“Sustenance in the Production of High Quality Cassava Flour (HQCF): The Pricing Issues” Presented by: Bernard Siwoku (Business Development Advisor) Professor Lateef Sanni (Country Manager) 7th November, 2013

Outline What is HQCF? Common inclusion levels of HQCF in different products Market Potential for HQCF Challenges to HQCF Production Cost of Production of HQCF The Way Forward

What is HQCF?

HQCF is an unfermented, smooth, odourless, white or creamy cassava flour produced within 24 hours from wholesome freshly harvested and rapidly processed cassava roots. The process for HQCF production involves peeling, washing, grating, pressing (dewatering), Drying, Milling and Packaging. All process must be completed within 24 hours The Quality Parameters are stated in the Book of Standard by Standard Organisation of Nigeria (SON)

Common Inclusion Level of HQCF in Different Products

Common inclusion levels of HQCF in different cereal-based products Categories of End-users of HQCF Product/End-Use Inclusion Levels Bread Bakers Bread including French loaves 20 – 30%** Food Industries Biscuits Wafers Noodles Spaghetti 10 – 50% 10% 10% up to 50%* 25%* Home Caterers Cakes Chin-chin Meat/ Fish Pie Buns & Fish Rolls Puff-puff 100% 25 – 100% 10 – 100% 10 – 12.5% 10 – 25% Restaurants Stiff Porridge (Cassava – Maize – Semo/Ugali) 18%

High quality cassava flour is a cheap replacement for wheat flour that can be used in a number of food and non-food options How is it produced? How is it used? Cassava roots are peeled, grated, pressed, and then dried, by an artificial dryer HQCF can be used in food and non-food options At the rural level, bakeries can substitute HQCF for wheat flour Industrially, biscuits and packaging / plywood are large-scale options for HQCF For Aqua culture feed production Artificial (flash) drying is effective for large scale, industrial production Action points for the future: - NA 7

Market Potential for HQCF

Market Potential for HQCF Market Size (T/Year) Replacement Size of HQCF Opportunity (T/year) Target Price Point (% Wheat Flour) Price (N/Kg) Milling 22 million 5% 110,000 90% 75 Biscuit 500,000 10% 50,000 75% 67 Packaging 3,000 – 6,000 100% >80 Soap 600 ??? Rural Caterers Yet to be

Challenges Confronting HQCF Production

The Key limiting factors for HQCF 1. High prices offered by garri & fufu processors for cassava root 2. Most Cassava processing factories have been shut down for months/years 3. Ability of SMEs to meet buyers’ quality requirements consistently 4. Market acceptability & Capacity to deliver 5. Lack of working capital by SME owners 6. Inaccessibility to reliable sources of finance

The Guilty one! CASSAVA ROOTS & MEASURES

Cost of Production & Delivery Margin Allowed (20%) Cost of Transport Total Cost N90,000 18,000 10,000 118,000 N100,000 20,000 140,000 N120,000 24,000 154,000 N130,000 26,000 166,000 N140,000 28,000 178,000

Yield/ Ha Price of Root @ N8,000/ T Price of Root @ N9,000/ T Price of Root @ N10,000/ T Price of Root @ N12,000/ T Price of Root @ N15,000/ T 15T 120,000 135,000 150,000 180,000 225,000 18T 144,000 162,000 216,000 270,000 20T 160,000 200,000 240,000 300,000 22T 176,000 198,000 220,000 264,000 330,000 25T 250,000 375,000 30T 360,000 450,000 35T 280,000 315,000 350,000 420,000 525,000

Cost of Production of HQCF

Cost Item HQCF Cassava Roots (N10,000/T) HQCF Wet Cake (N18,000/T) 40,000 - HQCF Wet Cake (N18,000/T) 36,000 Peeling 3,000 Bags 1,200 Fuel for Drying (Black oil) 12,000 Generator 3,800 Electricity 1,000 Transport to Market 2,700 Grating 2,000 Pressing (Dewatering) Fixed Cost 4,078 Contingencies (3% of Fixed + Var. Cost) 2,123 1,787 Total Cost of Production 72,901 61,365

Even though fresh cassava roots are the most expensive input and the most difficult to supply Cost of goods sold, annual $USD# 100% = 23 Diesel 10 Fresh cassava roots procurement Transport Most difficult supply to guarantee in terms of timing and logistics Several options for procuring: Smallholder farmer production Outgrower / contract scheme Self-supply through commercial means (supplemental) Pricing is seasonal and based on a number of external factors (e.g., drought, famine) Packaging 26 Fresh roots 55 2011 20

The Way Forward

The Price of HQCF should be fixed periodically (Quarterly or Bi-annual) using cassava root price as a factor Training of farmers to increase yield so that the price of cassava root can be low and stable Commercialisation of cassava production Distribution of improved cassava varieties to more farmers around the selected SMEs Flour millers are the BIGGEST buyers now, but not the ONLY buyer. Rural marketing as direct inclusion to bread, confectionery or food staples should be explored

Training of Potential Investor on HQCF based new product development - Use of HQCF in feed formulation should be explored; other uses of HQCF should be explored further Encouragement of Processors to establish own farm as source of roots during price hike Energy cost should be made low using alternative sources of energy such as use of Agricultural wastes – cashew shell; Palm kernel shell; saw-dust; etc

Conclusion

Due to the versatile uses of cassava, once the price of cassava root is relatively stable and competitive, the production of HQCF will become attractive for current and potential investors. This will help sustain the HQCF value chain and transform the livelihood of so many actors along the chain.

Thank you for your Attention!

Key contacts Professor Lateef Sanni, Country Manger, Federal University of Agriculture, Abeokuta (FUNAAB). E-mail: lateef_2@yahoo.com Bernard Siwoku, Business Development Advisor, E-mail: bosiwoku@yahoo.com General project e-mail: cava@gre.ac.uk Project website: http//:cava.nri.org 28