SMALL BUSINESS SOLUTIONS
Investing in cassava production for export is a thriving business and a money spinning venture, writes Uba Godwin
The federal government still encourages diversification via Agriculture. The Minister of Agriculture, Chief Audu Ogbeh has retreated the importance of diversification to Agricultural products such as yam, cassava and rice production and processing.
The present government has paid attention on the development of agriculture and other non-oil exportable products. Through Agricultural development food security, self-reliance on local food consumption and export will be enhanced.
Cassava production, processing into chips & pellets, industrial starch, ethanol, garri, 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.
Nigeria is a major producer of this tropical crops with output conservatively put at over 50, 000 metric tons. Cassava and its allied products were on the export prohibition list for quite long time. 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 of cassava is almost totally processed and consumed locally.
Cassva is used to produce Garri, foo-foo, cassava flour and ethanol for local consumption.
Cassava is used mainly for producing animal feeds. 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 as raw materials for production. Food, pharmaceutical and cosmetics industries (to mention few) need starch as raw materials
Cassava for export includes dry cassava leaves, chips & pellets, starch and ethanol. All these products can be exported and very lucrative business. Detailed research reports and feasibility studies report on establishment and running of any these aspects of the project as well as export market information are available and would be given to prospective investors.
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.
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, fiber 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.
Global Packaging Requirements
Packaging is done in sacks of cotton, multi-craft paper bags or clean jute bag or woven sacks; pellets should be uniform in shape and size, less fragile and should be compatible for handling, storage and transportation. Palletizing 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 3,500 DM per ton, industrial starch $2,500 US per ton as at April 2017(please note that the international price fluctuates and project plan market price) would be worked out based on the current.
Establishing the Cassava processing plants
The plants and machinery for setting up of the cassava chips and pellets, industrial starch and flour, ethanol, garri and foo-foo producing and packaging plants for both locally and export markets are locally available. However, arrangements can be made for foreign machines on request. There are foreign machines from China 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.
Prospective investors can start very small and gradually grow.
The proposed project is always very lucrative.
|Projects||Chips & Pellets||Industrial starch/ flour||Ethanol||Garri / foo-foo|
|Payback period||Within 1 year||Within 1 year||Within 1 year||Within 1 year|
|Return on investment||52%||68%||40%||60%|
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.
Details would be given to prospective investors on contacting the writer.
Global Trust Consulting,
56, Ishaga Road (1st floor), Surulere, Lagos
Tel: 08034494437, 08023664368, 08171555133