cassava production and processing into quality and internationally acceptable cassava flour.

Cassava flour is an acceptable among Africans, Asians and some other parts of the world as raw materials in bakeries. Just like Semovita, Semolina etc, it is also eaten as food by many. Pharmaceutical companies also use it as raw material.

Its processing increases its shelf life, adds value to the cassava tubers (from where it is processed) before being exported to enhance its economic value, reduces waste and cuts down the cost of transporting the product to longer distances compared with the heavy wet cassava tubers that are unprocessed.

The fact that this can be preserved helps to stabilise prices during off harvest season.  The setting up of this project is seen to be feasible, considering the following:

Technical Considerations

The most important thing to put into consideration when going into this project is quality. The quality of cassava flour has a great role to play in its acceptability and applications within Nigeria and outside the country. Most producers of cassava flour in Nigeria are victims of this. They ignored quality standards and in the long run, their products are turned down by flour mills in Nigeria and outside the country.

The plant aimed here will be able produce and package quality finished products for export. Its rated capacity is 5,000 metric tonnes of well packaged yam flour per year (8 hours per day of 250 days in a year after allowing about 2.5 per cent waste).this implies capacity of about 20 tonnes per day. The conversion ratio of raw yam tubers to yam flour is 3:1. This means that about 1,500MT of raw yam tubers will be needed per day, working at full capacity.

The machinery and equipment needed to process yam flour are

(a) Yam Peeler (could be done manually)

(b) Boiler

(c) Dryer

(d) International Standard Scale

(e) Automatic Sealing Machine

(g) Packaging Machine

All the above machines and processing technology can be obtained locally.  The machines apart from obtaining locally can as well be imported. The addresses of where to obtain both locally made machines and imported ones will be given to prospective investors on reaching to the writer.

Raw Materials

The raw materials needed are yam tubers. These are obtainable from farms cultivated by plantations, small holders and co-operative farmers. There is abundant yam grown in this country. Nigeria is the world’s largest producers of yams with over six million metric tonnes per annum of this output; only about 5 per cent is put into industrial use by way of chips and flour. Almost all states of federation grows yam.

Location

The best place to locate this project is the area where yam tubers are obtained in abundance. Yam tubers are heavy and so transport expenses would be reduced if the project is located in areas where the tubers are grown in abundance, hence it can be sited in any part of the country. Other factors to consider include:

(a) Availability of labour and raw materials in commercial quantity.

(b) Availability of infrastructural facilities (water, power, access road etc). Export processing zones will be most ideal for setting up this project, if it is basically for export.

(c) Ease or otherwise of the accessibility of the plant site to urban areas/ markets both for local consumption and export.

To accommodate the plant, one needs a large building with an area of about 1,500M2.

Market for Yam Flour

The market is both local and international. The later should be targeted where there is preponderance of inhabitants of Africans in Europe, America and Asian countries. Based on research, some marketing points internationally have been established and would be given to prospective investors.

The factors that have positively affect the demand for this product include the prevalence of foreign exchange crunch, habit/culture, the increase in population of the country, the fact that its consumption cuts across demographic classes, income levels and religious boundaries.

Production Process

Briefly the processes involved in yam flour production are

(1) Procurement of good quality tubers, weighing and washing of them.

(2) Peeling the washed tubers

(3) Grinding of the peeled tubers into pulp.

(4) Drying of the ground yam pulp

(5) Milling of the dried pulp

(6) Sieving to avoid having lumps when being prepared for eating

(7) Bagging and Packaging (2kg, 5kg, 10kg, 25kg and 50kg).

Details of the standard required in the international market will be given to prospective investors.

Cost and Funding

The project can be set up with minimum of N10.5 million using locally made machines.  It will be more if imported machines are to be applied. In terms of funding there are some institutions in Nigeria that are interested in the funding of this type of projects. Details will be given to prospective investors

Investment Analysis

The project is very profitable. With aggressive marketing strategies, good management and export oriented, the payback period would be less than 2 years. The return on investment is very encouraging at over 58 per cent. Details will be given to prospective investors.  For detailed information on export market, comprehensive and bankable feasibility studies/ report, sourcing of the required funds, please contact the writer.

* Godwin wrote from Surulere, Lagos

Email: ubagodwin@yahoo.com

Tags: Business, Nigeria, Featured, Cassava Flour Producing Plant, PROFITS

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