Investing in cassava farming and processing for export

Cassava is an important yearly food crop grown throughout Nigeria. It is a tuberous crop and has the ability to thrive in poor soil because it has considerable resistance to drought. Botanically called Manihot esculenta, maniac or tapioca, cassava tubers are used to produce one of Nigeria’s staple food garri.

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

Uses
Cassava is also used to produce 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 and food industries need starch.

Production
Nigeria is a major producer of this tropical crop in Africa. In 2012, it produced over 80, 000 metric tonnes of the crop. Other major producers are Brazil, Thailand, Indonesia, and Zaire.

Export
Globally, only 15 per cent of the total production of cassava is exported with Thailand being the major exporter. 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 in the country among other food crops.

Direction Of Export
The direction of 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 flour are available for any prospective investor. About 30 per cent of cassava production globally is used for starch and other industrial products with less than one per cent processed into ethanol particularly in Brazil. It is also a choice animal feed raw material because of its high carbohydrate content. It could also be mixed with another protein source like soya beans.

Europe Market Overview
Europe is the major market for cassava. The compound feed formulation is the main attraction for the crop. About 90 per cent of the traded cassava in Europe is from the developing countries, including 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 per cent recorded in the early part of the millennium.

The principal buyers are Netherlands (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).

Transportation And Handling
Transportation and handling constitute high export costs. This is due to the bulky nature of the product. This cost could be as high as 50 per cent of the total cost. But proper management of cost reduction programme is therefore recommended for those who wish to go into this venture, as the reduction of costs will lead to a very high profit. Cassava pellets are usually cheaper to transport and handle than other processed products like industrial starch.

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 for chips and flour, while 62 per cent goes for pellets. The moisture content remains at 14 per cent. For fibre the moisture content is five per cent, while ash is three per cent.

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

Packaging
Packing is done in cotton sacks, multi-craft paper bags or clean jute bags; pellets should be uniform in shape and size, less fragile and should be compatible for handling, storage, and transportation. Palletising equipment exist for the production of pellets. Prospective investors can see the professional for guidance.

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

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, among others.

Raw materials, labour and all other required inputs are locally available. Other details are as stated below:

Chips & Pellets Industrialstarch flour Garri
Financial Implications as at January 2020 is in our records. Interested investors should contact the writer. 15,500,000 55,000,000 60,500,000 15,000,000

Investment Analysis
Chips & Pellets Industrial starch flour Garri
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
The EPZ (export processing zones) can provide accommodation to serious investors. At the same time would ensure quality processing of their export products.