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1. INTRODUCTION

1.1 The objectives of the study are as follows:- (a) To prepare a Turnkey Model business plan / Feasibility Study for Cassava Processing to Starch

(Food & Industry Grade).

(b) To enable NEXTT partner with value chain associations and technical teams to produce high level business plans that could enable best practices and attract investors.

(c) To spur investments to improve economic environment of Nigeria and ensure sustainability of

investments. (d) To align with and ensure achievement of objectives of NEXTT.

1.2 On the basis of the foregoing, Agroec Consultants would prepare a Turnkey Feasibility Report

/Business Plan for USAID. Special attention was given to:-

i. The market potential for Starch (Industry and Food Grade) ii. Profitability or otherwise of operations

iii. Technical operations iv. Organization and personnel requirements.

The subsequent pages of this report contains the observations, findings and recommendations of the Consultants.

2. OVERALL ECONOMIC & INDUSTRY SURVEY

2.1 Overall Economic Environment 2.1.1 Nigeria became independent in 1960 and from then the political and economical leadership and

management of the country was transferred to Nigerians.

Since independence, the country has had 15 Governments, 4 Development Plans and several other rolling Plans (the first 1962 – 1968 to the fourth 1975 – 1981 which are all geared towards bringing about a general improvement in the living standard of the population. Despite various

government policies and well articulated development and rolling plans, Nigerians are yet to experience any appreciable improvement in their living condition. while billions of Naira have been budgeted and spent over various Development Plans, the country is yet to find answers to

its basic social and economic problems, which include amongst others:-

A dilapidated and scanty infrastructure; An agricultural system that can neither feed the growing population nor supply the essential

inputs to her industries;

An exogenous demand profile that far outstrips our production capacity;

Declining industrial output and productivity; Massive unemployment and under – employment;

Soaring prices and inflation; A dysfunctional bureaucracy which is allegedly corrupt and inept and yet exercises supreme

control over the economy;

Inadequate and unreliable data for national planning;

High leadership turnover; and A high level of external dependence

2.1.2 In the early days of Nigeria’s independence, agriculture accounted for nearly 60% of Gross

Domestic Product (GDP) and 80% of export earnings (Shaib, Aliyu, Bakshi 1997). Today, agriculture accounts for a third of GDP and less than 1% of export earnings, oil and gas accounting for the rest.

A desirable outcome for the Nigerian population and current government is a strong diversified economy able to:- i. Generate employment

ii. Sustain incomes for its citizens iii. Increase the productivity of agriculture iv. Increase utilization of industrial capacity

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v. Improve export earnings

2.1.3 The Government has just launched the Economic Recovering and Growth Plan Policy (2017). The highlight of the policy designed to achieve above are as follows:-

i. Review ban on 41 items, free forex market ii. Sell National Assets:- Selected public enterprises/assets will be privatized to optimize their

efficiency and reduce fiscal burden on the government. iii. Create 15 Million Jobs by 2020:- One major strategy is to accelerate implementation of

the National Industrial Revolution Plan (NIRP) through Special Economic Zones (SEZs). The focus will be on priority sectors to generate jobs, promote exports, boost growth and upgrade skills.

iv. Don’t Import a Drop of Petrol by 2020:- Boost local refining for self-sufficiency. Reduce petroleum product imports by 60 per cent by 2018, become a net exporter by 2020, save foreign exchange and prevent reversion to the fuel subsidy regime.

v. Hit 10,000 Megawatts by 2020 – But no selling TCN:- With regards to the power value chain, efforts will be concentrated on overcoming the current challenges which relate to governance, funding, legal, regulatory, an pricing issues across the three main power

segments of generation, transmission and distribution, and ensuring stricter contract and regulatory compliance. “The Plan also aims to increase power generation by optimizing operational capacity to improve the energy mix including through greater use of renewable

energy, encouraging small-scale projects, and building more capacity over the long term. Government will also invest in transmission infrastructure”.

vi. Raise VAT to 15% - Only on Luxury Items:- The plan is to increase the tax base by

raising the VAT rate for luxury items from 5 to 15 per cent from 2018, while improving CIT and VAT compliance to raise 350 billion annually.

vii. Raise Oil Production to 2.5MBPD

viii. Take Inflation Back to Single Digit:- The recovery plan seeks to cut inflation from 15.7 percent in 2017, and down to 9.9 percent by 2020, based on sound macro-economic policies.

ix. Achieve Tomato, Rice, Wheat Self-sufficiency:- Nigeria is projected to become a net

exporter of key agricultural products, such as rice, cashew nuts, groundnuts, cassava and vegetable oil. The government also plan to “open up a minimum of 100,000 hectares of irrigable land through the 12 River Basin Development Authorities by 2020”, and “expand the

use of dams for commercial farming and aquaculture”. x. Provide Two Million Houses by 2020:- Improve access to finance for the construction

industry, e.g. by fast-tracking implementation of the proposed Family Homes Fund, to build

2 million housing units by 2020. “Reposition of the Federal Mortgage Bank of Nigeria by recapitalizing it from N2.5 billion to N5000 billion to meet the housing needs across Nigeria.

The Cassava value chain represents a unique opportunity for the diversification of the Economy

for employment Generation and value added activities.

3. BACKGROUND INFORMATION Cassava – Farm Production, Processing Trends (Global & Nigeria), Opportunities and

Economic Potentials

3.1 Production – Commodity Context

i. As a crop whose by products have a wide array of uses, Cassava is the most important food crop for Nigeria by production quantity next to yam, which is the most important food crop by value (FAOSTAT, 2012). Nigeria is the world’s largest producer of cassava with other top producers being Indonesia, Thailand, the Democratic Republic of Congo and Angola (Table

1). It has been estimated that in 2010 Nigeria’s production of cassava reached 37.5 million tonnes (FAOSTAT, 2012). The country has consistently been ranked as the world’s largest producer of cassava since 2005 (FAOSTAT, 2012). Nigeria is however not among the top

10 exporters of cassava worldwide and exported just about 0.55 million tonnes of its fresh/dried cassava in 2011 (UNCOMTRADE, 2012).

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Source: FAOSTAT 2012 Table I – Top ten cassava producing countries in 2010 (USD, tonne)

Cassava is also seen to have a high poverty-reduction potential for Nigeria due to its

low production cost (Nweke 2004, FAO 2005). Egesi et al (2006), argue that cassava has been transformed from a reserve commodity for support in times of famine into a rural staple, and subsequently a cash crop. A prior study conducted by Nweke et al (1997) shows that

cassava accounts for 21 percent of the income of cassava producing households.

There are two main categories of cassava varieties produced in Nigeria: Manihot palmata and Manihot aipi, or bitter and sweet cassava respectively (Nwabueze, 2009). Cassava production,

yield and area data are shown in table II below. In 2010 production values reached about 37.5 million tonnes while yield and area values reached 12 tonnes per hectare and 3.13 million hectares respectively. The figure also shows that while area harvested remained

overall stable during the past decade, production saw an increase of 15 percent between 2000 and 2006, with yields developing in correlation to production trends.

Main production figures for cassava in Nigeria (2000-2010) Table II

Source: FAOSTAT 2012

ii. Characteristics of Cassava Production in Nigeria and Thailand – Table III

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Table III, shows the major characteristics of the largest producer of cassava and the largest importer of cassava and its by products.

3.2 Growing Cassava in Nigeria – Commercial Crop Production Guide Series USAID/IITA Publication (2013) i Choice of Land

Choose well-drained, deep, loamy soils. Where such is not available sandy and clayey soils can be managed intensively for cassava production. However, very sandy and clayey soils should be avoided. Land preparation: The texture and water table of the soil will guide you in your choice of land

preparation method. Planting on the flat is recommended when the soil is deep and well drained as in sandy loam soils. Shallow and clayey soils should be tilled and ridged. Soils prone to water-logging require ridges or mounds. Planting on ridges or mounds is a general

practice in the rain forest and derived savanna zones in Nigeria.

ii Choosing a Variety

a. Carefully select varieties with multiple pest and disease resistance, high and stable root yields and acceptable quality characteristics that meet end users’ requirements for food (gari, fufu, fermented flour etc) and industrial raw material (Starch, chips, pellets,

unfermented flour etc). The major genetic factor that determines quality of roots is dry matter content.

b. Recommended Varieties Several improved varieties of cassava have been recommended and released in Nigeria.

The most commonly grown of these are TMS 30572, 4(2)1425, 92/0326 and NR 8082. More recently 42 new improved genotypes have been made available to farmers in the South-south and South-east for participatory selection so that they can identify specific

best-bet varieties for each of the cassava growing communities. For now, you could choose any of the commonly grown improved varieties for planting since they are stable across environments. However, you will also need to select the variety with the highest

performance in your farm site and environs. iii. Acquisition of Planting Materials

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Stems of improved varieties can be obtained from National Seed Service (NSS), state offices

of Agricultural Development Programs (ADP), the Cassava Growers Association (CGA) and several out-growers who produce quality stems for sale. Stems are usually tied in bundles each having 50 stems that are 1metre long. Fifty of such bundles are needed to plant 1

hectare of land.

Keep bundles of stems stacked vertically on the soil under a shade. The distal end of the stem should touch the soil. Moisten the soil regularly and keep the

surrounding weed free. This way you can store your stems for more than 3 months. Under low relative humidity and heat stress store your stems in pits under shade.

(a) Stem Quality

Cassava stakes (cuttings) for planting should be taken from plants 8 – 18 months old. Stakes taken from older plants are lignified and they perform poorly due to delayed sprouting and rooting. A mature cassava stem has 3 sections – hardwood, semi-hardwood

and shoot-tip. The hard and semi-hardwood sections are the best for planting. Shoot tips are very fragile and have high mortality rate especially if they are subjected to moisture stress during the first month after planting. If you must source planting materials from an

old field (over 18 months) the semi-hardwood section gives the best quality.

Use sharp tools preferably a secateurs or cutlass to cut stems into stakes for planting. Avoid bruising the stems. Smooth cuts enhance root yields through rapid and uniform root

development from the cut surface. The recommended length of stakes is 20-25 cm with 5 or more nodes. Mini-stakes (10cm) are required for multiplication while micro-stakes (3-5 cm) are used for rapid multiplication.

(b) Handling of Stakes Stakes should be planted soon after they are cut otherwise they get dehydrated and perform poorly. If stakes must be stored for a few days (3-5 days) before planting put

them into transparent polyethylene bags. You can also gather the stakes together under shade and cover with a plastic bag. The high relative humidity and temperature within the bag usually induce rapid sprouting and rooting of stakes. Plant vigour, survival rate and

yields are better if stakes are pre-sprouted before planting.

iv. Plant Population

The optimum plant population for high root yield is 10,000 plants per hectare obtainable when plants are spaced at 1 x 1 m. This population is seldom achieved at harvest due to losses caused by genetic and environmental factors. In other to harvest a plant population near the optimum an initial plant population/ha of 12300 at 0.9 x 0.9m is recommended. Plant spacing

and population will vary depending on if cassava is planted sole or in association with other crops.

Cassava is compatible with many crops when intercropped. The best intercrops of cassava in Nigeria include maize, melon, groundnut, cowpea and vegetables. Other less important intercrops particularly in the South-south and Southeastern Nigeria include yam,

cocoyam, sweet potato, plantain and banana. Non or high branching varieties of cassava are best for intercropping. Profuse and low branching varieties will shade light off the intercrops. In medium and large-scale farms maize is the best intercrop.

a. Weed Control This is one of the major limiting factors to production accounting for more than 25% of the total cost and time of production. Integrated weed control (cultural, mechanical and

chemical) is recommended. The ideal combination will depend on the agro ecology, weed spectrum and level of infestation, soil type and cropping system.

Cassava should be planted early before weeds emerge after land preparation. Adopt

improved fallow practices using live mulch to suppress weeds. Under monocropping, plant varieties with potentials for early canopy closure to reduce weed infestation. Such varieties

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should be vigorous and resistant to major pests and diseases in addition to having multiple

branching at a medium height. b. Mechanical

Do double or triple harrowing before planting. Weed with hoes or adapted cutlasses 3 or

more times depending on agro ecology and type of weed. More weeding times are required in the forest than in the savanna. Weeds with stolon, rhizome, tubers or deep taproot require more frequent weeding. On a large scale you will require tractor-operated

weeders. c. Chemical

Several pre and post emergence herbicides exist but only few of them are available in Nigeria for controlling weeds in a cassava farm. In the forest zone, apply pre-emergence

herbicides like premextra or dual while in the savanna zone you can apply primextra, dual or cotoran multi immediately after planting to keep your farm weed free for periods ranging from 4-8 weeks. Apply post-emergence herbicides (paraquat or

gramozone) as soon as weeds begin to emerge after the pre-emergence herbicide treatment. They are basically non-selective, localized contact herbicides and should be sprayed with a guard to ensure that only the weeds receive the chemical. If

your field is infested with difficult-to-control weeds like Spear grass (Imperata cylindrica) carefully apply systemic herbicides like Glyphosate, Fusilade or Sarosate. Weather conditions affect herbicide performance. Do not apply herbicides soon after a heavy

rainfall or when it is likely to rain to avoid diluting the chemical and reducing its effectiveness. For best results gramozone should be sprayed only when you are sure of having at least 3 hours of sunshine after spraying. For cost effectiveness and results use

skilled staff for chemical weeds control. Organic herbicides are available. These include Weed Pharm (20% acetic acid), C-Cide (5% citric acid), GreenMatch (55% d-limonene), Matratec (50% clove oil), WeedZap (45% clove oil + 45%

cinnamon oil) and GreenMatch EX (50% lemongrass oil).

v. Fertilizer rate and time of application Ideally, fertilizer recommendations should be based on soil analysis but when this is not

done then use the land history and vegetation as a guide. Lands naturally inundated with Chromolaena odorata (Akintola taku) as weed can support a good cassava crop without fertilizer while the presence of Spear grass or poorly established

vegetation is a signal for fertilization. Under continuous cultivation in the forest zone apply a first dose of 200kg (4 bags) of N: P: K 15:15:15 per hectare or a full small matchbox per plant at 4-6 weeks after planting (June-July). A second dose of 100kg of muriate of potash or a half-

full small matchbox per plant at 14-16 weeks after planting (September) should also be applied. In the savanna zone, apply 200kg (4 bags) of N: P: K 15:15:15 per hectare or a full small matchbox per plant at 4-6 weeks after planting and a second dose of 50kg of muriate of potash

per hectare. Apply fertilizer in holes 5 cm deep and 10 cm radius from the plant. Do not apply fertilizer if the soil is dry.

3.3 Trends – Global and Nigeria

3.3.1 Cassava is one of the world’s most important food crops, with annual global production at approximately 276 million metric tons (MT) in 2013. The Top producing countries globally in 2013 were: Nigeria (accounting for ~19% of the total), Thailand (~11%), Indonesia (~9%), Brazil

(~8%) and Democratic Republic of Congo (~6%).

Global demand for the commodity has been growing significantly between 2004 and

2013 because of its appeal as a food security crop for growing populations in emerging markets, and the growing demand for industrially processed cassava products. Africa accounts for less than 1% of total exports and the cassava production space is dominated by smallholder farmers (25% women). The root crop is a source of livelihood for at least 300 million

people. Virtually all cassava (90%) produced in Africa is used as a staple food for human

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consumption, providing calories for ~500 million people and constituting ~37% of the

population’s dietary energy requirements.

However, in several African countries, cassava is perceived, not only as a food security crop, but also as a raw material for various types of industries. In some countries, there

are concerted efforts being initiated, sometimes with strong political support at the highest level to make cassava an engine of economic growth. The Global Cassava Development Strategy study commissioned by IFAD and FAO and the Vision 2020 study on Root and Tuber crops stressed the

great potential of cassava to spur rural industrial development, raise rural incomes, and contribute to food security.

3.3.2 The New Partnership for African Development (NEPAD) has also recognized Cassava as a

powerful poverty fighter in Africa and recommended a Pan-African Cassava Initiative based on a transformation strategy which emphasizes better markets, better organization of producers for collective action, and better participation by the private sector.

3.3.3 However, for cassava to be a contributor to development, the demand must grow more rapidly. This can only be made possible by the introduction and promotion of new uses for cassava.

Despite widespread subsistence cultivation of cassava, especially in Africa, the crop’s derivatives have enormous potential for use in industrial processing.

In terms of national policy objectives for the Cassava sector, both the National Investment Plan

(NAIP) and the Presidential Agricultural Transformation Agenda (ATA) include cassava within their main focus crops. The NAIP (2011-2014), provides for increased input supply and distribution, by monitoring the quality standard of fertilizers in the country. The use of organic fertilizers is

encouraged as a complement to inorganic fertilizers.

The NAIP also promotes the export of cassava products by adopting measures including the US African Growth and Opportunity Act (AGOA) and the adoption of appropriate Sanitary and

Phytosanitary Standards, in compliance with the Technical Barriers to Trade agreements of the World Trade Organization.

The country’s Presidential Agricultural Transformation Agenda (2011-15), intends to create 3.5 million jobs along key agricultural product value chains. Furthermore, the Agenda provides for improved mechanisms for the supply of quality inputs, such as subsidized fertilizers and seeds to farmers, as well as guaranteed farm-gate minimum prices for many crops. The Presidential

council, which is in charge of implementing the Agenda, also intends to increase Cassava production up to 50 million tonnes by 2015, while supporting its export.

3.3.4 Lessons can be drawn from success stories of agricultural transformation in other countries such as Thailand and Vietnam. The Federal Government of Nigeria launched the Agricultural Transformation Agenda (ATA) in 2012, as a private sector-driven, agri-business

based, development of commodity value chains to create wealth, attain industrialization and sustain livelihood. This program which was built on commodity value chains drove Nigeria’s cassava production to 54 million tons in 2015. Based on the impressive

food production, Nigeria met the Millennium Development Goal of halving the number of hungry people (MDG 1 - poverty reduction) in 2013, two years ahead of 2015 target.

3.4. Opportunities (By Products)

3.4.1 The huge and untapped market opportunities of cassava in Africa can be effectively exploited for transforming Africa’s agriculture. The challenge today is to increase productivity, marketing opportunities and profitability through effective and efficient cassava value chain development.

Cassava has diverse end-uses (Figure 1) despite its widespread subsistence cultivation in Africa for mainly food. Given its versatility and high Starch content, it can be transformed into many important products/derivatives (cassava chips, high quality cassava flour (HQCF), Starch, and

ethanol).

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Figure 1: Cassava derivatives and their uses

3.4.2 Indeed, Cassava can be converted into a large number of products ranging from

traditional and novel food products, livestock feeds, ethanol, Starch and numerous other derivatives. Cassava can also provide locally produced products to substitute for imported commodities to reduce food imports, to improve foreign exchange

balances and to provide local earning potential within Africa.

Nigeria has very good soil for cultivation and agriculture-friendly weather yet the country spends billions on food imports: about 600 million tonnes of food is imported annually. The country is

said to be the highest importer of rice; spending N75 billion on it every year. Another N60 billion is spent to import sugar, N165 billion goes to the importation of wheat and N105 billion on fish.

Given its versatility and high Starch content, Cassava can be transformed into many important products. Cassava’s derivatives can be broadly categorized into four product areas: cassava chips, high quality cassava flour (HQCF), Starch, and ethanol. All of these products that can be derived

from cassava are already in use in many parts of the world, demonstrating its high potential for value-addition and use in industry.

This is obviously due to the fact that over the decades the federal governments of various military

regimes and civilian administrations have not considered agriculture a priority because they had crude oil to export. This has resulted to poor funding of agriculture and even today agriculture gets less than 3% of the entire national budget.

In past few years, a lot of stakeholders in the agricultural sector have been drumming up attention for this root crop: Cassava (manihot esculentus).

3.4.3 The appetite for Garri, Eba and ‘African Salad’ is increasing in the country. Just like chicken and turkey, Eba, a meal made from Garri continues to be glamorized and included in the menu of major social events, like other local dishes. Also the popularity of trendy restaurants with local dishes has resulted in all the major fast food restaurants including Eba on the menu. Not to forget

the Garri-Sugar snack that is catching on amongst school kids especially in the suburbs.

The high price of wheat flour is affecting the price of bread and bread is practically a

necessity in every home, especially for breakfast. The situation with wheat is expected to get worse as Nigeria continues to import more and more wheat flour.

Fortunately, bakers can now include cassava flour in bread making following the Federal

Government’s new policy of having 40% cassava flour input in bread made and consumed in the country.

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The new policy, expected to come into operation on July 1, 2012, proposes that bread made in

the country will comprise 60% wheat and 40% processed cassava flour. Brazil is usually cited as the country where cassava content in bread is highest at 30%.

In the meantime, while stakeholders in the bakery and confectionery sector have expressed

doubts as regards the success of the policy because of the plethora of logistic and operational challenges that are yet to be solved, some say 100% cassava bread stands a chance of becoming a delicacy someday, just like corn bread. Also some noodle makers are quietly using cassava to

supplement wheat flour that is more expensive. The chances are that bread consumers may not even know their bakeries have switched to cassava flour. But there is more to Cassava than all of this.

Over 800 million people worldwide depend on cassava for food. The consumption in West Africa is more than 120kg per annum/per capita while that of Central Africa Republic is more than 300kg per annum/per capita.

3.5 Challenges, Risks and Contribution to addressing challenges 3.5.1 The major challenges to the development of the cassava subsector in Africa include the following:-

(i) Low yields: The yields of African cassava producers are 37 - 64% below the global value. In 2013, Nigeria reached 14.1 tons/ha, similar to Brazil but ~37% less than Indonesia (22.5 tons/ha) and Thailand (21.8 tons/ha) (FAOSTATS accessed 2015). The yields of the other top African producers are also low. Cameroon’s cassava yield in 2013 was at 14.7 MT/Ha, while

Angola achieved yields similar to those of Nigeria at 14.1 tons/ha. DRC’s 2013 yield was 8.0 tons/ha, less than 60% of Nigeria’s yield. Yields are low by global standards, mainly due to the prevalence of traditional subsistence farming techniques with little or no use of inputs.

(ii) Variety improvement: Improved crop varieties remain the engine of agriculture. Successful value-added chains of cassava in Thailand and Brazil take advantage of the increased productivity, and profits for actors along the chain, that improved varieties of

cassava brings. Under the cassava transformation emphasis will be placed on the development of new varieties that respond well to inputs, the use of biotechnology approaches to accelerate breeding, expanding the genetic base with novel traits, and capacity

building of a new generation of cassava breeders. (iii) Identification of cassava varieties that respond to increased use of inputs

especially fertilizer: Cassava breeding in Nigeria test materials across agro-ecologies under

zero input conditions typical of how farmers have always grown cassava. But the emphasis is now to grow cassava under best production practices; there is a need to improve cassava for these conditions. In the first instance, 60 advanced breeding lines in the IITA and NRCRI

breeding programs will be tested across the cassava belt of Nigeria under optimum production conditions. This activity is expected to result in the identification of genetically improved cultivars that respond to fertilizer best suited in each agro-ecological zone. In addition, an

emphasis will be placed traits important to the value-added chains, especially high Starch yields.

To ensure quick adoption by farmers and processors, lines already at an advanced stage in

the breeding pipeline will be evaluated for performance and quality traits in collaboration with farmers and processors involved in the five value-added chains to determine those that best meet commercial quality requirements. It is important that farmers include seed producers

in the respective SCPZ clusters. They can contribute to quick dissemination of new selected materials.

(iv) Fragmented, Smaller-Holder Farms: In Africa, cassava production is carried out in

predominantly smaller-holder and fragmented farms with rudimentary technologies, low use of inputs limited economy of scale. Six million small-scale farmers account for 90% of the production in Nigeria.

(v) Limited Adoption of Improved Seeds: Small-scale farmers rarely use improved planting materials (clean, healthy seeds), and the sub-sector is dominated by disease-prone local

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varieties with long maturation periods and low yield potential. IITA and African NARS (National

Agricultural Research System) have played leading roles in the development of improved cassava varieties that are multiple disease and pest resistant, early maturing, and high yielding. These varieties have the potential to raise productivity by up to 30-40 tons/ha.

Thirty-two African countries have released an estimated 384 high yielding varieties between 1970 and 2014. These varieties are high yielding with good levels of multiple disease and pest resistance as well as of acceptable quality for food, feed and industrial uses in Africa. While

the combination of these new varieties and better agronomic practices could increase yields per unit area by at least 40%, the rate of adoption by smallholder farmers has been low.

The dissemination of these varieties has often suffered from the lack of a reliable planting

material distribution system from National Agricultural Research Systems (NARS) because of weak extension systems, insufficient quantities of planting material, and delays in distributing the approved planting materials.

This compels farmers to continue to grow local, low yielding, varieties. This is exacerbated by inadequate location specific knowledge on fertilizer use, and other cultural practices such as

weed and pest and disease management for cassava systems and late planting specifically in southern Africa region where maize comes first. Private companies are also not involved in distribution because cassava is propagated vegetatively, and it takes one year to produce cassava stems material compared to three to five months for grain seeds.

(vi) Low use of Herbicides: Low use of herbicides and pesticides presents another obstacle. In the case of south-eastern Nigeria, only 3% of farmers use herbicides because they do not

know about them, lack the technical skills to use them, are not able to afford them or are under pressure from local NGOs to avoid them. When they do use them, most use insufficient amounts of herbicides to save cost. Instead increasing herbicide use would reduce the need

for weeding and free up labor for other activities.

(vii) Limited use of Fertilizers and Irrigation: Fertilizers are used infrequently, and even when used, the amounts are below the recommended levels because of the high cost. Use

of irrigation techniques is also a constraint in almost all cassava farms in Africa as the system of cultivation is predominantly rain-fed.

(viii) High labor use: Cassava farming is highly labor-intensive and related costs can account

for up to 90% of total production costs. For example, the cost of developing and preparing land is quite high. In Oyo and Benue states of Nigeria, 98% of the average cassava production cost of USD 700 per hectare is labor (ridging, planting, weeding, etc.) and 2%

is inputs (fertilizers, seeds).

(ix) Low use of mechanization: A low level of mechanization characterizes small-scale

cultivation. For example, tractors are used in just 10% of Nigeria’s cassava cultivation. Harvesting is done manually and is therefore time-consuming and expensive. In both small-scale and commercial farming, 8-12% of cassava roots are lost due to sub-

optimal harvesting methods. A survey conducted by the African Agricultural Technology Foundation (AATF) during the 2004 Triennial Symposium of the International Society for Tropical Root Crops – Africa Branch revealed a consensus among African cassava experts that the most important intervention to increase the competitiveness of the cassava industry

was the adoption of mechanization in cassava production. Such mechanization will enable a reduction of labor costs, thus bringing down the cost of cassava as a raw material and stimulating reliance on local cassava as a competitive raw material for various industries.

(x) High Prices of Cassava Roots: Cassava prices vary greatly from country to country as there is no global commodity market and production costs differ vastly due to varying levels

of input use. For example, in 2012, the average price for cassava was USD 161/ton in Nigeria (10% mechanized), and USD 67/ton in Thailand (highly mechanized).

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Cassava derived products must be price-competitive with their substitute products like corn

Starch and ethanol made from other sources.

(xi) Limited access to finance: Both commercial and smallholder farmers have limited access to finance. In Nigeria the agricultural sector accounts for 42% of GDP but has 2% of all

formal credit flows. Reasons for this include:- - Conditions to access a bank loan are stringent; - Interest rates are high (17-25%);

- And commercial banks do not offer conducive payment terms for agro- based activities (e.g., fixed repayment periods that may not match annual cropping, especially when loan release is not coordinated with growing cycles). As a result, commercial farmers

may produce lower volumes.

(xii) Trade and Transport: Smallholder cassava producers have weak and limited access to markets. The high transportation costs and the need to process cassava within 48 hours of

harvesting because of its perish ability, makes small producers to sell most of their product at local markets. The high fragmentation (scattered farms) and poor infrastructure make it difficult to develop commercial-scale aggregation. Poor roads and inadequate storage

facilities drive up prices and increase postharvest losses.

(xiii) Weak Access to Markets: Agricultural markets world-wide are characterized by market structures, both quantitative – aggregation, storage, and processing facilities, and

qualitative – quality standards, information services, logistics for distribution of agricultural products. Many of these structures do not exist in many African countries for cassava distribution.

(xiv) 3 year Cassava Burst Cycle: Nigerian cassava farmers produce for an inelastic food market. This leads to wide swings of prices every other harvest, in the absence of a

minimum price guarantee schemes by government. For example, the price of a ton of cassava in 2007 was N5,000-N6,000 in central Nigeria due to overproduction, partly in response to an appeal to farmers by the last Presidential cassava initiative to increase

cassava production for new markets of high quality cassava flour, Starch, and chips, markets that were only partly achieved. Because of the depressed prices, many farmers switched to other crops and production output fell. By March and August 2009 cassava sold at farm

gate in most of central Nigeria for N12,000 – N15,000 per metric ton; given the good prices many farmers went back to cassava production, leading to an overproduction. In 2011 cassava roots are selling for between N5,000 – N8,000 a ton; and N16,000 in 2016: essentially completing the burst-boom cycle of cassava that occurs every three years;

cassava in Nigeria is a 15-18 months harvest and two crop cycles is 3 years.

3.5.2 Contributions Towards Addressing the Challenges:-

i. IITA has pioneered since the 1970s and will continue to propel the Cassava research improvement in Africa to increase and sustain cassava production and utilization in sub-Saharan Africa. The Institute, working with national partners, has been actively involved in

the development of Value chains of the cassava subsector in Africa since the 2000s.

Examples include the Rural Sector Enhancement Program, Pre-emptive management of Cassava Mosaic disease in Nigeria, and the Cassava Transformation Agenda all in Nigeria.

Under the Nigeria Cassava Presidential Initiative on Cassava (1999 – 2007), IITA research efforts increased cassava production by 10 million tons, making Nigeria global top producer. Similar efforts in Cameroon also helped the country to double cassava production. Other

projects such as the Support for Agricultural Research for Development of Strategic Crops which is funded by the Africa Development Bank, and the Cassava Enterprise Development Project are also driving the production and productivity of Cassava. In 2004, the New

Partnership for Africa’s Development (NEPAD) launched the NEPAD Pan African Cassava Initiative (NPACI) as a means to tap on the enormous potential of cassava in Africa for food security and income generation.

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The project made significant contributions towards cassava production, commercialization and

social marketing in Southern Africa with specific emphasis in Malawi, Zimbabwe and Mozambique. These efforts have contributed to food security and incomes in those countries. Other projects such as Great Lakes Cassava Initiative and Cassava Weed Management Project

are also having an impact.

ii. What should be done in the short-term, medium term: To address the challenges currently constraining the full realization of cassava subsector for the agricultural

transformation of African economies, there are number of recommendations that stakeholders across the cassava value chain should act upon:- Develop a market-oriented strategy with emphasis on value-addition and productivity

enhancement along the whole value-chain. Launch a roadmap for the cassava sub-sector reform setting out clear implementation

plans focusing on the integration of food production, storage, food processing and

industrial manufacturing by value chains (‘farm to fork’) where countries have comparative advantages to resolve the challenges of the subsector, and setting the path for its improvement in the short (1-5 years) and medium (5-10 years) terms. This should be a

deliberate, strategic, sustained set of actions for a private-sector-led agricultural transformation as there are no “quick fixes” for sustained economic growth and poverty alleviation (Short term).

Deploy integrated pest/pathogen management (IPM) programs backed with clean seed production, and effective surveillance to prevent geographic expansion of cassava brown streak disease (CBSD) and also to control endemic diseases like cassava mosaic and

cassava bacterial blight, and control emerging insect pests on cassava, such as spiralling whitefly and papaya mealy bug (short to medium term).

Change mindset of small and medium farmers to treat agriculture as a business and create

incentives and efficient input delivery systems including private-sector enabled Agricultural Equipment and Mechanization: Leasing Services to make cassava production financially attractive to end-users (Short term).

Increase awareness of potential to produce and use cassava substitutes through targeted and frequent advocacy efforts for cassava value chains (short term).

Develop infrastructure to reduce the costs of aggregation and transport that currently

make many locally made products non-competitive (Medium term). Continue funding R & D on: (i) using advance breeding technologies to rapidly produce

varieties more suited for production and processing, and pilot efforts to demonstrate

feasibility of substituting cassava products for imported goods; (ii) climate-smart agriculture that promote sustainable agricultural management systems, and (iii) Research and development that enhance efficiency of production along the value chain as well as strengthening of the national agricultural systems. (Short to medium term).

Build strong farmer groups and linkages with appropriate financing that level the playing field so that they are able to effectively access inputs and markets and receive fairer product and input prices, and promote backward integration into commercial farming to

buttress supply (short term). Provide access to expertise and know-how through Technical Assistance to increase

productivity and competitiveness of the commercial cassava farming sector (Short to

medium term). Create output markets links for farmers, primary and secondary processors, aggregators,

farmer cooperatives, small and large traders by improving regional and global market links

for increased value chain efficiency and to access to regional and global agricultural trade (short to medium term).

Facilitate public-private partnerships (PPPs) to encourage cross-sector collaboration and

knowledge sharing especially in research and development, and initiatives along the

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agricultural value chain to develop infrastructure and/or build stronger farmer linkages,

e.g. Agricultural Enterprise Processing Zones (medium term). Develop new policies, institutions and financing structures to drive sector growth (Short

to medium term): Deregulation of seed and fertilizer sectors; marketing reforms to

structure markets; innovative financing for agriculture for farmers inputs and credit guarantees and low interest rate, long-term debt products for construction of new processing facilities; new agricultural investment framework.

Improve the legal framework in land acquisition and transfer to ensure ownership and right of use, and facilitate development of a system for making available unutilized government and communal lands for agricultural use in order to facilitate contiguous farming for farmers’ groups/organizations and industries (Short to medium term).

Develop sustainable market information, e.g. private-led; develop warehousing system (Bonded system for easy access to finance); develop bulking system for primary product, e.g. fresh tubers; and upgrading of informal markets, especially for primary commodities

(short term). Capacity building for all actors of the value chain including farmer education and

commercialization through public and private extension (short to medium term).

Create specific women and youth in cassava agribusiness programs (short term)

3.5.3 Vision for Sustainability:-

i. African cassava industrialization will create wealth, jobs and promote sector-wide efficiency and productivity growth. It will enhance and meet the demand of emerging industrial needs, traditional products and global demand by reducing production costs and increasing the output of high quality industrial products to strengthen the continent’s position in the global

context for competition.

Five major cassava value chains are proposed for industrialization based on the demand and

supply side targets for various African countries and elsewhere as estimated from the FAOSTATS database:- High Quality Cassava Flour (HQCF),

Starch, Chips, High Fructose Cassava Syrup (HFCS) and

Ethanol

These value chains offer tremendous potential to fuel the economic growth in the continent as this will create jobs for women and youth, improve food security and

generate wealth. Production should be expanded to:- Meet domestic, industrial demand and export markets through promotion of industrial

applications of key value chains (HQCF, livestock feed, Starch, ethanol, etc.);

Encourage the involvement of large scale farming as a driving force for industrialization; and encourage private sector investment and engagement. Each country can develop its industry according to its available resources and market opportunities within a globally

competitive framework.

ii. Estimated Costs – Sustainability Issues The proposal is for individual African governments of the top 20 producing countries to commit

at least US$625 million over 5 years and US$625 million for outscaling in the subsequent 5 years to fully implement the specified value chains. This can be done through PPP arrangements.

Table IV:- Estimated Costs

Value Chain Indicative funding (million US$)

2016-2020 2020-2024

High Quality Cassava Flour (HQCF)

- Personnel (10%) 10 10

15

- Operations (Services & Recurrent costs) (40 %) 40 40

- Infrastructure (50%) 50 50

Sub total 100 100

Starch

- Personnel (10%) 12.5 12.5

- Operations (Services & Recurrent costs) (40 %) 50 50

- Infrastructure (50%) 62.5 62.5

Sub total 125 125

Chips

- Personnel (10%) 10 10

- Operations (Services & Recurrent costs) (40 %) 40 40

- Infrastructure (50%) 50 50

Sub total 100 100

High Fructose Cassava Sweeteners (HFCS)

- Personnel (10%) 15 15

- Operations (Services & Recurrent costs) (40 %) 60 60

- Infrastructure (50%) 75 75

Sub total 150 150

Ethanol

- Personnel (10%) 15 15

- Operations (Services & Recurrent costs) (40 %) 60 60

- Infrastructure (50%) 75 75

Sub total 150 150

Total 625 625

3.6 Demand / Economic Potential for Cassava Products

3.6.1 Global Demand i. The annual demand for processed cassava products by American and European countries is

huge, especially in Germany, UK, France, and the Netherlands, because of its many uses.

But food is what cassava is mostly used for. Cassava chips or pellets are just right for groundnut cake, palm kernel cake, soya bean cake, bone meals, etc. Cassava chips are also used in the animals feed industry, and this has made them to receive tremendous patronage

around the globe.

The International Institute of Tropical Agriculture (IITA) reports claim that Nigeria’s cassava is superior – based on research results and we are responsible for 80% of the world’s output.

ii ‘Cassava food’ includes: Gari, Cassareep, Palaver, Fufu, Eba, Tapioca, Cassava cake, Cassava bread, Tapai, Getuk, krupuk and the list is growing. Also the cassava leave-soup is a daily

delicacy in Liberia. It is also used to make alcoholic beverages.

Processed cassava serves as industrial raw material for the production of adhesives bakery products, dextrin, dextrose glucose, lactose and sucrose. Dextrin is used as a binding agent

in the paper and packing industry and adhesive in cardboard, plywood and veneer binding.

The food and beverage industries use cassava products derivatives in the production of jelly caramel and chewing gum; pharmaceutical and chemical industries also use cassava alcohol

(ethanol) in the production of cosmetics and drugs. The products are also used in the manufacture of dry cell, textiles and school chalk and more.

Interestingly, cassava can be used to make ethanol biofuel and the clamour for alternative to crude oil-fuels especially petrol would increase the demand for maize and cassava for fuel. Nigeria alone produces over 10 million metric tons of cassava per annum.

In fact the International Fertilizer Development Center (IFDC), the Dutch government, the Dutch Agricultural Development and Trading Company (DADTCO), three Nigerian state

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governments: Rivers, Taraba and Osun, and a non-governmental organization,

Communicating For Change (CFC) have begun the ‘Cassava Revolution’.

iii. More companies are going into the processing of Garri. Local makers predominantly produced it back in the day. Things have changed now and farmers are very delighted to sell off

hundreds of tons of the cassava roots in one transaction to a company.

In April 2005 Nigeria began exporting cassava chips to the People's Republic of China under the Presidential Initiative on cassava. The first export was 40 metric tonnes of cassava chips

in two batches of 20 metric tonnes.

iv. HarvestPlus (2015) is at this point striving to achieve its goal of having more than 150,000

Nigerian households eating vitamin A fortified yellow cassava by the year 2014. HarvestPlus, an international agricultural organisation, is partnering with the IITA which is leading a global effort to breed and disseminate micro-nutrient-rich staple food crops to reduce hunger in

malnourished populations. This means that more of the Garri consumed in the country would be processed by cassava processing companies.

In June 2011 Roberts Ungwaga Orya, Managing Director/Chief Executive Officer of the Nigeria

Export-Import Bank said that the bank had “provided funding windows of N500 million” for the export of cassava and provided about N1.1 billion to five companies for value added processing of cassava to flour, chips and glucose syrup.

3.6.2 Regional Market There are export opportunities for Nigerian cassava products (e.g. gari) from and to countries in the West African sub-region (such as Niger and Mali). In these cases, Nigerian cassava products

will compete with cassava products from neighboring countries. (Ghana and Benin). Coastal West African (Cote d’Ivoire, Ghana, Togo, Benin) countries are both competitors and the potential markets for Nigerian products. The determining factor is the price of the raw material.

There are some indications that prices in Ghana are similar to those in Nigeria, while the prices of cassava products in the Republic of Benin are generally lower. The latter observation explains the periodic presence of Benin gari on the Lagos, Nigeria market. Gari prices fluctuate in all West

African coastal countries, and not necessarily at the same time. Recent market surveys by the West Africa Trade Network (www.wa-agritrade.net) and MISTOWA (www.mistowa.org) confirm that Nigeria cassava products do not yet enjoy a significant price advantage over those in

competing West Africa countries. Nevertheless, a cross-border trade study (Ezedinma et al, 2005d) in Northern Nigeria showed a substantial cassava export to Niger (mostly gari, but also chips), especially during the “hungry season” (February through April) when the new grain crops

in Niger are not yet harvested (see: www.cassavabiz.org).

3.6.3 Economic Potentials / Domestic Demand i. As the main food staple for urban and rural people in the south and the central States of the

country, Cassava already makes a major contribution to the Nigerian economy. Additionally,

the market for industrially processed cassava is growing - Estimates indicate the potential short-term demand for industrial cassava at about 8.8 million MT of fresh cassava annually. This domestic shortfall in demand provides Nigerian cassava farmers an increase in

demand of more than 20%. Assuming a well-managed cassava farm that yields 20 MT/hectare, this untapped domestic demand implies an increase in acreage of over 440,000 hectares.

Sector

Current Domestic Demand

Substitution

Potentials

(MT/Product)

Fresh Root

Starch 230,000 MT 50 % 115,000 MT 1,150,000 MT

Flour 330,000 MT 10 % 330,000 MT 1,320,000 MT

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Ethanol E10 1.1 billion L 50 % 550,000 MT 4,400,000 MT

Ethanol Industrial /Beverage

160,000,000 L 10.0 % 160,000 MT 1.040,000 MT

Animal Feed 1,200,000 MT 20 % 240,000 MT 960,000 MT

Total required 8,870,000 MT

Table V: Potential Market for Cassava-derived Products in Nigeria – ATA (2015)

From the domestic demand analysis presented in Tables V and VI, the necessary economic inputs can be estimated.

Based on the capacity figures (small to medium scale), and the cost estimates, the number of processing plants, and the associated investments can also be estimated. The analysis shows that the domestic demand has the potential to motivate investments in nearly 500

small to medium scale plants in the foreseeable future, with at least 100 such plants in the short run – If supporting policy measures are in place.

ii. Assuming an average investment of about N20 million per plant, the associated investment

would amount to about N10 billion in the foreseeable future (or N2 billion in the short run). This value of investment excludes the associated investments at the farm level and the multiplier effects that would be created through other activities and services along the value

chain.

Sector

Fresh Root

(Million)

Plants

Short Term

1 -2 yrs

Medium Term

2 -5 yrs

Long Term

5 yrs

Starch 0.6 MT 17 plants (24T/daily) 20% 40% 40%

Flour 1.2 MT Turnkey: 50 plants Batch: 100 plants

20% 60%

40% 40%

40%

Ethanol E10 3.6 MT 214 plants 100%

Ethanol Industrial /Beverage

1.0 MT 60 plants 60% 40%

Animal Feed 10 MT 52 plant (10%

cassava)

33% 33% 34%

Total required 493 126 108 259

Table VI: Expected Fresh Roots Demands and Processing Plants to be established – (ATA 2015)

3.7 Getting Involved 3.7.1 To become an exporter and investor of cassava and cassava products information is key. The

Nigerian Export Promotion Council (NEPC) can provide this information while consultations from practitioners in the sector will go a long way to educate potential investors. However, prospective

investors need to identify which of the cassava products they intend to focus on.

The opportunities that cassava based businesses have are vast but Nigeria has not harnessed it

even though stakeholders have been creating the awareness in their own capacities for several years.

The farmers still battle with poor technology, poor transportation, poor infrastructure and pests

(cassava mites).

3.7.2 The information on how to get started is available (even on the internet) and this includes:-

- Addresses of local makers, - Fabricators of the cassava processing machines, information on the - Cassava production technology, - Appropriate packaging to meet the export standard,

- Processing cassava and its derivatives, - Export procedures, documentation and marketing in the international market,

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- Procedures for collecting 30% rebate on export of agricultural products, and

- Contact data of foreign companies seeking to buy cassava products.

As for the cassava root itself, an investor would also need to know:- - How to keep their tubers fresh for months,

- Which varieties of cassava are of the highest/most sort after quality for the product the investor is focusing on as well as

- High yielding varieties, and details on

- How to order for supplies of cassava chips.

3.7.3 This information is also available online and on request from the various stakeholders, including their respective unions. Information on how to actually process cassava is also available and

this includes the making of cassava flour which food processing companies purchase more than 1,000 tonnes daily. One could also seek information on funding, as cassava is one of the ‘new brides’ of the ministry of agriculture.

Once an investor has decided what point of the equation he or she would want to come in, the next stage is to learn the processes and the details. The information is available on request.

Meeting with some of the players in the ‘line of choice’ is a very good idea; prospective suppliers of your raw materials and consumers of your products.

Then the issue of funding comes up. It is believed that it is easier to get funding with the help of

any of the government schemes for cassava processing so as to enjoy the incentives. An investor can also team up with existing companies and thus ride on their backs to make huge profits.

3.8 Governments Latest Efforts

3.8.1 In the current Government’s “The Agriculture Promotion Policy” (2016-2020) launched recently, the Government has enunciated the under listed policy framework:- i. Building on the successes and lessons from the ATA, the vision of the Buhari Administration

for Agriculture is to work with key stakeholders to Agriculture Transformation Agenda build an agribusiness economy capable of delivering sustained prosperity by meeting domestic food security goals, generating exports, and supporting sustainable income and job growth. In

this regard, a number of specific objectives for the period 2016 – 2020 emerge:

Grow the integrated agriculture sector at 1x to 2x the average Nigerian GDP for 2016 – 2020; sector’s historical growth was between 3% - 6% per annum in 2011 – 2015, hence

the need to raise performance. Assuming GDP growth of 6% in 2017, agriculture would aim to achieve 6% - 12% , allowing agricultural household income to double in 6–12 years, holding all else equal

Agriculture’s Share of GDP: 23% (Q1 2016)

Agriculture’s Share of the Labor Force: 70% Agricultural Activity Mix: Crop Production: 85%; Livestock and other non-crop: 15%

Integrate agricultural commodity value chains into the broader supply chain of Nigerian

and global industry, driving job growth, increasing the contribution of agriculture to wealth creation, and enhancing the capacity of the country to earn foreign exchange from agricultural exports;

Agriculture’s Share of Non-Oil Exports Earnings: 75% Promote the responsible use of land, water and other natural resources to create a vibrant

agricultural sector offering employment and livelihood for a growing population; Facilitate the government’s capacity to meet its obligations to Nigerians on food security,

food safety and quality nutrition

Agriculture’s Share of Federal Budget: ~2.0% Create a mechanism for improved governance of agriculture by the supervising

institutions, and improving quality of engagement between the Federal and State

Governments.

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ii. Unlocking Nigeria’s full agricultural potential requires that Nigeria solve the underlying

challenges in its agricultural system, which includes the following:- Policy Framework: Nigeria suffers from policy instability driven by high rate of turnover of

programmes and personnel, which in turn has made the application of policy instruments

unstable. The outcome is an uneven development pathway for agriculture; lack of policy accountability, transparency and due process of law, relating to willful violation of the constitution and subsidiary legislations governing the agriculture sector. That in turn has

made the business environment unpredictable and discourages investors. To address this challenge, Nigeria needs to create a policy structure that matches evidence-driven coordination among decision-making authorities with common and public goals for an agricultural transformation of the country. Building that evidence base requires that

Nigeria adopt a consistent fact base to drive decision making, as well as build on prior successes e.g. the Jonathan Administration’s pioneering Agricultural Transformation Agenda (ATA).

Political Commitment: This pertains to the non-implementation of international protocols or conventions agreed to with other members of the comity of nations. For example, Nigeria has failed to achieve the targets in the Maputo Declaration that prescribes a

minimum of 10% budgetary allocation to the agricultural sector. Political commitment at both the Federal and State levels will be required to enforce reforms.

Agricultural Technology: Persistent shortcomings of the National Agricultural Research

System (NARS) to generate and commercialize new agricultural technologies that meet local market needs. NARS’s challenges have been relatively severe particularly around improved varieties of seed or other planting materials and breeds of livestock and aquatic

species. The failure to also deliver already proven technologies available on the shelf to farmers’ fields where they are needed is a challenge. Addressing these will require better coordination among extension delivery system, the national agricultural research system,

as well as public and private sector suppliers of agricultural inputs. Infrastructure Deficit: Nigeria’s agricultural sector suffers from an infrastructure challenge.

Infrastructure such as motor roads, railroads or irrigation dams are either insufficient, or

when available, not cost competitive. They are thus unable to operate to support scale-driven agriculture. That imposes an added cost (up to 50% - 100%) on the delivered price of agricultural produce in Nigeria, making it uncompetitive compared to global peers.

In order to boost farm productivity, raise the level of marketable surplus and expand value chain participants’ access to low cost infrastructure, Nigeria will need to rethink the business and operating model for agricultural infrastructure.

Finance and Risk Management: Nigeria’s agriculture sector continues to have poor access to financial services that enable farmers and other agricultural producers to adopt new technologies, improve market linkages, and increase their resilience to economic shocks. Poor access to financial services that enable input suppliers, processors, traders and

others in agribusiness to address liquidity and encourage targeted private sector engagement in agriculture remains a challenge. Lending rates still routinely range from 10% to 30% subject to whether the borrower is considered prime, has access to low cost,

government-provided financing (BoA, CBN, BOI), or is offered a NIRSAL Plc. -financed interest rate subsidy and credit guarantee. To improve financing options and de-risk value chains further, Nigeria will need to intensify innovation in financing ecosystems.

Institutional Reform and Realignment: Today, many federal and state agricultural institutions only exist on paper. In fact, the system even ignores local government areas which is actually where a majority of activity takes place. There is a need to streamline,

clarify mandates and ensure continued accountability for results. Unless these issues are tackled, Nigeria will continue to struggle with the capacity of its agricultural institutions to deliver on their public mandates. A turnaround will mean, for example, adding more

resources such as adding up to 15,000 extension workers, setting up more operational

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coordination mechanisms between the Federal Government and States in between the

National Council of Agriculture, and linking rewards to performance.

iii. In addressing these constraints, the government will apply prudent, market based policy measures to grow the sector, with a clear recognition that widespread poverty

reduction through the transformation of the agriculture sector is integral to the country’s long run economic growth trajectory and prosperity. Accordingly, this policy statement is anchored on three main pillars in line with the constitutional provision for

the role of Federal Government in agricultural development:- Promotion of agricultural investment; Financing agricultural development programmes and

Research for agricultural innovation and productivity.

One of the most important by products of Cassava – Starch – Industry & Food Grade is the object of this study.

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CASSAVA STARCH INDUSTRY

Problems and Prospects

22

4. CASSAVA STARCH INDUSTRY – Problems & Prospects

4.1 The Product Starch is a soft, white, tasteless powder that is insoluble in cold water, alcohol or other solvents. Starch can be cassava based but also cereal based Starch. Over 90% of Starch produced in

Nigeria have a production capacity of less than 10tons per day.

Starch uses are varied and are diversifying further with continued global economic development. Starch is produced from local production of grain or root crop. Starches from different raw

materials i.e. maize or cassava can be substitutable in end-use.

4.2 Types of Starches 4.2.1 Starch can be classified into two types: native and modified. Native Starches are produced

through the separation of naturally occurring Starch from either grain or root crops, such as cassava, maize, and sweet potato, and can be used directly in producing certain foods, such as noodles. The raw Starches produced still retain the original structure and characteristics and are

called “native Starches”. Native Starch is the basic Starch product that is marketed in the dry powder form under different grades for food, and as pharmaceutical, human, and industrial raw material. Native Starch has different functional properties depending on the crop source, and

specific types of Starch are preferred for certain applications. Native Starch can be considered a primary resource that can be processed into a range of Starch products.

Native Starches have limited usage, mainly in the food industry, because they lack certain desired

functional properties. The native Starch granules hydrate easily when heated in water, they swell and gelatinize; the viscosity increases to a peak value, followed by a rapid decrease, yielding weak-boiled, stringy, and cohesive pastes of poor stability and poor tolerance to acidity, with low

resistance to shear pressure, as commonly employed in modern food processing. However, food, metallurgic, mining, fermentation, construction, cosmetics, pharmaceutical, paper and cardboard, and textiles industries among others use native Starch in its traditional form.

4.2.2 Modified Starches For those characteristics, which are unattainable with native Starch, modified Starch can be used

for other industrial applications through a series of techniques, chemical, physical, and enzymatic modification. Thus, modified Starch is native Starch that has been changed in its physical and/or chemical properties.

Modifications may involve altering the form of the granule or changing the shape and composition of the constituent amylose and amylopectin molecules. Modifications are therefore carried out on

the native Starch to confer it with properties needed for specific uses. Some of these modified Starches, their methods of modification and desirable properties are shown in Table 6. When a Starch is modified chemically or physically, the properties of the native Starch is altered. Various

modifications give the Starch properties that make it useful in many industries such as food, pharmaceutical, textile, petroleum, and paper pulp industries.

The different ways of modifying native Starch consist in altering one or more of the following

properties: paste temperature, solids/viscosity ratio, Starch paste resistance to reduction of viscosity by acids, heat and or mechanical agitation (shear), retro gradation tendencies, ionic and hydrophilic nature.

Modifying Starch is important to provide the following properties: thickening, gelatinization, adhesiveness and/or film-formation, to improve water retention, enhance palatability and sheen and to remove or add opacity.

The reasons why native Starch is modified are: To modify cooking characteristics (gelatinization).

To reduce retro gradation. To reduce paste’s tendency to gelatinize. To increase paste’s stability when cooled or frozen. To increase transparency of pastes and gels.

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To improve texture of pastes and gels.

To improve adhesiveness between different surfaces, such as in paper applications.

4.2.3 Advantages of Cassava Starch Cassava has many advantages for Starch production.

High level of purity. Excellent thickening characteristics. A neutral (bland) taste.

Desirable textural characteristics. A relatively cheap source of raw material containing a high concentration of Starch (dry-

matter basis) that can equal or surpass the properties offered by other Starches

(maize, wheat, sweet-potato, and rice).

Cassava Starch:-

Is easy to extract using a simple process (when compared to other Starches) that can be

carried out on a small-scale with limited capital. Is often preferred in adhesive production as the adhesives are more viscous, work more

smoothly, and provide stable glues of neutral pH has clear paste.

The development of both the food and non-food uses of cassava Starch has made much progress and continues to have a bright future. Both old and important new

products, such as modified Starches, Starch sugars, Starch-based plastics and fuel alcohol, are reviewed briefly.

4.2.4 Cassava Starch is an important domestic and industrial raw material used in the manufacture of

various products including food, adhesives, thickening agents, paper, and pharmaceuticals. It has many remarkable characteristics including high paste viscosity, high paste clarity and high freeze-thaw stability, which are advantageous to many industries.

4.3 Cassava Starch – Global and Nigeria Trends 4.3.1 The world Starch production is about 60 million tonnes and its consumption trend is expected to

be 70 million tonnes by 2012 (Vilpoux, 2005). The largest producer is United States with 25.2

million tonnes, the Asian countries at 19.8 million tonnes, Europe with 12.2 million tonnes, Latin America with 1.8 million and Brazil with 1.0 million tonnes respectively. The major raw materials used in Starch production are corn, 75%, sweet potato, 13% and lastly,

cassava at 12%.

Figure 2- Relationship between Corn Prices and Starch Imports

The current statistics show that maize is still supplying as much as 75% of the global Starch

market, with cassava Starch contributing about 12%.

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4.3.2 On the international market, Cassava Starch is able to compete against corn, wheat and potatoes

Starches. Cassava Starch is especially competitive outside the two main markets, US and EU (i.e. in South East Asia). The overall world demand for all Starch products grows at an annual rate of 4%. It is expected that this significant growth in demand will continue in the

next decade.

4.3.3 A high level of protection characterizes the Starch market, as many users protect their local Starch industries. Tariffs on Cassava Starch in the main importer countries range from 0%

in Canada, Malaysia, Indonesia and the United States to 480% in the Republic of Korea. In the main markets, Starch is imported under preferential access conditions. Japan for instance, has established an overall 200,000 tonnes tariff quota on native Starch from maize, potato and

cassava, beginning with a 25% duty and reducing it to 15% in 2000.

4.4 Cassava Starch Industry in Nigeria 4.4.1 In a paper presented by Chief Executive Officer (CEO) of Union Dicon Salt (UDS) Plc Mr. Chuka

Mordi in August 2016, he said inter alia:-

Nigeria’s Cassava Starch industry generates over $240 million about N76.9 billion yearly, 90

per cent of which is from importation. But the industry has the potential to grow as population and income per capita increase.

According to Mordi, Nigeria currently has four major functional Starch processing plants with a

combined capacity of 27,000 tons. He said the Nation’s Annual Starch demand of over 250,000 tons with a market size of $240m is met by importation of corn Starch, and this provides an opportunity for import substitution, which is in line with UDS’s strategy.

UDS Plc is a company operating in the Nigerian consumer goods sector. It has been diversifying into the agro industrial sector, with an initial concentration on Cassava and Starch processing. The firm has already finalized agreement with GEA Westphalia of Germany to build the largest

Industrial Starch processing facility in Nigeria.

Mordi said the potential for Nigeria’s Starch market is huge, as Nigeria is the largest cassava

growing country in the world, with an estimated annual output of 45m tons, which continues to grow annually.

He, however, said over $600m worth of cassava products (flour, Starch, glucose and animal feed)

are imported, largely as a result of uncoordinated harvest and transport of high grade cassava in commercial quantities.

Cassava Starch, a food grade product refined from cassava roots, the major component of the

cassava plant. It has thickening and binding qualities and is used as binder and thickener in convenience foods. But Mordi said Nigeria processes very little of its current output Starch compared with other countries.

According to him, all the major Starch processing factories in Nigeria operate at less than 20 per cent of their installed capacity, producing about 27,000 tons of Starch per annum. The 20 per cent domestic production capacity, he said, fall short of the nation’s current demand for

Starch, put in excess of 250,000 tons per annum.

To meet local supply, the CEO said Starch end-users resort to importation of Starch, which

presents a clear opportunity for investment in Starch processing for import substitution. He said the company’s investment in Cassava processing involved the installation of a 10,000 Metric Tons Per Annum (MT PA) Starch processing plant for the conversion of cassava to Starch.

4.5 Characteristics of the Starch Industry 4.5.1 First, the share of the cassava crop going to Starch is very little (2%) but has been growing over

time. The number of participants involved in Starch production has increased, including both rural

households and large firms. Field survey results show that at least 5% of total cassava production is now used for Starch.

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4.5.2 Second, many Starch processors cannot buy enough cassava to run at full capacity. In particular,

there is a sizable gap between potential and utilized capacities, a gap that grows with firm size. Capacity utilization for micro firms is 66%, for small firms it is 41%, for medium firms 36%, and for large firms 25%.

The Starch value-chain is characterized by difficulty in securing sufficient fresh roots to run the large mill at full capacity; both NSM and MATNA run at 40 and 60% capacity respectively. Currently, the MATNA mill works a single shift and sources cassava from 1,200 hectares of small

holder farms located 650km from the mill. The plan going forward is to improve this supply by clustering 2,500-3,000 hectares of farms within 300km of the mill for a two shift operation. In the long term, the mill will operate three shifts using fresh roots from 4500-5000 hectares of

cassava of which at least 2/3 is from within 300km. NSM on the other hand has a nucleus farm of 500Ha that meets roughly 20% of its raw material needs. The rest of its raw material comes from white Zimbabwean out grower farmers, some 700 km away in Shonga, Kwara state.

Sourcing cassava from such a long distance adds N7,000 to each ton of fresh cassava roots.

A study of USAID MARKETS revealed commercial Starch processors of Cassava need consistent volumes to be profitable. Solutions include The Cassava Supply Management System

(CSMS), a database for managing supplier relationship, it includes: a system for planning harvest; a record of deliveries for accounting; manages complex supplier network; efficient allocation of transport fleet; Standard Operating Procedures Developed: Harvest, Transport and

Delivery.

4.5.3 Third, high Cassava Root costs contribute to lowering the competitiveness of the industry, particularly of the larger firms. Survey results show that large firms pay the highest prices

for raw materials procured from farmers, where as the smallest firms pay the lowest prices. Moreover, small and medium firms travel shorter distances to procure cassava than do large processors. High costs are also related to the low productivity of cassava farming. Current yields

only average 15tons/ha in Nigeria, where as in China and Thailand yields are nearly double that.

4.5.4 Fourth, most of the Starch firms are micro or small. Micro firms (with a production capacity of

less than one ton per day) comprise almost 50%, with small firms (between 1and 5tons per day) making up about 26%, medium firms (between 5 and 10tons per day) about 24%, and large firms (over 10tons per day) only 10%. The largest enterprise, MSN, has a capacity of 10,000ton/yr

(ATA 2015).

Small firms also have poorer quality equipment. Most small processors manufacture Starch with a bare minimum of equipment, using only graters and pumps in their operations. By contrast,

large firms have access to sedimentation tanks, dryers, and complete Starch systems. The majority of participants (both small and large) in the Starch industry use locally manufactured equipment, which is often of low quality and in appropriate for producing high

quality Starch.

Field Survey indicates small firms-and even some large firms-face credit constraints that make it quite difficult for them to increase the quantity and quality of their equipment. The

survey revealed a higher incidence of borrowing by medium and large processors (68% and 76%, respectively) than micro and small processors (44% and 22%, respectively). While large firms have better access to bank credit, the survey reports a larger gap between obtained credit and

credit requirements for these firms. Problems with securing sufficient collateral and difficulties with banks were stated by firms in the survey as the main reasons for not being able to obtain additional credit.

4.5.5 Fifth, as firm size increases, the capital/labor ratio increases. Nearly all of the firms in the survey are labor-intensive, with capital use increasing only after an enterprise has reached a scale of at least three tons per day. Survey results show that the average value of equipment for micro,

small, and large firms was respectively N1m, N12m, N240m (using the 2017 exchange rate of U.S.$1 to N305.6)

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4.5.6 Sixth, there is a correlation between firm size and the type of Starch produced and market

targeted. Micro, small, and medium firms produce about 87% of the wet Starch, but only produce 13% of the dry Starch. Smaller firms specialize in wet Starch production, and large firms specialize in dry Starch production. This is to be expected, since dry Starch is more capital intensive than

the production of wet Starch. Moreover, smaller, household Starch firms mainly produce Starch for the noodle industry, while only the most advanced household processors produce Starch for Industry.

By contrast, larger firms target their Starch production toward a broader range of food and non food uses, including the paper industry, MSG, pharmaceuticals, and textiles interestingly. Small firms have maintained their network of sales despite competition from large firms in traditional

wet Starch markets (i.e., noodles, maltose). This is partly because small firms target local markets that are relatively protected from large firms in urban areas because of high transaction costs, poor infrastructure, Impediments in moving raw materials, and the difficulty of entering marketing

channels established by small firms.

4.6 Cassava Starch factories 4.6.1 The profitability of any cassava factory depends primarily on the following conditions:

(a) year-round availability of cassava roots of the desired quality in sufficient quantity; (b) presence of abundant water with the needed qualities; (c) reliable power supply;

(d) transportation facilities both for the roots and the end products; (e) availability of capital and labour.

Small and medium-size factories are more frequently found in rural regions with a rather dense

agrarian population, numerous streams, and at least one highway to and not too distant from commercial centre.

4.7 Requirements for Success in the Industry 4.7.1 Field investigation revealed that the requirements for success within the industry include amongst

others:-

i. The maintenance of a clean and healthy environment as provided for by the Factories Act of 2004.

ii. Effective Distribution Channels with a good Commission System

iii. Production efficiency with regular and steady supply of materials iv. Promotional activities aimed at cultivating first time buyers v. Good management practices and controls

vi. Good quality products that would meet international standards vii. Effective competitive strategy and branding to win over consumers with a good market share

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TECHNICAL STUDY

28

5 TECHNICAL OPERATIONS

The technical operations involved in the manufacture of cassava Starch were thoroughly investigated. The following areas of activities were examined:- i. Raw Materials Supplies

ii. Sources & Types of Machinery and Equipment Needed for Production iii. Process of Manufacture/Labour Requirements iv. Warehousing & Storage

v. Utilities – Water, Energy etc vi. Wastes Disposal vii. Quality Control/Good Manufacturing Practice (GMP)

5.1 Raw Material, Supplies and Utilities 5.1.1 Fresh cassava root is the only raw material for production of Cassava Starch. Cassava is grown

in almost all the states in Nigeria and Nigeria has been rated the highest producer of cassava in

the world. The other major items of supplies are:- i. The packaging materials, ii. Factory wears (overall, hand gloves, factory shoe, nose mask),

iii. Cleansing agents, disinfectants, iv. Electricity, diesel (for generator and project truck), v. Low Pore Fuel Oil (LPFO) for firing the flash dryer, and

vi. Water is the major utilities requirement.

5.2 The Product 5.2.1 The main product of the study is Starch and its derivatives. Cassava Starch is produced

primarily by the wet milling of fresh cassava roots but in some countries such as Thailand, it is produced from dry cassava chips.

Starch is the main constituent of cassava. About 25% Starch may be obtained from mature, good

quality tubers. About 60 % Starch may be obtained from dry cassava chips and about 10% dry pulp may be obtained per 100 kg of cassava roots.

Fresh tubers are processed during season and dry chips during the off-season in some countries. Extraction of Starch from fresh cassava roots (Figure 3) can be divided into five main stages: preparation (peeling and washing), rasping/pulping/grating, purification (Starch washing),

dewatering and drying, and finishing (milling and packaging).

5.2.2 Cassava Starch is used in the manufacture of sweeteners, sizing of paper and textile and is in particular an excellent food Starch used as a thickener and stabilizer. The pulp is used as cattle

feed. Juice and spent process water are valuable fertilizers disposed of by land spreading. Being a pure renewable natural polymer Starch has a multitude of applications.

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5.3 Starch Production - Process

Simple process for cassava Starch production

Figure 3 Process Flow

5.3.1 For cassava, the process of Starch extraction is relatively simple as there are only small amounts of secondary substances, such as protein, in the roots. When cassava roots are harvested or selected for Starch extraction, age and root quality are critical factors. Cassava roots need

to be processed almost immediately after harvest, as the roots are highly perishable and enzymatic processes accelerate deterioration within 1-2 days.

A first-rate quality Starch can be obtained from cassava using only water, and this makes the

processing of cassava Starch particularly suitable for developing countries and rural industries.

There are many varieties of cassava, but they fall into two main categories, namely bitter and

sweet cassava (Manihot palmata and Manihot aipi), depending on their content of cyanohydrin. For industrial purposes bitter varieties are most frequently used because of their higher Starch content. Sweet cassava is preferred for food because of its taste and dough forming ability. It pounds well.

5.3.2 A typical composition of the root is:-

Moisture 70%

Starch 24%

Fibre 2%

Protein 1%

Other 3%

Starch content may be as high as 32%.

5.3.3 Process Flow The roots are living plants and need some air for respiration and life activity. During storage the

roots consume a small amount of their own Starch to maintain life functions until spring. This will require some fresh air, and the respiration causes development of heat. If the tubers get warm, respiration increases, raising the temperature further. A lot of Starch is used for respiration and

the tubers will die of heat.

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Unfavourable storage conditions cause Starch losses and, in the worst case, dead and smashed

raw materials, which are disruptive for the process. Therefore roots are processed in the order they are delivered to the factory, and the roots must be processed within 24 hours of harvest. Supplies of bad raw materials have to be rejected.

i. Root Reception First point of reception is weighing of the lorry on a platform scale. Second point is sampling. A sample of roots is washed on a laboratory washer. The difference of sample weight before and

after washing indicates the proportion of dirt in the delivery. The next step is the determination of the Starch content. Both figures are used to settle the account with the farmer and encourage the delivery of high quality tubers rich in Starch.

The roots are stored in the reception yard on a concrete floor. The yard may be divided in several bunkers alongside a main yard conveyor to accomplish the processing of the oldest tubers first. At this point the tubers are still bulky with an average weight of 600 - 650 kg per m3.

The main yard conveyor may be a long horizontal band positioned 10 - 20 cm below floor level. In large reception yards more bands may be used to feed the main conveyor. A Bobcat may find

use as well or instead of a yard conveyor.

ii. Raw Material Handling First of all, any stalks must be removed. This is most easily done during harvest. Stalks will

interfere with the peeling, blunt the rasps, and increase the fibre mass with adverse effect on the process.

Loose dirt, sand, and gravel are removed in different ways. Preferably a rotating bar screen is

used for a dry cleaning of the roots prior to the washing step.

From a buffer bin the tubers are fed into the bar screen. From the bar screen the roots enter the

washing station. Paddle washers are still in use, but rotary washers have proved their efficiency as they have in the potato industry.

Thorough dirt removal will lessen the problems with stones and sand later. The soil also contains

considerable quantities of nutrients, which will dissolve in the washing water and contribute to the environmental burden created by the effluent.

iii. Efficient Washing Makes Refining Easier

Soil and dirt not removed in the washing station yield problems later. The washing is therefore very important.

High quality washing improves refining, because many impurities resemble Starch in specific weight and size, so washing is the only way to get rid of them. The rubbing in the washing machine is a most important quality factor.

The quantity of impurities adhering to the surface upon delivery depends to a great extent on weather conditions and the soil where the tubers are cultivated.

The paddle wash takes place in two compartments - one with a water level and one without. The

rotary wash machine combines flushing with a low water level and continuous removal of dirt and peel. The wash water may be recycled after filtering off peelings on a rotary screen and settling of sand in basins. Process water from the refining station and crude water replace the loss of

wash water.

The washed tubers are conveyed on an inspection belt to the pre-cutter. In order to feed the

rasps properly, the roots are chopped into pieces.

iv. Rasping or Grating Rasping is the first step in the Starch extraction process. The goal is to open all the tuber cells,

so that all the Starch granules are released. The slurry obtained can be considered as a mixture of pulp (cell walls), fruit juice, and Starch. With modern high-speed raspers, rasping is a one-pass

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operation only. An even feed of the rasps is essential for a steady flow throughout the rest of the

plant.

After rasping, the hydrogen cyanide and cyanohydrin are released and go with the juice and process water. The effluent may be disposed of by land spreading.

v. Use of Sulphur The cell juice is rich in sugar and protein. When opening the cells, the juice is instantly exposed to air and reacts with the oxygen, forming coloured components, which may adhere to the Starch.

Food grade sulphur dioxide gas or sodium-bisulphite-solution therefore has to be added. The great reduction potential of the sulphur compounds prevents discoloration. Sufficient sulphur has

to be added to turn the juice and pulp light yellow.

vii. Extraction Powerful flushing is needed to release the Starch granules from the cells - the cells are torn apart

in the rasper and form a filtering mat trying to retain the Starch. Water has previously been used for the extraction, but today the extraction takes place in closed systems, allowing the use of the juice itself or process water from the refining step.

The Starch that is flushed out leaves the extraction sieves along with the fruit juice. The cell walls (pulp) can be concentrated further on pulp dewatering sieves. In this case the pulp leaves the dewatering sieves wet, but drip-dries to 10 - 15 % dry matter.

The extraction takes place on rotating conical sieves. The high efficiency makes it feasible to utilise high quality sieve plates made of stainless steel, which will withstand abrasion and CIP-

chemicals. The sieve plates have long perforations that are only 125 microns across.

The extraction is a counter current process. It is followed by a fine fibre washing on conical sieves also. The washed fibres are combined with the pulp and may be used as cattle feed.

viii. Concentrating the Crude Starch Slurry As much juice as possible is excreted on a couple of hydrocyclone batteries or on a nozzle centrifuge. The Starch leaves the concentrator as pumpable slurry of approx. 21 oBe.

The juice leaves the factory as a by-product. The best way to dispose of the fruit water is to utilise it as a fertilizer on nearby agricultural land.

viii. Refining It now remains to purify the crude Starch slurry (suspension) and remove residual fruit juice and impurities. The way it is done is more or less based on the same principles used when removing

soapy water from the laundry - you wring and soak in clean water repeatedly. Everyone doing laundry realizes how often it is necessary to wring before the rinsing water is all clear, and that the harder you wring the fewer rinsing steps are required.

In the same way the Starch slurry is diluted and concentrated again and again. With hydrocyclones it is feasible to reduce fibre and juice to low levels with a minimum of fresh water. To save rinsing water the wash is done counter currently - i.e. the incoming fresh water is used

on the very last step and the overflow is reused for dilution on the previous step, and so on.

Increasing the number of hydrocyclone refining steps may accomplish considerable savings of

fresh water. This is one of the advantages of using hydrocyclones. Dual refining lines represent the ultimate design.

In the strong gravitational fields of a hydrocyclone and a centrifuge, the Starch settles quickly,

while fibres (pulp residuals) just float in the water. Fibres with adhering air bubbles are lighter than water and seek towards the overflow. Fibres with Starch granules enclosed are heavier and sink towards the underflow and mix with the Starch. The juice is directly diluted in the water and

goes with the water phase. Refining is based on the differences in weight density between water, fibres, and Starch:

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Density g/ml

Starch 1.55

Cell walls (fibres) 1.05

Water 1.00

Soil, sand above 2

By creating a water flow moving towards the Starch, lots of fibres that are floating in the water may be forced into the overflow. Soil, sand, and many fungi, etc. are of equal density, or heavier than Starch and it is not possible to separate these particles from Starch by centrifugal force.

That is why it is so important to remove as many impurities as possible from the tuber surface in the washing station. If the inlet concentration gets too high, even lighter particles may be retained because of plug flow conditions occurring.

Although some impurities go with the Starch in the underflow, there is, by means of a sieve, a last chance to remove the larger particles. Impurities not removed this way are not removable by any known technique.

ix. Hydrocyclones The hydrocyclone has no moving parts and the separation is totally dependent on the pressure

difference over the cyclone.

For the removal of the juice hydrocyclones are far more efficient than centrifuges due to the large dilution rate of the feasible application of multi-stage units.

Starch is among the most pure of all agricultural products. Actually, purity is the most important parameter for being competitive.

No significant amount of juice is left in the Starch. The colour or whiteness may be improved by the use of sulphur in the right place and dosage, and by removing iron and manganese from the process water. Oxides of iron and manganese (e.g. rust) are dark coloured components, which

have to be removed in the water treatment plant.

ix. CIP - Cleaning in Place Cleaning in Place is done with caustic and hypochlorite as cleaning agents. Caustic is a powerful

agent for removal of the protein build-up on the interior walls and the hypochlorite is an efficient germ killer.

During CIP it is of the utmost importance to keep the pipes filled up. Tanks are most efficiently CIP'ed with rotating disc nozzles - and covered tanks are required.

x. Drying and Sifting

The purified Starch milk is dewatered on a continuous rotating vacuum filter or a batch operated peeler centrifuge.

The moist dewatered Starch is dried in a flash dryer with hot air. The inlet air temperature is

moderate. High temperatures may increase cold-water soluble Starch. The moisture of tapioca Starch after drying is normally 12-13%.

xi. Modification Most Starch is used for industrial purposes. Starches are tailor made to meet the requirements of the end-user giving rise to a range of specialty products. Many and sophisticated techniques are

applied. A most versatile principle comprises a three step wet modification:-

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Preparation

v Reaction

v

Finishing By applying different reaction conditions - temperature, pH, additives - and strict process control,

specialty products with unique properties are made.

These specialty products are called modified Starches. They still retain their original granule form and thereby resemble the native (unmodified) Starch in appearance, but the modification has

introduced improved qualities in the Starch when cooked. The paste may have obtained improved clarity, viscosity, film-forming ability, etc.

Starch finds uses in fast food, sweets, sausages, tablets, paper, corrugated board etc. and plays

a prominent part in our everyday life.

5.3.4 Standard Production Cost

SME Standard Cassava Production Costs Ranking Using a 3 tonne/day capacity SME as a model as revealed by Folusho Olaniyan (2015) in a lecture title “Profitability and Growth of Cassava Business in Nigeria” 21st March, 2015.

Figure 4 – Standard Production Costs (Source – Folusho Olaniyan 2015)

He said inter-alia:- i. Cassava Tubers are the root of the matter ii. Pressure points are cassava tubers, energy and labour.

The category percentages of cost items trend is similar for all categories of processors. To improve profitability, the respective value chain players must identify the pressure points, and

collaborate on a business process review exercise. iii. Starch Manufacturing Plant

Based on the assumption that the Lowest Selling Starch house sells Starch at N145,000 per

tonne while highest sells at approx. N169,000 per tonne. Net profit for lowest selling house is 7% while net profit for higher selling Starch houses is capped at 15%.

With the drop in the value of the naira, a rare and reasonable opportunity has opened up for

Starch manufacturers to increase their profit margins now that imported Starch price may become uncompetitive.

iv. Profit is critical to sustainability

Managing root supply: A key issue is the supply of the roots and the associated need to be close to farmers to work with them and manage their expectation. Many of the cassava-using companies have resulted to working directly with small holder cassava farmers to establish

supply. Cassava processing companies would have collapsed if this level of engagement had not been possible.

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5.4 Machinery and Equipment

5.4.1 The major equipment for production of Cassava Starch are:- i. Hammer Mill Grater, ii. Starch Extractor,

iii. Sedimentation Tank, iv. Hydraulic Press, v. Granulator,

vi. Flash Dryer, vii. Packaging Machine and viii. Weighing Machine. These can be fabricated at FIIRO. The cost of the equipment with capacity of 4 tonnes of Cassava

Starch per day is N12, 036,060.

5.4.2 Layout of a Small Factory

In such mills the work is performed entirely with simple hand-driven tools. These factories, as a rule, do not produce more than 200 kg wet Starch if run by a family, the daily production is generally not more than 100-120 kg.

A small factory with a daily output of about 200 kg of dry wet Starch functions as follows. Water is drawn off from a brook, dammed up for the purpose, by the channel leading to a waterwheel. The rotation of the wheel is transmitted via the flywheel and a belt to the rasper which is mounted

in the rasping table with seating bench. The roots are peeled and dumped into the basin, where they are washed with clean water from a feed pipe, after which they are transferred to the rasper. The pulp obtained by rasping is transferred to the washing basins, where it is washed thoroughly

with spring water or purified river water. The Starch runs into the settling tanks.

After settling, this is let off through a drain, joining the wash water from the roots and the water from the channel on its way to the river. The moist Starch is conveniently dried near the factory

on racks in the open, and the packing of the crude Starch and other related work are performed in a small shed. The waste pulp is worked up in factories. It is dried in the sun and sold to a bolting factory together with the crude Starch.

5.4.3 Layout of a Medium-Size Factory In these factories the installation of an electromotor or diesel engine of about 20 hp raises the

production capacity to a level of about 5 tons a day, principally on account of more efficient grating or rasping. The other operations also change somewhat in character as compared with the small-mill methods, but they are the same in principle and little skilled labour is needed. The power supply mentioned above is sufficient to drive one mechanical rasper. In many instances,

however, the factory includes a bolting installation, which, in general, is driven alternately with the rasper, and the factory produces an assortment of finished Starch: in this case a somewhat larger power supply (at least 25 hp) is necessary. Factories of this kind are very suitable for rural

areas where unskilled labour is comparatively cheap but technical equipment and skills are difficult to procure.

Both small mills and medium-size factories in general, have to buy their roots from landowners in their neighbourhood. On account of many economic and social factors the supply often lacks stability and continuity. Consequently, the possibility of production

planning is slight, and this is perhaps the most important factor limiting the size and output of such factories. In areas where farmers or farmer organizations have more advanced ideas, where they are commercially minded and combine in rural industrial enterprises to process their own agricultural product, the supply of roots can be organized to the great economic benefit

of all concerned.

Figures 5 shows the main elements of a typical medium-size factory with a capacity of 2-5 tons

of Starch per day. The arrangement and dimensions, given in centimetres, are those recommended by an expert with long practical experience. Figure 5 shows vertical sections of the arrangement through the axis of the rotating screen (above) and perpendicular to this axis

35

(below). The peeled roots are stored in basin A, washed in basin B, and transferred from the

latter basin to the rasper (C), mounted on a rasping table (L in Fig. 6). A 20-hp diesel engine (H) coupled to the pump (G), which supplies water from the well (F), drives both the rasper (at 800 rev/min) and the rotating screen (at 120 rev/min) via the transmission gear (1). The Starch milk

passes from the rotating screen (D) to the Starch table (E), which has a slope of about I percent.

5.4.4 Large or Estate Factories By starting with a sufficiently large investment of capital, it is possible to overcome the limitations

mentioned above and reach at once production of the order of 40 tons of Starch a day. Manufacture at this level presupposes that a continuous sale is secured within industry. Supplying cassava for specific industrial purposes, however, in turn places definite demands on

the Starch mills, which can be summed up as the demand for a regular supply of an assortment of Starch of specific and constant quality. Clearly, this demand will be met only when the factory can rely on adequate raw material - roots - from its own extensive plantations where a

selected strain of cassava is grown. On this level only, appropriate machinery for purification and more elaborate techniques are needed to save labour, minimize losses, and so process more economically.

Division into three classes of factories is, of course, arbitrary: medium-size factories may have fairly modern machinery, such as centrifuges for the preliminary drying of the flour, whereas a much larger factory may be limited to rather out-of-date methods of drying. Still, as a rule, each

operation in processing the Starch is carried out in a form characteristic of the particular class in the above classification of factories.

The processing operations in different types of factories are illustrated in the following flow sheets and diagrams. Figure shows an example of the operations used in a small to medium-size cassava Starch factory in Malaysia. The equipment and methods of manufacture are mostly old-fashioned.

Figure 4 shows an example of the processing operations in a medium- to large-size factory in Thailand. Most of the equipment is modern and the production is mostly prepared for export. Figure 5 shows a diagram of the operations of a large factory with modern equipment proposed

for Nigeria.

- Figure 5

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Figure 6 – Flow Diagram of Operations in an Old-Fashioned Small to Medium-Size Processing Factory.

Figure 7 – Flow Diagram of Operations in a Modern Medium to Farce Processing Factory.

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Figure 8 – Flow Diagram of Operations Proposed for a Large Modern Processing Factory in Nigeria.

5.4.5 Proposed Scalable Production Schedule It is assumed that during the first year of operation, optimum production is not likely to be

achieved as the workers learn to grapple with machinery and production problems. It is hoped that the production staff would gain more experience in production process and be able to increase capacity utilization in later years. It is, therefore, assumed that initial capacity utilization

would be 60% of installed capacity on 2-shifts in the first year of operation. The envisaged production schedule assuming 300 working days in a year is as indicated below:-

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5.4.6 Proposed Scalable Production Schedule Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

1- 5tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 130 78 91 104 110.5 117

Monthly production - Output tons 125 75 87.5 100 106.25 112.5

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 1,500 900 1,050 1,200 1,275 1,350

Selling price/Ton of output (N) 172,000 172,000 172,000 172,000 172,000 172,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 258,000,000 154,800,000 180,600,000 206,400,000 219,300,000 232,200,000

Annual waste or Refuse sales (N) 2,100,000 1,260,000 1,470,000 1,680,000 1,785,000 1,890,000

Total Sales 260,100,000 156,060,000 182,070,000 208,080,000 221,085,000 234,090,000

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

5- 10tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 250 150 175 200 212.5 225

Monthly production - Output tons 240 144 168 192 204 216

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 2,880 1,728 2,016 2,304 2,448 2,592

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 486,720,000 292,032,000 340,704,000 389,376,000 413,712,000 438,048,000

Annual waste or Refuse sales (N) 4,032,000 2,419,200 2,822,400 3,225,600 3,427,200 3,628,800

Total Sales 490,752,000 294,451,200 343,526,400 392,601,600 417,139,200 441,676,800

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

10- 15tons No of production days in a week 6 6 6 6 6 6

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Monthly production - Input tons 382 229.2 267.4 305.6 324.7 343.8

Monthly production - Output tons 376 225.6 263.2 300.8 319.6 338.4

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 4,512 2,707 3,158 3,610 3,835 4,061

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 762,528,000 457,516,800 533,769,600 610,022,400 648,148,800 686,275,200

Annual waste or Refuse sales (N) 6,316,800 3,790,080 4,421,760 5,053,440 5,369,280 5,685,120

Total Sales 768,844,800 461,306,880 538,191,360 615,075,840 653,518,080 691,960,320

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

20- 40tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 1046 627.6 732.2 836.8 889.1 941.4

Monthly production - Output tons 1003 601.8 702.1 802.4 852.55 902.7

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 12,036 7,222 8,425 9,629 10,231 10,832

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 2,034,084,000 1,220,450,400 1,423,858,800 1,627,267,200 1,728,971,400 1,830,675,600

Annual waste or Refuse sales (N) 16,850,400 10,110,240 11,795,280 13,480,320 14,322,840 15,165,360

Total Sales 2,050,934,400 1,230,560,640 1,435,654,080 1,640,747,520 1,743,294,240 1,845,840,960

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

40tons & Above No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 1308 784.8 915.6 1046.4 1111.8 1177.2

Monthly production - Output tons 1254 752.4 877.8 1003.2 1065.9 1128.6

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 15,048 9,029 10,534 12,038 12,791 13,543

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

40

Annual Revenue from sales (N) 2,543,112,000 1,525,867,200 1,780,178,400 2,034,489,600 2,161,645,200 2,288,800,800

Annual waste or Refuse sales (N) 21,067,200 12,640,320 14,747,040 16,853,760 17,907,120 18,960,480

Total Sales 2,564,179,200 1,538,507,520 1,794,925,440 2,051,343,360 2,179,552,320 2,307,761,280

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

1- 5tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 130 78 91 104 110.5 117

Monthly production - Output tons 125 75 87.5 100 106.25 112.5

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 1,500 900 1,050 1,200 1,275 1,350

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 253,500,000 152,100,000 177,450,000 202,800,000 215,475,000 228,150,000

Annual waste or Refuse sales (N) 2,100,000 1,260,000 1,470,000 1,680,000 1,785,000 1,890,000

Total Sales 255,600,000 153,360,000 178,920,000 204,480,000 217,260,000 230,040,000

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

5- 10tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 250 150 175 200 212.5 225

Monthly production - Output tons 240 144 168 192 204 216

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 2,880 1,728 2,016 2,304 2,448 2,592

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 486,720,000 292,032,000 340,704,000 389,376,000 413,712,000 438,048,000

Annual waste or Refuse sales (N) 4,032,000 2,419,200 2,822,400 3,225,600 3,427,200 3,628,800

Total Sales 490,752,000 294,451,200 343,526,400 392,601,600 417,139,200 441,676,800

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

10- 15tons No of production days in a week 6 6 6 6 6 6

41

Monthly production - Input tons 382 229.2 267.4 305.6 324.7 343.8

Monthly production - Output tons 376 225.6 263.2 300.8 319.6 338.4

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 4,512 2,707 3,158 3,610 3,835 4,061

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 762,528,000 457,516,800 533,769,600 610,022,400 648,148,800 686,275,200

Annual waste or Refuse sales (N) 6,316,800 3,790,080 4,421,760 5,053,440 5,369,280 5,685,120

Total Sales 768,844,800 461,306,880 538,191,360 615,075,840 653,518,080 691,960,320

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

20- 40tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 1046 627.6 732.2 836.8 889.1 941.4

Monthly production - Output tons 1003 601.8 702.1 802.4 852.55 902.7

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 12,036 7,222 8,425 9,629 10,231 10,832

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 2,034,084,000 1,220,450,400 1,423,858,800 1,627,267,200 1,728,971,400 1,830,675,600

Annual waste or Refuse sales (N) 16,850,400 10,110,240 11,795,280 13,480,320 14,322,840 15,165,360

Total Sales 2,050,934,400 1,230,560,640 1,435,654,080 1,640,747,520 1,743,294,240 1,845,840,960

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

40tons & Above No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 1308 784.8 915.6 1046.4 1111.8 1177.2

Monthly production - Output tons 1254 752.4 877.8 1003.2 1065.9 1128.6

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 15,048 9,029 10,534 12,038 12,791 13,543

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 2,543,112,000 1,525,867,200 1,780,178,400 2,034,489,600 2,161,645,200 2,288,800,800

Annual waste or Refuse sales (N) 21,067,200 12,640,320 14,747,040 16,853,760 17,907,120 18,960,480

Total Sales 2,564,179,200 1,538,507,520 1,794,925,440 2,051,343,360 2,179,552,320 2,307,761,280

42

5.4.6 Outgrowers Scheme, farm production – applicable to all Scales of Operation

An Outgrowers scheme would be establish by the investor to ensure uninterrupted sully of fresh cassava root. The scheme is outline below:-

5000 HECTARES OUTGROWER CASSAVA FARMS (SECOND YEAR PROJECTIONS)

Revenue

Projected yield/Hectare (Tons) 15.00

Aggregate Farm Size (Hectare) 2400

Projected Selling Price/Ton (N) 18000.00

Annual Expected Revenue (N) 648,000,000.00

Expenditures Cost/Unit (N) No. Frequency Total (N)

Pre-Planting Operations

Land Clearing

180,000.00 2400 1 432,000,000.00

Land Preparation 7,500.00 2400 4 72,000,000.00 504,000,000.00

Material Purchases

Cassava Stem 500.00 2400 30 36,000,000.00

Fertilizers

10,500.00 2400

2.00 50,400,000.00

Herbicides 5,000.00 2400 2 24,000,000.00

Pesticides 2,500.00 2400 2 12,000,000.00 122,400,000.00

Planting & Management

Planting 12,000.00 2400 1 28,800,000.00

Weeding/Hoeing 0.00

Herbicides Application 7,500.00 2400 2 36,000,000.00

Others 6,500.00 2400 1 15,600,000.00 80,400,000.00

Harvesting 35,000.00 2400 1 84,000,000.00

Sub-Total Cost of Production (N) 367,440,000.00

Transportation Logistics (N) @ 2.5% of Production Cost 9,186,000.00

Ground Rent (N) 5,000.00 2400 1 12,000,000.00

Technical Services Fee (N) @2% of Gross Revenue 12,960,000.00

Total Production Costs/Annum (N) 401,586,000.00

Gross Margin/Annum (N) 246,414,000.00

Total Number of Outgrowers 1000

Average Annual Income Per Outgrower 246,414.00

Table VIII - Scalable Starch Production Requirements

Scale

Machinery Capital

Requirement N M

Labor Requirement

Skilled & Unskilled

Space

Requirement for Factory

Product Volume (tons)

Margin

Pay Back Preview

Micro 1-5 tons/day 12 M 36 An Acre 1,440 15% 1.2years

Small 5-10 tons 20 M 79 3 acres 4,320 42% 4.3

Medium 10-15 tons 29 M 132 5 acres (2ha) 8,640 7% 4.3 years

Large 20-40 tons 29 M 135 5 acres (2ha) 11,520 53% 1.2 years

Large 40 and above tons 64 M 139 5 acres (2ha) 14,400

43

5.5 Quality Control/Good Manufacturing Practices

5.5.1 Quality is the fitness of a product for use by consumers. The nutritional, sensory, safety, convenience, aesthetic and health values of Starch must be maintained for all customers - industrial as well as individual users.

Evolution of quality management The management of quality has gone through distinct phases – from being a purely inspection-based control system through assurance to Total quality management. The observed

inefficiencies at each phase led to the evolvement of the next phase. The identifiable phases of the evolution process are:- Quality Inspection

Quality Control Quality Assurance Total Quality Management

Under quality inspection, inspection of goods and services—to make sure that what’s being produced is meeting all expectations—takes place at the end of the operations or process. Under such a system, one or more characteristics of a product are examined, measured or tested and

compared with specified requirements to assess its conformity. Products which do not conform to specification may be scrapped, reworked or sold as lower quality items. The limitation of this system is that it fails to address root causes because it is an after-the-fact screening process with

virtually no prevention content. In quality inspection the problem is addressed after it has occurred.

5.5.2 This limitation led to the emergence of the second phase of quality management which is quality

control. Under a system of quality control, product testing and documentation control became ways to ensure greater process control and increased conformity. Typical characteristics of such systems were performance data collection, feedback to earlier stages in the process and self-

inspection. Quality assurance came with a shift from product quality to system quality. Here an organization sets up a system for controlling what is being done and the system is audited to ensure it is adequate both in design and use. A major part of this shift is the use of both second

party and third party audits to assess the efficiency of the system. The major characteristics are the use of quality manuals, procedures, work instructions, quality planning, audits etc. The fundamental difference is that quality assurance is prevention-based while quality control is

inspection-based.

Total quality management is the highest level of quality management. In addition to all aspects of quality assurance, it involves the application of quality management principles to all aspects of

the business. Total quality management requires that principles of quality management be applied in every branch and at every level in an organization. Typical of an organization going through a total quality process there would be a clear unambiguous vision, reduced

interdepartmental barriers, more time spent on training, excellent supply system and customer relations, and realization that quality is not just product quality but also the quality of the whole organization, including sales, finance, personnel and other non-

manufacturing functions (Zhang, 1997).

5.5.3 Hazard/Quality analysis critical control point (HACCP/QACCP) system

The Hazard analysis critical control point (HACCP) system is concerned and deals primarily with controlling and ensuring the safety of food products. It is a scientific and systematic approach to identifying hazards and providing measures for their control to guarantee food safety. It involves monitoring and controlling of materials, and processes that could lead to a compromise in the

safety of the final food products. However, from the standpoints of food manufacturers and consumers, the quality of food is as important as the safety. In spite of the fact that food quality systems are often complicated and expensive to implement, food manufacturers implement them

as a matter of priority to produce products that meet the minimum quality standards and in compliance with the food and drug regulations of the countries where the products are to be

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consumed. Quality Analysis and Critical Control Point (QACCP) system which employs simple but

well planned techniques was developed to address both the quality as well as the safety of food products during processing. The HACCP/QACCP system therefore falls under Quality Assurance as well and can be applied during production of Starch.

The application of QACCP system to Starch production thus ensures control of input materials and processing procedures to produce high quality cassava flour that meets the predefined quality characteristics. This control may, very well include for example, control of cassava cultivar to

indirectly ensure chemical safety through low cyanide content of the final product.

To ensure effectiveness of the quality systems, it is often important to implement some prerequisite quality programs in Starch production before HACCP/QACCP. Two of such

prerequisite programs are Good Manufacturing Practice (GMP) and general principles of Food Hygiene or Good Hygiene Practice (GHP). Even though HACCP/QACCP can be simplified to a level where it can be easily implemented by SMEs using techniques such as measurement of pH with

pH paper, timing of operations, physical observation and inspections, etc, it often still involves extensive documentation and laboratory analysis of samples for verification.

5.5.4 HACCP-like system To simplify the system further for ease of implementation by SMEs, the HACCP/QACCP systems for producing high quality cassava Starch may be implemented without the 6th and 7th principles of HACCP, i.e. with no rigorous record-keeping nor verification schemes. However, emphasis

should be placed on identifying hazards and their critical control points, establishing critical limits for preventive measures and a monitoring procedure (Forsythe and Hayes, 1998).

5.5.5 HACCP/QACCP team Every SME involved in the production of Starch should have a HACCP/QACCP team in place to carry out the HACCP/QACCP implementation and monitoring as well as taking corrective actions

when necessary. The team should have the appropriate knowledge of Starch production and expertise. It should normally consist of:-

An external technical and independent advisor on HACCP/QACCP

Operations or Production Manager Quality Assurance Manager An Agronomist

Engineer, Equipment or Machinery Technician Marketing/Distribution Manager Supporting Junior Staff

This multidisciplinary team should be given strong support by top management and should have very firm commitment to the application and funding of the HACCP/QACCP application. The team should meet regularly (possibly once every month) to review performance of the quality mandate

and maintain the consciousness of the entire workforce to quality and safety.

5.5.6 Walls, floors, windows and roofs

Brooms and brushes must be used to scrub and clean walls and floor, and dirt hosed away down drains. High-pressure jets must be used for relatively inaccessible spots covered with tenacious soil which cannot be dealt with by a brush. This type of cleaning should be done often for wet processing areas of cassava such as the peeling, grating, and de-watering or pressing areas.

Smooth floors may be dried using rubber squeegees. Rubber strips of squeegees must be pressed in close contact with floor by pressure on the handle and pushed along floor. Walls and floors must be mechanically scrubbed with detergent solution, rinsed and dried.

For warehouse and storage room floors however, vacuum cleaning of floor must be done to remove dust or spilled dried materials. Appropriate vacuum cleaning attachments (or other

alternative means) must be used to clean roof girders and collect dust. Roof girders must be cleaned before floors. Order of cleaning must be planned so that dirt is washed down onto a surface to be cleaned and not one that has already been cleaned. The floor should be the last to

45

be cleaned. Scrubbing and mopping of floors, cleaning of window and window screens must be

done using clean water or vacuum cleaning.

5.5.7 Don’ts of Sanitation Management Programme Do not clean any machine (chippers, grater, press, mechanical dryer, mill, sifter or screen)

when it is in operation, unless if required as part of cleaning procedure Do to allow water to enter electrical parts of machines. Do not clean machines until the electrical switches are in ‘off’ position.

Remember to apply grease or the appropriate lubricants immediately after greasy areas are cleaned.

5.5.8 Water Supply and Water Quality Management

Water supply management The following water supply sources are recommended in decreasing order of preference for processing:-

Potable pipe-borne water Water from a bore hole Water from a dug-out well, and

Harvested rain water

Potable pipe-borne water should be the first choice of water for processing cassava into Starch. In the absence of pipe-borne water, water from a bore-hole should be the next choice.

Water from a running river source may be used in the absence of all the above options but must be handled with great caution and subjected to very rigorous treatment before use. With the

exception of pipe-borne water, water from all other sources should preferably be subjected to chlorination and filtration before use especially if there is suspicion of some form of contamination. Other recommended treatments (if affordable) include:-

Deodorization by passage through a carbon column Sterilization by passage through a U-V sterilizer

Water from a running river source should be subjected to all the above treatments before use.

When it becomes necessary to treat the water before use expert advice must be sought before the recommended treatments are carried out.

Adequate systems should be installed to ensure that water supplied for processing is clean and

safe. A regular inspection (preferably weekly) of the water supply system should be carried out to ensure water availability in quantities required for all processing, cleaning, washing and sanitation activities scheduled for each week.

5.5.9 Water Quality Management Water quality is determined by assessing the microbiological, chemical and physical

characteristics. Biological characteristics refer to the number and types of microorganisms present. Chemical characteristics include pH, alkalinity, hardness, nitrates, nitrites, ammonia, phosphates, dissolved oxygen, biochemical oxygen demand, conductivity and density. Physical

characteristics include the odor, color, presence of particulate matter and taste.

For the purposes of processing cassava into Starch, the biological quality of water is very important. The parameters of utmost importance and which should be assessed include presence

of pathogens, coliforms, total plate count, yeast and mould counts. In addition, selected parameters like odor, pH, conductivity and density from the physical and chemical attributes could give useful indications of the physical presence of pollutants in the water and should be assessed.

Selected water quality specifications that should guide the quality control manager in ensuring that the quality of water provided for processing is acceptable and safe. Samples of water should be taken at source and at delivery points and assessed:-

Daily for the physical and chemical attributes, and Weekly (or upon strong suspicion of contamination or pollution) for microbiological attributes.

46

5.5.10 Management and Control of Rodents, Insects (Fruit Flies, Cockroaches, Bees, House

Flies etc.), Birds, Reptiles, And Domestic Animals. Rodents A member of staff must be responsible for monitoring the processing plant for rodents and the

assignment should include baiting and recommendations on repairs that are necessary to keep out rodents. Access to food by rodents must be completely avoided. Small cracks may allow rodents to enter. Therefore, cracks and holes once observed must be sealed or filled

appropriately. Containers for storing food must be rodent proof. Traps with baits must be placed along rodent pathways. Anticoagulant rodenticides may be used to kill rodents.

Insects (fruit flies, cockroaches, house flies, etc.)

Regular spraying of environment with insecticides and the use of screen netting must be ensured to eliminate insects. Insecticides must not be used on production floor during production and must not be sprayed directly over food contact surfaces and equipment surfaces in direct contact

with food. Dark cabinets and drawers must be regularly checked for eggs of cockroaches, thoroughly cleaned and sprayed with insecticides.

It has been found that bees are attracted to cassava grits and chips during sun drying.

Therefore special consideration needs to be given to preventing bees from contaminating the materials during sun drying on open platforms or on concrete surfaces. Beehives close to drying areas should be identified and carefully removed.

Birds, reptiles and domestic animals These must be continuously monitored and eliminated by appropriate means to avoid product contamination especially during drying of pulverized cake in the open.

5.5.11 Environmental Impact Although no hazardous chemical is used during Starch production, the peels of fresh cassava and

effluent from washing and pressing operations; noise and soot from cassava graters, chippers, electricity generators, mechanical dryers, mills and sifters constitute nuisance to the processing environment. In addition, some types of sifters, screeners and milling machines, particularly those

without or with ineffective cyclone separators cause air pollution due to escape of cassava dust during processing.

Of all these, the accumulation of effluent and peels normally containing the cyanogen’s -

linamarin, cyanohydrins and hydrogen cyanide, removed from cassava roots during processing is the most serious in terms of its negative impact on the environment, the health of the processors and rural people, particularly Women and children. Run-off from cassava processing plants if not

adequately treated can cause pollution and damages to the ecosystems along its path, nearby streams, rivers and underground water. The cumulative effect of these may include accumulation of cyanogens in community drinking water and loss of aquatic lives,

which may further expose the community to cyanide toxicity through drinking of underground water or eating of fish and other foods from nearby rivers.

It is important for all cassava processors to device adequate measures to minimize or eliminate

the dangers posed by the pollutants and toxins released during processing of cassava. Adequate monitoring scheme such as regular environmental impact assessment by qualified personnel or institution in addition to regular hospital surveillance reports should be implemented to ensure

that the measures put in place are working.

5.6 Waste Disposal 5.6.1 Wastes are typically generated during the processing of agricultural feedstocks to products.

Cassava processing to Starch generates liquid effluents (whey), solids (mostly peelings and sieviates) and gaseous emissions. Cassava processing to Starch is dominated by the smallholders, which are also referred to as micro, small and medium scale enterprises (MSME). Knipscheer et

al. (2007) estimated that the smallholders produce and process over 80% of Nigerian cassava.

47

With a cassava industry of over 45 million tonnes per annum, large qualities of bio wastes could

be generated. Unfortunately, waste management in Nigeria is very poor.

The Federal Government is focusing more on large corporations particularly multi-nationals in the oil and gas sector, whereas the smallholders/food processors especially in the cassava sub-sector

are generating and releasing large qualities of wastes into the environment, which are largely un-quantified.

Cassava peels have about 140·90 ppm free cyanide (Balogun and Bawa, 1997). Such waste could

contaminate nearby drinking water sources and pollute the air with fermentation odours. Though, the use of cassava peelings for the production of biogas has been demonstrated in the laboratory in Nigeria (Ofoefule and Uzodinma, 2009; Itodo et al., 2007), it has not been widely adopted.

Fermentation odours are common in major cassava processing communities in Nigeria like Okada, Ibillo, Omotosho, Ologbo, Ijebu and Mosogar. Hence, there is need to evaluate the traditional processing of cassava, quantifying the waste production at every stage of the process

with the view of suggesting measures to tackle the wastes to minimize environmental impacts.

Figure 10 Source: Ohimain, Silas-Olu and Zipamoh 2010

In order to prevent environmental impacts arising from the huge waste streams generated during cassava processing, we suggest the various waste should be gathered and converted to useful

products including fuel ethanol (Akpan et al., 1988; Opoku and Uraih 1983; Kosugi et al., 2009), animal feeds (Balogun and Bawa, 1997; Phillips et al., 2004), biogas and electricity (Ofoefule and Uzodinma, 2009; Plevin and Donnelly, 2004), bio-surfactants (Barros et al., 2008) and raw

materials for several industrial applications for the production of mushrooms, single cell protein, enzymes, organic acids, amino acids and other buck chemicals (Pandey et al., 2000; Sriroth et al., 2000).

Power In the small and medium-size factories the only processes consuming a considerable amount of energy are rasping of the roots and, where a bolting installation is present, crushing of the crude

dry flour. At the lowest production levels the manufacture can, therefore, be effected entirely by hand; the larger rural mills, however, have recourse to running water as the chief source of power.

A rasper and eventually a rotating screen can be driven by a simple waterwheel about I m in diameter, constructed of hardwood and revolving on an iron shaft. The mill is set up preferably

48

near a riverside or brook. At some point upstream, water is led off into a channel of suitable size.

The amount of water running in the channel before reaching the waterwheel is regulated by the operation of lock gates.

Above a certain production level, depending on various factors, the energy consumed by the

rasper, rotating screen, disintegrators (in bolting installations) and accessory equipment (such as pumps) is such that it is more advantageous to employ a diesel engine or an electric motor. In modern factories located near cities, power for industrial purposes can usually be purchased from

the local power station at reduced rates. In medium factories, a small stand-by engine generator is recommended for use in the event of power failure and large industrial generators in large scale factories.

49

MARKET STUDY

50

6. MARKET STUDY

The aim of the market study is to determine the present and future demand/supply of Edible and industrial Starch in Nigeria. To this end, the supply and demand position were investigated with a view to assessing the commercial viability and the economic desirability of

Edible and industrial Starch in Nigeria.

The other marketing practices such as Pricing, Sales Promotion and Advertising were examined to enable the Investor adopt a competitive marketing strategy.

6.1 Supply Situation 6.1.1 The supply of Industrial and Edible Starch is very low in Nigeria. This is due to the fact that

virtually all cassava (90%) produced in Nigeria is used as staple food for human consumption.

However, Cassava derivative such as Food and Industrial Grade Starch have enormous potential for industrial processing, hence the supply can be substantially increased.

Estimates indicate the potential short term demand for Industrial cassava at about 8.8million MT of fresh cassava annually (ATA 2015). This domestic shortfall in demand provides Nigeria farmers an increase in demand of more than 20%. Assuming a well managed cassava farm that

yields 20MT/hectare, this untapped domestic supply implies an increase in acreage of 440,000 hectares.

6.1.2 The Starch value-chain is characterized by difficulty in securing sufficient fresh roots to

run the large mill at full capacity.

Of the 5 modern large-scale Cassava Starch factories existing in Nigeria, only two are in operation,

Nigeria Starch Mill (NSM), Ihiala, with an installed capacity of 15,000 ton of Starch/year and MATNA Starch mill, Akure, with installed capacity of 5,000 ton/year. In addition to these two large mills, there are hundreds of small village-level processors who produce Starch around Warri

in Delta State for food and other industrial non-food applications, such as for use in textile mills, plywood, cardboard, and in the paint industry.

6.1.3 Based on capacity figures (small & medium scale) and the cost estimates (Agriculture

Transformation ATA- 2015), the number of process plants and the associated investments can also be estimated. The analysis shows that the domestic demand has the potential to motivate investments in nearly 500 small to medium scale plants in the foreseeable future, with at

least 100 such plants in the short run – If supporting policy measures are in place.

Assuming an average investment of about N20 million per plant, the associated investment would amount to about N10 billion in the foreseeable future (or N2 billion in the short run). This value

of investment excludes the associated investments at the farm level and the multiplier effects that would be created through other activities and services along the value chain.

Sector

Fresh Root (Million)

Plants

Short Term 1 -2 yrs

Medium Term 2 -5 yrs

Long Term > 5 yrs

Starch 0.6 MT 17 plants (24T/daily) 20% 40% 40%

Flour 1.2 MT Turnkey: 50 plants Batch: 100 plants

20% 60%

40% 40%

40%

Ethanol E10 3.6 MT 214 plants 100%

Ethanol Industrial /Beverage

1.0 MT 60 plants 60% 40%

Animal Feed 10 MT 52 plant (10% cassava)

33% 33% 34%

Total required 493 126 108 259

Table IX: Expected Fresh Roots Demands and Processing Plants to be established – ATA 2015

Current supply situation

51

Investigation indicates that the major Starch processing factories in Nigeria operate at less than

20% of their installed capacity producing only 27,000 tons per annum. This falls for short of the current demand of 250,000 tons per annum.

Supplies, Export and Offtakers

Lusurgy & Co Nig. This is a company that is build on trust and have presently some agricultural product to sell.

You can contact us at anytime. Telephone：234 - 01 - 706951005Address：25, Ahmed Oghre

Street. Idimu Lagos 23401 Nigeria Ad & C West Africa Technology Limited

We produced finished food for Human and Animal, from Cassava, Gari, Chips, Flakes, Starch

and from Beans, beans floor and more. Telephone：234 - 803 - 5500872Address：#1 Arunah

Dorcas Close off Orunju St Ifon Ondo Nigeria F.A Fola Enterprise

F.A FOLA ENTERPRISE is a tested name in the Agricultural Exports Industry and has over

years made quality her watch word. We Export Cash Crops Namely: Sesame Seeds, Cassava, Coconut Shells, Maize, all types of Wood, Ginger, Chilli Pepper etc. Check Out our Website:

www.folafarms.com. Telephone：234-812-068-5484Address：146 FLAT 5, AMUWO ODOFIN

ESTATE Gallio Commercial and General Services

Our company specializes on cassava starch and we have been able to expand our sales by

involving in massive exportation. We are not also relenting to expand our exportation down

to the Asian continent. Telephone：234 - 803678 - 5317Address：4, Adegboyega St, Las

Igando Road, Akesan Lagos 23401 Nigeria

Ubaim Green Pasture Ent. Garcinia Kola is a raw material for herbal drugs producers, we are exporters of this product

plus other agricultural product, we also have large stock of cassava for sale. Telephone：234

- 80 - 55508184Address：11 Aisosa Str, Off Okhoro Rd Benin City Edo 234 Nigeria

Timoden Nigeria Limited Buying directly from the source and selling to buyers. 2. We would harvest cassava farm, get them washed peeled. After peeling them, we wash again then we grind in machine extract

starch grinded get dried very well packed.

Telephone：00234 - 80339 - 5717Address：43B Ijeja Road Oke Sokori PO Box 5054 Abeokuta

Ogun State 110003 Nigeria Full Nature Foods

We have cassava farms and produces dried cassava chips for bio ethanol producing companies, we also have yams, cashew nuts, ginger and other agricultural products. thanks for contacting us

Telephone：234 - 080 - 22343320Address：Block 247 Lagos Nigeria

Virose Pharms Nig. Ltd Deals on pharmaceutical products cassava flour, starch and chips. It has a subsidiary Virose

Nig. Enterprises.

Telephone：234 - 0865904 - 379Address：2 Oladehinde Close,Ketu Lagos Lagos 23401

Nigeria

Africentric Investment Limited We are a Nigeria registered company with Head Office at 6TH Floor, Great House, 47/57, Martins Street, Lagos. We major supplier of high-grade industrial cassava starch in

(STARCH:95% MIN, MOISTURE:2% MAX SAND:0.5% FIBER:0.5% MAX. supply excess 20 Metric Tonnes. Please interested buyer to ...

52

Telephone：234 - 802 - 3178184Address：c/o Giljohn Investment Ltd, 6th Floor, Great

Nigeria House, 47/57, Martins Street, Lagos. Nigeria Lagos Lagos/Nigeria Nigeria Mikon Farm Industries Ltd

Planting tapioca root/cassava 40 hacters land at eastern part Nigeria under project farmers association and supervision northern agriculture state ministries. Capacities volume minimum

10,000 M/ton a month. First delivery beginning 3 - 4 months from now. We ...

Telephone：234-803-7654720Address：22 Asa Road

Ad Industrial Skorba Jabuka Ltd A.D. Industrial Skorba Jabuka, registered and started operations in Nigeria 2013, established 1894 Serbia changing its owners going through a series of development phases. We have our

farmland in 5 states of the South East region to boost productions. Our goal is produce the best quality

Telephone：234-8035-712492Address：28 Peace Crescent Drive, Woji Road

Aus Founders Nig. Limited We are a Nigeria company that deal on wood, timer, cashew, Cola nut, palm kernel, Palm kernel shell, cassava (tapioca) chips, starch, Ginger. Our address: No 36 Erhunmwunse str. Uzebu Quarter. Benin City Edo State. You can reach US through our email: Phone no: +

2348025537154 Marius Osatin

Telephone：234- 80- 25531754Address：No 36 Erhunmwunse St. Uzebu Qts

Festival Nigeria Ltd We are a cassava manufacturing company in Nigeria, we produce cassava in large quantities for international buyers. Currently, we are looking for buyers from china and all other Asian

countries. Telephone234-02-2414706Address2 Floor Aliviana Building, Queen Cinema, Dugbe Area, Ibadan, Oyo,

Psaltry International Limited – Starch Factory PIL established its 20-ton/day starch factory in 2012 and an additional Production Line of 30

tons/day capacity in 2015 to meet more Customer demands and satisfaction. With 400 hectares of Company Cassava farmland located at Alayide-Wasimi Village, Ado-Awaye, Oyo State, a farming community of about 10,000 hectares of farmland.

The company’s asset base as at December 2015 was about $5million comprising its factory, farm land and equipment and generated up to $3.5million as revenue in 2015 and has saved the nation the more than $7million in forex in the past two years. The company has provided

employment for over 300 people including 200 permanent staff and 100 temporary staff.

PIL have a backup farm peradventure there is scarcity of supply. The company has about 2000hectares and about 25% of it in use. PIL have farm hands that work on contract for a

year on the farm in 2 different major villages. PIL could have up to 30tons per hectare as yield.

Export Offtakers

COMPANY / COUNTRY PRODUCT

China Foshan HM Trading Company China Cassava Starch

AL DOLLAR FZE United Arab Emirates Cassava Starch

Gadot Biochemical Industries Ltd Israel Cassava Chips

Peyman Group Co. Iran Cassava Starch

SJD Trade Ltd. Estonia Cassava Starch

53

ONE WORLD TRADING Paraguay Cassava Starch

C & F Industrial, s. a. Costa Rica Cassava Starch

Projected Supply 2017-2020 – Table X

S/N

Product

Supply Situation

2017

(Tons)

2018

(Tons)

2019

(Tons)

2020

(Tons)

2021

(Tons)

1. Starch Food Grade 15,000 29,400 24,800 30,000 60,000

2. Starch Industrial Grade 12,000 21,400 25,000 25,000 40,000

Total 27,000 50,800 49,800 55,000 100,000

Extrapolations from Analysis and observations

6.2 Demand Position 6.2.1 The Starch Industry is presently in a transformation phase

The demand for Starch – Food and Industrial Grade is very high. Cassava Starch is an important

domestic and industrial raw materials used in the manufacture of various products including food, adhesives, thickening agents, paper, and pharmaceuticals. It has many remarkable characteristics including high paste viscosity, high paste clarity and high freeze-thaw stability, which are

advantageous to many industries. The Nigerian demand for Starch is estimated at 230,000 tonnes per year; with 60,000 tons of Starch used by Nestle and Unilever alone (UNIDO 2006).

6.2.2 Global Demand Cassava as industry raw material – Starch Cassava Starch trade comprises of a diversity of products that are not normally delineated by available data and are not in the FAO data set, used for much of the analyses. Nevertheless, it is

known that there are many more importers of Cassava Starch than there are exporters.

Thailand is the dominant exporter accounting for approximately 85 percent of world Cassava

Starch exports. In 1990, China and Japan accounted for about 80 percent of global Starch imports. In 1995, China, Indonesia, Malaysia and Japan accounted for 81 percent of global Starch imports lately (2013).

The case studies of European and North American Starch markets demonstrated the fact that a nation's preferred Starch is based on the most abundant supply of raw material available.

In North America, the preferred Starch is maize Starch, while in Europe, a variety of Starches are preferred depending in part on the geographical region. The preferred Starches are potato, wheat and maize. The relatively large imports by China and Japan partially reflect the fact that these countries do not have an abundant raw material source for Starch manufacturing. The strongest

markets for cassava Starch in Europe and North America appear to be in the adhesives and food and beverage industries.

In times of high maize and maize Starch prices, the North American paper industry becomes a large importer of cassava Starch. Cassava Starch does not inherently have properties that make it a preferred Starch for the paper industry other than price.

The case studies relating to Starch in Brazil, Europe, North America and Thailand indicate a growth potential for modified Cassava Starch. For the producing countries, much of the commercial development of modified Starch production has been in conjunction with European

and North American Starch producers. The resulting product is normally produced for the European and North American Starch producers. There is little indication that cassava producing countries have produced modified Starches exclusively for domestic purposes.

6.3 Export Potentials Export market opportunities appear to be less robust than domestic market opportunities. All export markets can be characterized as being driven by final demand. The ethnic

communities in Europe and North America are driving the cassava food market.

54

The producers of final products like paper, textiles, adhesives, food and beverages in Europe and

North America are driving the Starch market. These industries continually search for the cheapest Starch that has the specific properties required by the industry. If the Starch does not exist, the industry will try and create the Starch. Finally, the animal feed industry and the EU

Common Agricultural Policy are driving the cassava chip and pellet imports.

The exporters do not drive these markets. Even the dominant exporters, Thailand in the cassava pellet and Starch markets, and Costa Rica in the paraffin-coated cassava food market

can do very little to alter market developments. The advantage of Thailand and Costa Rica is that they are constantly looking for new markets for their existing products. If a new demand for their products is found, they generally are in a position to exploit the opportunity.

It would appear that when it comes to developing new international market opportunities, Cassava producing countries have to be considered as market takers not market makers. We are adapting the economic term of price takers and price setters. Price takers cannot influence the selling price of the goods, price setters can. Rational price takers only enter markets with acceptable prices.

It would appear that any country that wants to enter into international markets should have a soundly based national market for cassava.

6.4 Nigerian Demand

6.4.1 The Industrial demand is less than 5% of total Cassava Produced Starch factories in Nigeria have sold most of their products to the textile industry where its preferred over other Starches such as corn (maize) Starch. However, lately, the Nigerian Textile Industry is under severe pressure from

cheap textile imports from Asian countries such as India and China.

Although these imports are banned, it is estimated that 70% of textiles sold are foreign

made. Import substitution provides a huge market for Starch factory. Another challenge for the Starch industry is to start producing for the food industry where demand is high but where the quality are higher than for the use of Starch in the textile industry.

In response to the demand for high quality Starch, new plants (2005) were opened in Ibadan and Akure and another one the following year in Anambra state, Ihiala.

A promising new market for Cassava Starch is Dextrin. The market is strong and increasing

6.4.2 Projected Demand 2017-2020 – Table XI

S/N

Product

Supply Situation

2017 (Tons)

2018 (Tons)

2019 (Tons)

2020 (Tons)

2021 (Tons)

1. Starch Food Grade 195,500 230,800 251,000 350,800 458,800

2. Starch Industrial Grade 34,500 46,000 107,200 151,000 305,900

Total 230,000 276,000 358,000 509,800 764,700

% Growth (Estimated) 20% 30% 40% 50% Extrapolation from Analysis and Observations

6.5 The Gap Analysis (Demand/Supply) 6.5.1 From the foregoing, it is evident that there is a yawning gap for the investor company to fill.

The demand as analysed above from outstrips the demand. The investor would take full

advantage of the demand trends to ensure profitability, viability and sustainably of the project.

Push factors that would support this Gap Analysis include amongst others: (i) Government

Support (ii) Better Farming Practices and Farmer Motivation (iii) New Varieties while the Pull factors include (i) Favourable markets (ii) Positive Attitude (iii) Consumer Demand (iv) Industrial Demand

55

6.5.2 To achieve the viability of operations and marketability of products, the company shall embark

on Strategic Marketing Programmes

i. Pricing The price of Cassava Starch varies from market to market. Currently, Starch sells for between

N145,000 – N169,000 per ton. ii. Packaging of Products

The product would be packaged in different sizes – 10kg, 1kg, 500gm, 50kg depending on

consumer needs. iii. Branding

Most of these products have no standard and no brand names. Due to the fact that the

products are not standardized, many dealers in the urban areas travel to the rural areas to purchase in bulk and resell to the urban consumers.

iv. Target Markets

The target markets for the products are as follows:- Homes – all classes of households (i) Paper and Textile Industries

(ii) Food and Beverage Industries (iii) Pharmaceutical Industries

Sales Promotion Strategy

The investor is out to fill the gap in the market and give value added services to its target audience. Meeting customers’ various need would create a strong customer relationship. The segmentation strategy is to target corporate, commercial and individual customers in order to

have a strong market share. The strategies to capture target audience are briefly discussed below:-

i. Timely delivery of products: Products are to be made available on a timely basis in order

to satisfy our clients’ needs. ii. Quality/Superior products: Quality shall be our unique selling proposition, be it for

industrial, commercial or home uses. The investor will make sure it provides quality cassava

based products; we will make sure we continually offer products that are in line with best international practices.

iii. Advertisement/Promos: In order to have a strong market share, the investor will

advertise its products through flyers, local news, radio jingles etc. It will also offer special promos on regular basis so as to attract customers to its self.

iv. Visibility: The products should be well packaged and well arranged in supermarkets and

other sales points to ensure visibility. v. Accessibility: Products should be placed in accessible outlets to ensure accessibility to

customer.

vi. Appearance: Sales staff and understanding personnel should be neatly dressed, well trained and courteous.

vii. Planned Merchandising: Road shows market displays should be undertaken to promote

and create awareness for the products to engender loyalty and sales. viii. Stock Control: Stock analysis and stock taking should be constantly undertaken to ensure

stock availability.

56

6.5.3 Projected Sale Volume – Table XII

Scale of Operation

(Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

1- 5 tons Total Revenue 153,360,000 178,920,000 204,480,000 217,260,000 230,040,000

5- 10 tons Total Revenue 294,451,200 343,526,400 392,601,600 417,139,200 441,676,800

10- 15 tons Total Revenue 461,306,880 538,191,360 615,075,840 653,518,080 691,960,320

20- 40 tons Total Revenue 1,230,560,640 1,435,654,080 1,640,747,520 1,743,294,240 1,845,840,960

40 and Above Total Revenue 1,538,507,520 1,794,925,440 2,051,343,360 2,179,552,320 2,307,761,280

57

FINANCIAL

ANALYSIS

58

Underlying Assumptions

1. This is a scalable Cassava processing to starch (Industry and food grade) project.

2. Sales of Cassava starch has been projected to be 169,000per ton while the cost of raw materials

has been projected to be 130,000.

3. Total project cost is based on the Cassava Processing Facility (Building & Equipment) depending

on the tonnage of cassava per day.

4. The Cassava Starch Production project shall be financed by both owners’ equity and a loan from

Banks and investors.

5. Loan equity of 70% of total project cost is sought from the lending organization at 9% pa for 5

years including 12 months moratorium.

6. Owner’s equity of 30% of total project cost would be provided to cover the working capital

required.

7. It is assumed that input – output ratios for Cassava root is 70%, 24%, 2%, 1% and 3% for

moisture, starch, fibre, protein and conversion rate is 12% for starch.

8. The factories will operate at 75% installed capacities for six months in Year 1 to allow for

construction and installation works.

9. Owners’ equity injection is from the proceeds of existing businesses and shareholders funds.

10. Tax holidays shall be sought from relevant government institutions to all for expansion and

diversification into the business lines.

11. 2400 Smallholder Farmers will be engaged in an Outgrowers Scheme that will ensure

uninterrupted supply of raw materials to the factory from the second year.

59

7.1 PRODUCTION COST SCHEDULE 1- 5 tons 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Raw Material Cost Monthly raw materials requirement (Ton) 75 87.5 100 106.25 112.5

Raw Material Cost/Ton (N) 130,000 130,000 130,000 130,000 130,000

Total Monthly cost of raw materials (N) 9,750,000 11,375,000 13,000,000 13,812,500 14,625,000

Total Annual Direct Material Cost (N) 117,000,000 136,500,000 156,000,000 165,750,000 175,500,000

5- 10 tons 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Raw Material Cost Monthly raw materials requirement (Ton) 144 168 192 204 216

Raw Material Cost/Ton (N) 130,000 130,000 130,000 130,000 130,000

Total Monthly cost of raw materials (N) 18,720,000 21,840,000 24,960,000 26,520,000 28,080,000

Total Annual Direct Material Cost (N) 224,640,000 262,080,000 299,520,000 318,240,000 336,960,000

10- 15 tons 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Raw Material Cost Monthly raw materials requirement (Ton) 225.6 263.2 300.8 319.6 338.4

Raw Material Cost/Ton (N) 130,000 130,000 130,000 130,000 130,000

Total Monthly cost of raw materials (N) 29,328,000 34,216,000 39,104,000 41,548,000 43,992,000

Total Annual Direct Material Cost (N) 351,936,000 410,592,000 469,248,000 498,576,000 527,904,000

20- 40 tons 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Raw Material Cost Monthly raw materials requirement (Ton) 601.8 702.1 802.4 852.55 902.7

Raw Material Cost/Ton (N) 130,000 130,000 130,000 130,000 130,000

Total Monthly cost of raw materials (N) 78,234,000 91,273,000 104,312,000 110,831,500 117,351,000

Total Annual Direct Material Cost (N) 938,808,000 1,095,276,000 1,251,744,000 1,329,978,000 1,408,212,000

40tons & Above 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Raw Material Cost Monthly raw materials requirement (Ton) 752.4 877.8 1003.2 1065.9 1128.6

Raw Material Cost/Ton (N) 130,000 130,000 130,000 130,000 130,000

Total Monthly cost of raw materials (N) 97,812,000 114,114,000 130,416,000 138,567,000 146,718,000

Total Annual Direct Material Cost (N) 1,173,744,000 1,369,368,000 1,564,992,000 1,662,804,000 1,760,616,000

60

7.2 FINANCING PLAN

Fixed Assets 1-5 tons 5-10 tons 10- 15tons 20- 40tons 40tons & Above

Land & Building 17,400,000 17,400,000 27,500,000 42,800,000 42,800,000

Plant & Equipment 46,823,333 46,823,333 72,903,333 102,050,000 102,050,000

Vehicle and Automobile 20,890,000 20,890,000 20,890,000 29,160,000 29,160,000

Furniture & Fitting 2,460,000 2,460,000 2,460,000 3,400,000 3,400,000

Total Required Fixed Assets 87,573,333 87,573,333 123,753,333 177,410,000 177,410,000

Operating Capital

Direct Material Cost - - - - -

Pre- opening salaries and wages 2,500,000 3,500,000 3,500,000 4,000,000 4,000,000

Legal & Accounting fees 3,500,000 3,500,000 3,500,000 4,000,000 4,000,000

Licences (e.g NAFDAC, EIA etc) 2,500,000 2,500,000 2,500,000 3,000,000 3,000,000

Other initial start up cost 2,000,000 2,500,000 2,500,000 3,000,000 3,000,000

Working Capital (Cash on Hand) 15,000,000 15,000,000 15,000,000 17,000,000 17,000,000

Total Operating Capital 25,500,000 27,000,000 27,000,000 31,000,000 31,000,000

113,073,333 114,573,333 150,753,333 208,410,000 208,410,000

Sources of Funding

Owners cash injection - 30% 33,922,000 34,372,000 45,226,000 62,523,000 62,523,000

Loan Equity -70% 79,151,333 80,201,333 105,527,333 145,887,000 145,887,000

Balance on fixed assets 53,651,333 53,201,333 78,527,333 114,887,000 114,887,000

61

7.3 Production Schedule Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

1- 5tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 130 78 91 104 110.5 117

Monthly production - Output tons 125 75 87.5 100 106.25 112.5

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 1,500 900 1,050 1,200 1,275 1,350

Selling price/Ton of output (N) 172,000 172,000 172,000 172,000 172,000 172,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 258,000,000 154,800,000 180,600,000 206,400,000 219,300,000 232,200,000

Annual waste or Refuse sales (N) 2,100,000 1,260,000 1,470,000 1,680,000 1,785,000 1,890,000

Total Sales 260,100,000 156,060,000 182,070,000 208,080,000 221,085,000 234,090,000

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

5- 10tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 250 150 175 200 212.5 225

Monthly production - Output tons 240 144 168 192 204 216

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 2,880 1,728 2,016 2,304 2,448 2,592

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 486,720,000 292,032,000 340,704,000 389,376,000 413,712,000 438,048,000

Annual waste or Refuse sales (N) 4,032,000 2,419,200 2,822,400 3,225,600 3,427,200 3,628,800

Total Sales 490,752,000 294,451,200 343,526,400 392,601,600 417,139,200 441,676,800

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

10- 15tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 382 229.2 267.4 305.6 324.7 343.8

Monthly production - Output tons 376 225.6 263.2 300.8 319.6 338.4

62

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 4,512 2,707 3,158 3,610 3,835 4,061

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 762,528,000 457,516,800 533,769,600 610,022,400 648,148,800 686,275,200

Annual waste or Refuse sales (N) 6,316,800 3,790,080 4,421,760 5,053,440 5,369,280 5,685,120

Total Sales 768,844,800 461,306,880 538,191,360 615,075,840 653,518,080 691,960,320

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

20- 40tons No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 1046 627.6 732.2 836.8 889.1 941.4

Monthly production - Output tons 1003 601.8 702.1 802.4 852.55 902.7

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 12,036 7,222 8,425 9,629 10,231 10,832

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 2,034,084,000 1,220,450,400 1,423,858,800 1,627,267,200 1,728,971,400 1,830,675,600

Annual waste or Refuse sales (N) 16,850,400 10,110,240 11,795,280 13,480,320 14,322,840 15,165,360

Total Sales 2,050,934,400 1,230,560,640 1,435,654,080 1,640,747,520 1,743,294,240 1,845,840,960

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Items

40tons & Above No of production days in a week 6 6 6 6 6 6

Monthly production - Input tons 1308 784.8 915.6 1046.4 1111.8 1177.2

Monthly production - Output tons 1254 752.4 877.8 1003.2 1065.9 1128.6

No of production month in a year 12 12 12 12 12 12

Annual production output -(Ton) 15,048 9,029 10,534 12,038 12,791 13,543

Selling price/Ton of output (N) 169,000 169,000 169,000 169,000 169,000 169,000

Selling price/Ton of waste/refuse (N) 14,000 14,000 14,000 14,000 14,000 14,000

Annual Revenue from sales (N) 2,543,112,000 1,525,867,200 1,780,178,400 2,034,489,600 2,161,645,200 2,288,800,800

Annual waste or Refuse sales (N) 21,067,200 12,640,320 14,747,040 16,853,760 17,907,120 18,960,480

Total Sales 2,564,179,200 1,538,507,520 1,794,925,440 2,051,343,360 2,179,552,320 2,307,761,280

63

7.4 Labour Schedule

S/N POSITION 1 -5 Tons 5 - 10 Tons 10 - 15Tons 20 -40Tons 40Tons and above

1 Managing Director

1 1 1

2 General Manager 1 1

3 Farm Manager 1 1 1 1 1

4 Agronomist 1 1 1 1 1

5 Factory Manager

1 1 1

6 Finance/Admin. Manager (Group)

1 1 1

7 Quality/Procurement Manager 1 1 1 1

8 Personnel Manager 1 1 1 1

9 Maintenance Manager 1 1 1 1

10 Internal Auditor 1 1 1 1

11 Stores Officer 1 2 2 2 2

12 Shift Supervisor (Factory) 2 3 3 3 3

13 Security Officer 1 1 1 1

14 Security Guards 2 4 8 8 8

15 Marketing Manager

1 1 1

16 Sales Officers 2 3 6 6 6

17 Farms Workers (Women & Youth) 12 20 70 70 70

18 Senior Driver/Drivers 2 2 4 6 6

19 Factory Workers 9 10 23 23 23

20 Accounts/Store Clerks 2 2 6 6 6

21 Workshop Supervisors- Electrical Mechanical 1 2 4 4 4

36 58 137 139 139

64

1 - 5 Tons (Annual Increment of 10% throughout the years across board)

S/N POSITION 2017 2018 2019 2020 2021

1 Managing Director

2 General Manager 1,800,000 1,980,000.0 2,178,000.0 2,395,800.0 2,635,380.0

3 Farm Manager 1,200,000 1,320,000.0 1,452,000.0 1,597,200.0 1,756,920.0

4 Agronomist 1,140,000 1,254,000.0 1,379,400.0 1,517,340.0 1,669,074.0

5 Factory Manager - - - -

6 Finance/Admin. Manager (Group) - - - -

7 Quality/Procurement Manager - - - -

8 Personnel Manager - - - -

9 Maintenance Manager - - - -

10 Internal Auditor - - - -

11 Stores Officer 720,000 792,000.0 871,200.0 958,320.0 1,054,152.0

12 Shift Supervisor (Factory) 1,200,000 1,320,000.0 1,452,000.0 1,597,200.0 1,756,920.0

13 Security Officer - - - -

14 Security Guards 600,000 660,000.0 726,000.0 798,600.0 878,460.0

15 Marketing Manager - - - -

16 Sales Officers 1,200,000 1,320,000.0 1,452,000.0 1,597,200.0 1,756,920.0

17 Farms Workers (Women & Youth) 2,880,000 3,168,000.0 3,484,800.0 3,833,280.0 4,216,608.0

18 Senior Driver/Drivers 600,000 660,000.0 726,000.0 798,600.0 878,460.0

19 Factory Workers 2,160,000 2,376,000.0 2,613,600.0 2,874,960.0 3,162,456.0

20 Accounts/Store Clerks 600,000 660,000.0 726,000.0 798,600.0 878,460.0

21 Workshop Supervisors- Electrical Mechanical 300,000 330,000.0 363,000.0 399,300.0 439,230.0

TOTAL 14,400,000 15,840,000 17,424,000 19,166,400 21,083,040

65

5 - 10 Tons (Annual Increment of 10% throughout the years across board)

S/N POSITION 2017 2018 2019 2020 2021

1 Managing Director

2 General Manager 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

3 Farm Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

4 Agronomist 1,140,000 1,254,000 1,379,400 1,517,340 1,669,074

5 Factory Manager - - - - -

6 Finance/Admin. Manager (Group) - - - - -

7 Quality/Procurement Manager 960,000 1,056,000 1,161,600 1,277,760 1,405,536

8 Personnel Manager 840,000 924,000 1,016,400 1,118,040 1,229,844

9 Maintenance Manager 720,000 792,000 871,200 958,320 1,054,152

10 Internal Auditor 1,020,000 1,122,000 1,234,200 1,357,620 1,493,382

11 Stores Officer 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

12 Shift Supervisor (Factory) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

13 Security Officer 420,000 462,000 508,200 559,020 614,922

14 Security Guards 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

15 Marketing Manager - - - - -

16 Sales Officers 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

17 Farms Workers (Women & Youth) 4,800,000 5,280,000 5,808,000 6,388,800 7,027,680

18 Senior Driver/Drivers 600,000 660,000 726,000 798,600 878,460

19 Factory Workers 2,400,000 2,640,000 2,904,000 3,194,400 3,513,840

20 Accounts/Store Clerks 600,000 660,000 726,000 798,600 878,460

21 Workshop Supervisors- Electrical Mechanical 480,000 528,000.0 580,800.0 638,880.0 702,768.0

TOTAL 23,220,000 25,542,000 28,096,200 30,905,820 33,996,402

66

10 - 15 Tons (Annual Increment of 10% throughout the years across board)

S/N POSITION 2017 2018 2019 2020 2021

1 Managing Director 2,400,000 2,640,000 2,904,000 3,194,400 3,513,840

2 General Manager - - - - -

3 Farm Manager 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

4 Agronomist 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

5 Factory Manager 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228

6 Finance/Admin. Manager (Group) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

7 Quality/Procurement Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

8 Personnel Manager 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228

9 Maintenance Manager 900,000 990,000 1,089,000 1,197,900 1,317,690

10 Internal Auditor 1,140,000 1,254,000 1,379,400 1,517,340 1,669,074

11 Stores Officer 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

12 Shift Supervisor (Factory) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

13 Security Officer 420,000 462,000 508,200 559,020 614,922

14 Security Guards 2,400,000 2,640,000 2,904,000 3,194,400 3,513,840

15 Marketing Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

16 Sales Officers 3,600,000 3,960,000 4,356,000 4,791,600 5,270,760

17 Farms Workers (Women & Youth) 16,800,000 18,480,000 20,328,000 22,360,800 24,596,880

18 Senior Driver/Drivers 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

19 Factory Workers 5,520,000 6,072,000 6,679,200 7,347,120 8,081,832

20 Accounts/Store Clerks 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

21 Workshop Supervisors- Electrical Mechanical 960,000 1,056,000.0 1,161,600.0 1,277,760.0 1,405,536.0

TOTAL 46,980,000 51,678,000 56,845,800 62,530,380 68,783,418

67

20 - 40 Tons (Annual Increment of 10% throughout the years across board)

S/N POSITION 2017 2018 2019 2020 2021

1 Managing Director 2,400,000 2,640,000 2,904,000 3,194,400 3,513,840

2 General Manager - - - - -

3 Farm Manager 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

4 Agronomist 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

5 Factory Manager 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228

6 Finance/Admin. Manager (Group) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

7 Quality/Procurement Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

8 Personnel Manager 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228

9 Maintenance Manager 900,000 990,000 1,089,000 1,197,900 1,317,690

10 Internal Auditor 1,140,000 1,254,000 1,379,400 1,517,340 1,669,074

11 Stores Officer 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

12 Shift Supervisor (Factory) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

13 Security Officer 420,000 462,000 508,200 559,020 614,922

14 Security Guards 2,400,000 2,640,000 2,904,000 3,194,400 3,513,840

15 Marketing Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

16 Sales Officers 3,600,000 3,960,000 4,356,000 4,791,600 5,270,760

17 Farms Workers (Women & Youth) 16,800,000 18,480,000 20,328,000 22,360,800 24,596,880

18 Senior Driver/Drivers 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

19 Factory Workers 5,520,000 6,072,000 6,679,200 7,347,120 8,081,832

20 Accounts/Store Clerks 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

21 Workshop Supervisors- Electrical Mechanical 960,000 1,056,000.0 1,161,600.0 1,277,760.0 1,405,536.0

TOTAL 47,580,000 52,338,000 57,571,800 63,328,980 69,661,878

68

40 Tons and Above(Annual Increment of 10% throughout the years across board)

S/N POSITION 2017 2018 2019 2020 2021

1 Managing Director 2,400,000

2 General Manager - - - - -

3 Farm Manager 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

4 Agronomist 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

5 Factory Manager 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228

6 Finance/Admin. Manager (Group) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

7 Quality/Procurement Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

8 Personnel Manager 1,080,000 1,188,000 1,306,800 1,437,480 1,581,228

9 Maintenance Manager 900,000 990,000 1,089,000 1,197,900 1,317,690

10 Internal Auditor 1,140,000 1,254,000 1,379,400 1,517,340 1,669,074

11 Stores Officer 1,440,000 1,584,000 1,742,400 1,916,640 2,108,304

12 Shift Supervisor (Factory) 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

13 Security Officer 420,000 462,000 508,200 559,020 614,922

14 Security Guards 2,400,000 2,640,000 2,904,000 3,194,400 3,513,840

15 Marketing Manager 1,200,000 1,320,000 1,452,000 1,597,200 1,756,920

16 Sales Officers 3,600,000 3,960,000 4,356,000 4,791,600 5,270,760

17 Farms Workers (Women & Youth) 16,800,000 18,480,000 20,328,000 22,360,800 24,596,880

18 Senior Driver/Drivers 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

19 Factory Workers 5,520,000 6,072,000 6,679,200 7,347,120 8,081,832

20 Accounts/Store Clerks 1,800,000 1,980,000 2,178,000 2,395,800 2,635,380

21 Workshop Supervisors- Electrical Mechanical 960,000 1,056,000.0 1,161,600.0 1,277,760.0 1,405,536.0

TOTAL 47,580,000 52,338,000 57,571,800 63,328,980 69,661,878

69

7.5 Profit and Loss Account

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Profit and Loss Items

1- 5 tons Total Revenue 156,060,000 182,070,000 208,080,000 221,085,000 234,090,000

Less:

Annual Cost of Raw Materials 117,000,000 136,500,000 156,000,000 165,750,000 175,500,000

Gross Profit 39,060,000 45,570,000 52,080,000 55,335,000 58,590,000

Less: Direct Overhead

Fuel, Water & Air 1,560,600 1,820,700 2,080,800 2,210,850 2,340,900

Communication Expenses (0.5% of gross revenue)

780,300

910,350 1,040,400 1,105,425 1,170,450

Factory Maintenance 3,121,200 3,641,400 4,161,600 4,421,700 4,681,800

Depreciation expense 6,425,280 6,181,214 5,875,875 5,237,866 4,692,412

Less: Administrative & Operating Expenses

5,989,267

3,904,340

4,517,790

3,604,260

2,467,859

Salaries and Wages 14,400,000 15,840,000 17,424,000 19,166,400 21,083,040

Fuelling (Operation vehicle @100,000/month)

1,200,000

1,200,000

1,200,000

1,200,000

1,200,000

Total Overhead 33,476,647 33,498,004 36,300,465 36,946,501 37,636,461

Net Profit 5,583,353

12,071,997

15,779,535

18,388,499

20,953,539

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Profit and Loss Items

5- 10 tons Total Revenue 294,451,200

343,526,400

392,601,600

417,139,200

441,676,800

Less:

Annual Cost of Raw Materials 224,640,000

262,080,000

299,520,000

318,240,000

336,960,000

Gross Profit 69,811,200

81,446,400

93,081,600

98,899,200

104,716,800

Less: Direct Overhead

Fuel, Water & Air 2,944,512 3,435,264 3,926,016 4,171,392 4,416,768

Communication Expenses (0.5% of gross revenue) 1,472,256 1,717,632 1,963,008 2,085,696 2,208,384

Factory Maintenance 5,889,024 6,870,528 7,852,032 8,342,784 8,833,536

70

Depreciation expense 6,700,260

6,469,943

6,172,854

5,521,851

4,963,033

Less: Administrative & Operating Expenses

13,036,270

10,322,557

12,950,333

12,510,978

10,464,480

Salaries and Wages 23,220,000

25,542,000

28,096,200

30,905,820

33,996,402

Fuelling (Operation vehicle @100,000/month)

1,200,000

1,200,000

1,200,000

1,200,000

1,200,000

Total Overhead 54,462,322

55,557,923

62,160,442

64,738,522

66,082,604

Net Profit 15,348,878

25,888,477

30,921,158

34,160,678

38,634,196

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Profit and Loss Items

10- 15 tons Total Revenue 461,306,880

538,191,360

615,075,840

653,518,080

691,960,320

Less:

Annual Cost of Raw Materials 351,936,000

410,592,000

469,248,000

498,576,000

527,904,000

Gross Profit 109,370,880

127,599,360

145,827,840

154,942,080

164,056,320

Less: Direct Overhead

Fuel, Water & Air 4,613,069

5,381,914

6,150,758

6,535,181

6,919,603

Communication Expenses (0.5% of gross revenue)

2,306,534

2,690,957

3,075,379

3,267,590

3,459,802

Factory Maintenance 9,226,138

10,763,827

12,301,517

13,070,362

13,839,206

Depreciation expense 9,907,200

9,635,710

9,260,433

8,344,226

7,553,678

Less: Administrative & Operating Expenses

76,327,569

14,953,072

17,125,295

14,024,328

10,240,957

Administrative staff salaries 46,980,000

51,678,000

56,845,800

62,530,380

68,783,418

Fuelling (Operation vehicle @100,000/month)

1,200,000

1,200,000

1,200,000

1,200,000

1,200,000

Total Overhead 150,560,510 96,303,480 105,959,182 108,972,067 111,996,665

Net Profit (41,189,630) 31,295,880 39,868,658 45,970,013 52,059,655

71

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Profit and Loss Items

20 - 40 tons Total Revenue 1,230,560,640

1,435,654,080

1,640,747,520

1,743,294,240

1,845,840,960

Less:

Annual Cost of Raw Materials 938,808,000

1,095,276,000

1,251,744,000

1,329,978,000

1,408,212,000

Gross Profit 291,752,640

340,378,080

389,003,520

413,316,240

437,628,960

Less: Direct Overhead

Fuel, Water & Air 12,305,606

14,356,541

16,407,475

17,432,942

18,458,410

Communication Expenses (0.5% of gross revenue)

6,152,803

7,178,270

8,203,738

8,716,471

9,229,205

Factory Maintenance 24,611,213

28,713,082

32,814,950

34,865,885

36,916,819

Depreciation expense 11,176,200

10,970,960

10,636,969

9,663,804

8,814,547

Less: Administrative & Operating Expenses

119,379,814

85,468,177

88,280,444

85,564,104

82,101,256

Administrative staff salaries 47,580,000

52,338,000

57,571,800

63,328,980

69,661,878

Fuelling (Operation vehicle @100,000/month)

1,200,000

1,200,000

1,200,000

1,200,000

1,200,000

Total Overhead 222,405,636

200,225,030

215,115,376

220,772,186

226,382,114

Net Profit 69,347,004

140,153,050

173,888,144

192,544,054

211,246,846

Scale of Operation (Tons per day) Year 2017 2018 2019 2020 2021

Capital Utilization 60% 70% 80% 85% 90%

Profit and Loss Items

40 tons and above Total Revenue 1,538,507,520

1,794,925,440

2,051,343,360

2,179,552,320

2,307,761,280

Less:

Annual Cost of Raw Materials 1,173,744,000

1,369,368,000

1,564,992,000

1,662,804,000

1,760,616,000

Gross Profit 364,763,520

425,557,440

486,351,360

516,748,320

547,145,280

72

Less: Direct Overhead

Fuel, Water & Air 15,385,075

17,949,254

20,513,434

21,795,523

23,077,613

Communication Expenses (0.5% of gross revenue)

7,692,538

8,974,627

10,256,717

10,897,762

11,538,806

Factory Maintenance 30,770,150

35,898,509

41,026,867

43,591,046

46,155,226

Depreciation expense 11,176,200

10,970,960

10,636,969

9,663,804

8,814,547

Less: Administrative & Operating Expenses

120,611,602

87,213,209

90,282,099

118,981,233

146,908,195

Administrative staff salaries 47,580,000

52,338,000

57,571,800

63,328,980

69,661,878

Fuelling (Operation vehicle @100,000/month)

1,200,000

1,200,000

1,200,000

1,200,000

1,200,000

Total Overhead 234,415,565

214,544,560

231,487,885

269,458,347

307,356,265

Net Profit 130,347,955

211,012,880

254,863,475

247,289,973

239,789,015

73

7.6 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER

1 - 5 Tons 5 - 10 Tons

2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

Non Current Assets Note N N N N N N N N N N Property, plant and

equipment 7

76,864 68,034 60,689 54,527 49,313

80,989 71,746 64,030 57,534 52,019

76,864

68,034

60,689

54,527 49,313

80,989

71,746

64,030 57,534 52,019

Current Assets Trade and Other Receivables 8

31,212

36,414

41,616

44,217 46,818

58,890

68,705

78,520 83,428 88,335

Inventory - - - - -

Cash and Cash Equivalents

47,305

68,263

78,351

92,847 108,919

19,295

54,760

82,754 117,287 154,162

78,517

104,677

119,967

137,064 155,737

78,185

123,465

161,274 200,715 242,498

Current Liabilities

Loan 9

79,151

31,846

31,846

19,705

9,281

80,201

57,806

36,836

17,291

595

Creditors 10

36,725

93,151

90,366

100,937

110,572

29,252

61,716

91,752

121,013

147,705

115,876

124,997

122,212

120,642 119,853

109,453

119,522

128,588 138,304 148,300

Net Current Assets

(37,359)

(20,320)

(2,245)

16,422 35,884

(31,268)

3,943

32,686 62,410 94,197

Net Assets

39,505

47,714

58,444

70,949 85,197

49,721

75,689

96,716 119,944 146,216

Capital

Called Up Share Capital 11

33,922

33,922

33,922

33,922 33,922

34,372

42,736

42,736

42,736

42,736

Retained Earnings 12 -

5,583

13,792

24,522

37,027 -

15,349

32,953

53,979

77,209

Profit/(Loss) for the year

5,583

8,209

10,730

12,504 14,248

15,349

17,604

21,026 23,229 26,271

39,505

47,714

58,444

70,949 85,197

49,721

75,689

96,715 119,945 146,216

74

10 - 15 Tons 20 - 40 Tons 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

N N N N N N N N N N

126,008 112,243 100,667 90,850 82,457

157,843 142,170 128,874 117,505 107,711

126,008

112,243

100,667

90,850

82,457

157,843

142,170

128,874

117,505

107,711

92,261

107,638

123,015

194,080

1,275,114

246,112

287,131

328,150

348,659

369,168

33,502

55,541

76,607

107,603

140,190

28,830

89,235

175,792

293,638

421,651

125,764

163,180

199,622

301,683

1,415,304

274,942

376,366

503,942

642,297

790,819

105,527

82,277

60,452

40,052

21,077

145,887

119,005

93,548

69,516

46,908

142,208

157,813

177,394

258,778

1,347,581

177,219

194,548

216,041

236,129

253,818

247,735

240,090

237,846

298,830

1,368,658

323,106

313,553

309,589

305,645

300,726

(121,972)

(76,911)

(38,224)

2,853

46,646

(48,164)

62,813

194,353

336,652

490,093

4,036

35,332

62,443

93,703

129,103

109,679

204,983

323,227

454,157

597,804

45,226

45,226

45,226

45,226

45,226

62,523

62,523

62,523

62,523

62,523

-

(41,190)

(9,894)

17,217

48,477 -

47,156

142,460

260,704

391,634

(41,190)

31,296

27,111

31,260

35,401

47,156

95,304

118,244

130,930

143,648

4,036

35,332

62,443

93,703

129,103

109,679

204,983

323,227

454,157

597,805

75

40 Tons & Above

2017 2018 2019 2020 2021

N N N N N

157,843 142,170 128,874 117,505 107,711

157,843

142,170

128,874

117,505

107,711

307,702

358,985

410,269

435,910

461,552

2,273

134,525

33,432

98,325

131,355

149,941

142,289

341,134

457,310

541,624

588,124

738,367

145,887

119,005

93,548

69,516

46,908

201,930

185,827

108,995 - -

347,817

304,832

202,543

69,516

46,908

(6,683)

152,478

339,081

518,608

691,459

151,160

294,648

467,955

636,113

799,170

62,523

62,523

62,523

62,523

62,523

-

88,637

232,125

405,433

573,590

88,637

143,489

173,307

168,157

163,057

151,160

294,648

467,956

636,113

799,169

76

7.7 CASH FLOW

1 - 5 Tons

2017 2018 2019 2020 2021 TOTAL

N'000 N'000 N'000 N'000 N'000 N'000

A INFLOWS

1 Sales/Debtors 124,848 176,868 202,878 218,484 231,489 954,567

Proposed Loan (New) 79,151 - - - - 79,151

Equity Deposit 33,922 - - - - 33,922

Total Inflows 237,921 176,868 202,878 218,484 231,489 1,067,640

B OUTFLOWS

Annual Cost of Raw Materials 117,000 136,500 156,000 165,750 175,500 750,750

Direct Overhead 11,887 12,554 13,159 12,976 12,886 63,461

Pre-operational Expenses 38,651 38,651

Administrative Expenses 14,400 15,840 17,424 19,166 21,083 87,913

Up front charges 1,583 - - - - 1,583

Interest on loan 6,470 5,045 3,621 2,196 771 18,103

Bank Charges 624 884 1,014 1,092 1,157 4,773

Taxation - 87 1,572 2,808 4,020 8,487

Dividend - - - - - -

Total Outflows 190,616 170,910 192,790 203,989 215,417 973,722

Net Cashflow 47,305 5,958 10,088 14,495 16,072 93,919

Cash Bal B/f 15,000 62,305 68,263 78,351 92,847 -

Cash Bal C/f 62,305 68,263 78,351 92,847 108,919 -

77

5 - 10 Tons

2017 2018 2019 2020 2021 TOTAL

N'000 N'000 N'000 N'000 N'000 N'000

235,561 333,711 382,787 412,232 436,769 1,801,060

80,201 - - - - 80,201

34,372 - - - - 34,372

350,134 333,711 382,787 412,232 436,769 1,915,633

224,640 262,080 299,520 318,240 336,960 1,441,440

17,006 18,493 19,914 20,122 20,422 95,957

53,201 53,201

23,220 25,542 28,096 30,906 33,996 141,760

1,604 - - - - 1,604

6,565 5,140 3,715 2,290 866 18,576

1,178 1,669 1,914 2,061 2,184 9,005

3,425 322 1,634 2,705 3,747 11,833

- - - 1,375 1,719 3,093

330,840 313,246 354,793 377,699 399,894 1,776,471

19,295 20,465 27,994 34,533 36,876 139,162

15,000 34,295 54,760 82,754 117,287 -

34,295 54,760 82,754 117,287 154,162 -

78

10 - 15 Tons 2017 2018 2019 2020 2021 TOTAL

N'000 N'000 N'000 N'000 N'000 N'000

369,046 522,814 599,699 645,830 684,272 2,821,660

105,527 - - - - 105,527

45,226 - - - - 45,226

519,799 522,814 599,699 645,830 684,272 2,972,414

351,936 410,592 469,248 498,576 527,904 2,258,256

26,053 28,472 30,788 31,217 31,772 148,303

63,527 63,527

46,980 51,678 56,846 62,530 68,783 286,818

2,111 - - - - 2,111

8,844 7,419 5,995 4,570 3,145 29,973

1,845 2,614 2,998 3,229 3,421 14,108

- - 12,758 14,710 16,659 44,127

- - - - - -

501,297 500,775 578,633 614,833 651,685 2,847,224

18,502 22,039 21,066 30,996 32,587 125,190

15,000 33,502 55,541 76,607 107,603 -

33,502 55,541 76,607 107,603 140,190 -

79

20 - 40 Tons

2017 2018 2019 2020 2021 TOTAL

N'000 N'000 N'000 N'000 N'000 N'000

984,449 1,394,635 1,599,729 1,722,785 1,825,332 7,526,929

145,887 - - - - 145,887

62,523 - - - - 62,523

1,192,859 1,394,635 1,599,729 1,722,785 1,825,332 7,735,339

938,808 1,095,276 1,251,744 1,329,978 1,408,212 6,024,018

54,246 61,219 68,063 70,679 73,419 327,626

97,887 97,887

47,580 52,338 57,572 63,329 69,662 290,481

2,918 - - - - 2,918

12,477 11,052 9,627 8,202 6,777 48,135

4,922 6,973 7,999 8,614 9,127 37,635

22,191 44,849 55,644 61,614 67,599 251,897

- 62,523 62,523 62,523 62,523 250,092

1,181,029 1,334,230 1,513,172 1,604,939 1,697,319 7,330,688

11,830 60,405 86,557 117,846 128,013 404,651

17,000 28,830 89,235 175,792 293,638 -

28,830 89,235 175,792 293,638 421,651 -

80

40 Tons & Above

2017 2018 2019 2020 2021 TOTAL

N'000 N'000 N'000 N'000 N'000 N'000

1,230,806 1,743,642 2,000,060 2,153,911 2,282,119 9,410,538

145,887 - - - - 145,887

62,523 - - - - 62,523

1,439,216 1,743,642 2,000,060 2,153,911 2,282,119 9,618,948

1,173,744 1,369,368 1,564,992 1,662,804 1,760,616 7,531,524

65,024 73,793 82,434 85,948 89,586 396,786

97,887 97,887

47,580 52,338 57,572 63,329 69,662 290,481

2,918 - - - - 2,918

12,477 11,052 9,627 8,202 6,777 48,135

6,154 8,718 10,000 10,770 11,411 47,053

- 67,524 81,556 79,133 76,732 304,946

- 62,523 62,523 93,785 125,046 343,877

1,405,784 1,645,317 1,868,704 2,003,970 2,139,830 9,063,605

33,432 98,325 131,355 149,941 142,289 555,343

17,000 50,432 148,758 280,113 430,054 -

50,432 148,758 280,113 430,054 572,343 -

81

CASH COLLECTION SCHEDULE Year 2017 2018 2019 2020 2021 TOTAL

1-5 Tons

156,060,000

182,070,000

208,080,000

221,085,000

234,090,000

1,001,385,000

2017

124,848,000

31,212,000

2018

145,656,000

36,414,000

2019

166,464,000.00

41,616,000.00

2020

176,868,000.00

44,217,000.00

2021

187,272,000.00

46,818,000.00

124,848,000

176,868,000

202,878,000

218,484,000

231,489,000

46,818,000

Year 2017 2018 2019 2020 2021 TOTAL

5-10 Tons

294,451,200

343,526,400

392,601,600

417,139,200

441,676,800

1,889,395,200

2017

235,560,960

58,890,240

2018

274,821,120

68,705,280

2019

314,081,280.00

78,520,320.00

2020

333,711,360.00

83,427,840.00

2021

353,341,440.00

88,335,360.00

235,560,960

333,711,360

382,786,560

412,231,680

436,769,280

88,335,360

Year 2017 2018 2019 2020 2021 TOTAL

10-15 Tons

461,306,880

538,191,360

615,075,840

653,518,080

691,960,320

2,960,052,480

82

2017

369,045,504

92,261,376

2018

430,553,088

107,638,272

2019

492,060,672.00

123,015,168.00

2020

522,814,464.00

130,703,616.00

2021

553,568,256.00

138,392,064.00

369,045,504

522,814,464

599,698,944

645,829,632

684,271,872

138,392,064

Year 2017 2018 2019 2020 2021 TOTAL

20-40 Tons

1,230,560,640

1,435,654,080

1,640,747,520

1,743,294,240

1,845,840,960

7,896,097,440

2017

984,448,512

246,112,128

2018

1,148,523,264

287,130,816

2019

1,312,598,016.00

328,149,504.00

2020

1,394,635,392.00

348,658,848.00

2021

1,476,672,768.00

369,168,192.00

984,448,512

1,394,635,392

1,599,728,832

1,722,784,896

1,825,331,616

369,168,192

Year 2017 2018 2019 2020 2021 TOTAL

40 Tons & Above

1,538,507,520

1,794,925,440

2,051,343,360

2,179,552,320

2,307,761,280

9,872,089,920

2017

1,230,806,016

307,701,504

2018

1,435,940,352

358,985,088

83

2019

1,641,074,688.00

410,268,672.00

2020

1,743,641,856.00

435,910,464.00

2021

1,846,209,024.00

461,552,256.00

1,230,806,016

1,743,641,856

2,000,059,776

2,153,910,528

2,282,119,488

461,552,256

Summary of Cash Collection 2017 2018 2019 2020 2021 2022

1 - 5 TONS 195,360,000

413,578,560

812,708,429

1,714,665,128

3,735,185,660

837,903,654

5- 10 TONS 390,720,000

827,157,120

1,625,416,858

3,429,330,256

7,470,371,320

1,675,807,307

10- 15 TONS 586,214,400

1,240,903,680

2,438,293,286

5,144,163,384

11,205,724,980

2,513,744,561

20- 40 TONS 1,563,283,200

3,309,132,480

6,502,171,430

13,717,825,023

29,881,989,279

6,703,330,030

40 TONS ABOVE 1,954,137,600

4,136,457,600

8,127,756,288

17,147,323,279

37,352,528,599

8,379,170,937

84

7.8 DEPRECIATION

1 - 5 Tons

SUMMARY OF DEPRECIATION Year 2 Year 4 Year 5

N'000 N'000 N'000

Existing Assets - - -

Additions on Projection 8,830 6,162 5,214

Total 8,830 6,162 5,214

5 - 10 Tons

SUMMARY OF DEPRECIATION Year 2 Year 4 Year 5

N'000 N'000 N'000

Existing Assets - - -

Additions on Projection 11,178 8,063 6,925

Total 11,178 8,063 6,925

10 - 15 Tons

SUMMARY OF DEPRECIATION Year 2 Year 4 Year 5

N'000 N'000 N'000

Existing Assets - - -

Additions on Projection 13,765 9,817 8,393

Total 13,765 9,817 8,393

20 - 40 Tons

SUMMARY OF DEPRECIATION Year 1 Year 4 Year 5

N'000 N'000 N'000

Existing Assets - - -

Additions on Projection 18,627 11,369 9,794

Total 18,627 11,369 9,794

40 Tons & Above

SUMMARY OF DEPRECIATION Year 2 Year 4 Year 5

N'000 N'000 N'000

Existing Assets - - -

Additions on Projection 15,673 11,369 9,794

Total 15,673 11,369 9,794

85

7.9 RISK ANALYSIS

INTERNAL RATE OF RETURN ( I R R )

Year Cash flow DCF@17% PV

0 (79,151,333) 1.0000 (79,151,333.1)

1 62,305,353 0.8929 55,632,449.9

1 - 5 Tons 2

68,263,350 0.7972 54,419,542.4

3 78,351,284 0.7118 55,770,444.3

4 92,846,624 0.6355 59,004,029.5

5 108,918,577 0.5674 61,800,400.7

Net Present Value

207,475,533.8

Internal Rate of Return (IRR) 65%

Year Net Cash flow Cumulative cash flow

0 (79,151,333)

(79,151,333)

1 47,305,353

(31,845,980)

2 5,957,997

(25,887,983)

3 10,087,935

(15,800,049)

4 14,495,339

(1,304,709)

5 16,071,953 14,767,244

Pay Back Period 4 Years 1Month

86

Year Cash flow DCF@17% PV

0 (80,201,333) 1.0000 (80,201,333.1)

1 34,294,637 0.8929 30,621,681.8

5 - 10 Tons 2 54,760,074 0.7972 43,654,731.1

3 82,753,592 0.7118 58,904,006.6

4 117,286,690 0.6355 74,535,691.6

5 154,162,401 0.5674 87,471,746.0

Net Present Value 214,986,524.0

Internal Rate of Return (IRR) 52%

Year Net Cash flow Cumulative cash flow

0 (80,201,333) (80,201,333)

1 19,294,637 (60,906,696)

2 20,465,437 (40,441,259)

3 27,993,518

(12,447,741)

4 34,533,098 22,085,357

5 36,875,710 58,961,067

Pay Back Period 3 Years 3Month

87

Year Cash flow DCF@17% PV

0 (105,527,333) 1.0000 (105,527,333.1)

1 33,502,327 0.8929 29,914,228.2

10 - 15 Tons 2 55,541,312 0.7972 44,277,533.5

3 76,606,903 0.7118 54,528,793.6

4 107,603,244 0.6355 68,381,861.6

5 140,189,960 0.5674 79,543,783.1

Net Present Value 171,118,866.9

Internal Rate of Return (IRR) 36%

Year Net Cash flow

Cumulative

Cash flow

0 (105,527,333)

(105,527,333)

1 18,502,327

(87,025,006)

2 22,038,984

(64,986,022)

3 21,065,591

(43,920,430)

4 30,996,341

(12,924,089)

5 32,586,715

19,662,626

Pay Back Period 4Years 2Month

88

Year Cash flow DCF@17% PV

0 (145,887,000) 1.0000 (145,887,000.0)

1 28,829,834 0.8929 25,742,159.1

20 - 40 Tons 2 89,235,221 0.7972 71,138,317.8

3 175,792,270 0.7118 125,128,938.1

4 293,638,063 0.6355 186,606,988.9

5 421,651,172 0.5674 239,244,874.9

Net Present Value 501,974,278.8

Internal Rate of Return (IRR) 63%

Year Net Cash flow Cumulative

cash flow

0 (145,887,000) (145,887,000)

1 28,829,834 (117,057,166)

2 60,405,386 (56,651,779)

3 86,557,050 29,905,270

4 117,845,792 147,751,063

5 128,013,109 275,764,172

Pay Back Period 2 Years 1month

89

Year Cash flow DCF@17% PV

0 (145,887,000) 1.0000 (145,887,000.0)

1 50,432,451 0.8929 45,031,135.7

40 Tons & Above 2 148,757,626 0.7972 118,589,579.3

3 280,113,005 0.7118 199,384,436.7

4 430,053,574 0.6355 273,299,046.3

5 572,342,910 0.5674 324,747,367.3

Net Present Value 815,164,565.3

Internal Rate of Return (IRR) 86%

Year Net Cash flow

Cumulative Cash flow

0 (145,887,000)

(145,887,000)

1 33,432,451

(112,454,549)

2 98,325,175

(14,129,374)

3 131,355,379

117,226,005

4 149,940,569

267,166,574

5 142,289,336

409,455,910

Pay Back Period

2Years 1Month

90

7.10 FINANCIAL HIGHLIGHTS - RATIOS

1 - 5Tons 2017 2018 2019 2020 2021

Turnover 156,060,000 182,070,000 208,080,000 221,085,000 230,040,000

EBITA 5,583,353 12,071,997 15,779,535 18,388,499 6,597,368

1 - 5Tons Gross Margin % 25.03% 25.03% 25.03% 25.03% 23.71%

Net Worth 39,505,220 47,714,265 58,444,356 70,948,500 57,977,434

Owners Equity Growth 39,505,353 40,090,953 45,978,722 53,491,032 57,977,243

5 - 10Tons 2017 2018 2019 2020 2021

Turnover 294,451,200 343,526,400 392,601,600 417,139,200 441,676,800

EBITA 15,348,878 25,888,477 30,921,158 34,160,678 5,825,518

5 - 10Tons Gross Margin % 23.71% 23.71% 23.71% 23.71% 23.71%

Net Worth 49,720,544 75,689,021 96,715,579 119,944,197 50,782,545

Owners Equity Growth 49,720,877 42,584,035 44,074,321 46,821,031 50,782,545

10 - 15Tons 2017 2018 2019 2020 2021

Turnover 461,306,880 538,191,360 615,075,840 653,518,080 691,960,320

EBITA (41,189,630) 31,295,880 39,868,658 45,970,013 24,794,829

10 - 15Tons Gross Margin % 23.71% 23.71% 23.71% 23.71% 23.71%

Net Worth 4,036,370 35,332,250 62,442,738 93,702,527 90,361,924

Owners Equity Growth 4,036,370 45,981,604 58,679,634 73,501,616 90,361,925

20 - 40Tons 2017 2018 2019 2020 2021

Turnover 1,230,560,640 1,435,654,080 1,640,747,520 1,743,294,240 1,845,840,960

EBITA 69,347,004 140,153,050 173,888,144 192,544,054 15,317,775

20 - 40Tons Gross Margin % 23.71% 23.71% 23.71% 23.71% 23.71%

Net Worth 109,678,962 204,983,037 323,226,774 454,156,911 303,992,828

Owners Equity Growth 109,678,962 181,904,695 252,852,937 293,577,230 303,992,815

40Tons & Above 2017 2018 2019 2020 2021

Turnover 1,538,507,520 1,794,925,440 2,051,343,360 2,179,552,320 2,307,761,280

EBITA 130,347,955 211,012,880 254,863,475 247,289,973 12,572,782

40Tons & Above Gross Margin % 23.71% 23.71% 23.71% 23.71% 23.71%

Net Worth 151,159,955 294,648,263 467,955,051 636,113,033 122,403,297

Owners Equity Growth 151,159,610 80,005,341 99,692,808 113,853,416 122,402,908

91

7.11 PROFITABILITY & VIABILITY OUTLOOK

1 -5Tons 2017 2018 2019 2020 2021

ROCE 14.13% 25.30% 27.00% 25.92% 24.59%

Gross Profit Margin 25.03% 25.03% 25.03% 25.03% 25.03%

1 - 5Tons Net Profit Margin 3.58% 6.63% 7.58% 8.32% 8.95%

Gearing Ratio 293.32% 261.97% 209.11% 170.04% 140.68%

Debtors Turnover 73 73 73 73 73

Assets Turnover 49.25% 37.37% 29.17% 24.66% 21.07%

5 -10Tons 2017 2018 2019 2020 2021

ROCE 592.21% 453.87% 405.93% 347.78% 302.07%

Gross Profit Margin 23.71% 23.71% 23.71% 23.71% 23.71%

5 - 10Tons Net Profit Margin 5.21% 7.54% 7.88% 8.19% 8.75%

Gearing Ratio 220.14% 157.91% 132.96% 115.31% 101.43%

Debtors Turnover 73.00 73.00 73.00 73.00 73.00

Assets Turnover 27.51% 20.89% 16.31% 13.79% 11.78%

10 -15Tons 2017 2018 2019 2020 2021

ROCE 114.3 15.2 985.02% 697.44% 535.97%

Gross Profit Margin 23.71% 23.71% 23.71% 23.71% 23.71%

10 - 15Tons Net Profit Margin (0.1) 5.82% 6.48% 7.03% 7.52%

Gearing Ratio 6138% 680% 380.90% 318.91% 1060.13%

92

Debtors Turnover 73.00 73.00 73.00 108.40 672.61

Assets Turnover 27.32% 20.86% 16.37% 13.90% 11.92%

20 -40Tons 2017 2018 2019 2020 2021

ROCE 63.23% 68.37% 53.80% 42.40% 35.34%

Gross Profit Margin 23.71% 23.71% 23.71% 23.71% 23.71%

20 - 40Tons Net Profit Margin 5.64% 9.76% 10.60% 11.04% 11.44%

Gearing Ratio 294.59% 152.97% 95.78% 67.30% 50.31%

Debtors Turnover 73.00 73.00 73.00 73.00 73.00

Assets Turnover 12.83% 9.90% 7.85% 6.74% 5.84%

40Tons & Above 2017 2018 2019 2020 2021

ROCE 86.23% 71.62% 54.46% 38.88% 30.00%

Gross Profit Margin 23.71% 23.71% 23.71% 23.71% 23.71%

40Tons & Above Net Profit Margin 8.47% 11.76% 12.42% 11.35% 10.39%

Gearing Ratio 230.10% 103.46% 43.28% 10.93% 5.87%

Debtors Turnover 73.00 73.00 73.00 73.00 73.00

Assets Turnover 10.26% 7.92% 6.28% 5.39% 4.67%

93

7.12 PROJECTED LOAN REPAYMENT N'000

Project Cost 113,073.33

Moratorium

(Months) 12

Equity

Contribution 33,922.00 1- 5 TONS

Number of Repayment

Periods: 48

Loan Amount: N 79,151

Management Fee

(1%) 791.51

Annual Interest Rate:

9.00%

Commitment Fee (1%) 791.51

Pmt. Period (months):

1

Total Upfront Fees 1,583.03

Number of

Periods: 60

Loan Amortization Schedule

Payment Period

Principal Balance

B/DWN(N'000)

Principal (N'000)

Cumulative Principal (N'000)

Interest (N'000)

Cumulative Interest (N'000)

Monthly Payment Amount (N'000)

Cumulative Payments (N'000)

1 79,151.33 1,319.19 1,319.19 593.63 593.63 1,912.82 1,912.82

2 77,832.14 1,319.19 2,638.38

583.74 1,177.38 1,902.93 3,815.75

3 76,512.96 1,319.19 3,957.57

573.85 1,751.22 1,893.04 5,708.79

4 75,193.77 1,319.19 5,276.76

563.95 2,315.18 1,883.14 7,591.93

5 73,874.58 1,319.19 6,595.94

554.06 2,869.24 1,873.25 9,465.18

6 72,555.39 1,319.19 7,915.13

544.17 3,413.40 1,863.35 11,328.53

7 71,236.20 1,319.19 9,234.32

534.27 3,947.67 1,853.46 13,181.99

8 69,917.01 1,319.19 10,553.51

524.38 4,472.05 1,843.57 15,025.56

9 68,597.82 1,319.19 11,872.70

514.48 4,986.53 1,833.67 16,859.23

10 67,278.63 1,319.19 13,191.89

504.59 5,491.12 1,823.78 18,683.01

11 65,959.44 1,319.19 14,511.08

494.70 5,985.82 1,813.88 20,496.90

12 64,640.26 1,319.19 15,830.27

484.80 6,470.62 1,803.99 22,300.89

13 63,321.07 1,319.19 17,149.46

474.91 6,945.53 1,794.10 24,094.98

14 62,001.88 1,319.19 18,468.64

465.01 7,410.54 1,784.20 25,879.19

15 60,682.69 1,319.19 19,787.83

455.12 7,865.66 1,774.31 27,653.50

16 59,363.50 1,319.19 21,107.02

445.23 8,310.89 1,764.42 29,417.91

17 58,044.31 1,319.19 22,426.21

435.33 8,746.22 1,754.52 31,172.43

18 56,725.12 1,319.19 23,745.40

425.44 9,171.66 1,744.63 32,917.06

19 55,405.93 1,319.19 25,064.59

415.54 9,587.21 1,734.73 34,651.79

20 54,086.74 1,319.19 26,383.78

405.65 9,992.86 1,724.84 36,376.63

21 52,767.56 1,319.19 27,702.97

395.76 10,388.61 1,714.95 38,091.58

22 51,448.37 1,319.19 29,022.16

385.86 10,774.48 1,705.05 39,796.63

23 50,129.18 1,319.19 30,341.34

375.97 11,150.44 1,695.16 41,491.79

24 48,809.99 1,319.19 31,660.53

366.07 11,516.52 1,685.26 43,177.05

25 47,490.80 1,319.19 32,979.72

356.18 11,872.70 1,675.37 44,852.42

26 46,171.61 1,319.19 34,298.91

346.29 12,218.99 1,665.48 46,517.90

27 44,852.42 1,319.19 35,618.10

336.39 12,555.38 1,655.58 48,173.48

28 43,533.23 1,319.19 36,937.29

326.50 12,881.88 1,645.69 49,819.17

94

29 42,214.04 1,319.19 38,256.48

316.61 13,198.48 1,635.79 51,454.96

30 40,894.86 1,319.19 39,575.67

306.71 13,505.20 1,625.90 53,080.86

31 39,575.67 1,319.19 40,894.86

296.82 13,802.01 1,616.01 54,696.87

32 38,256.48 1,319.19 42,214.04

286.92 14,088.94 1,606.11 56,302.98

33 36,937.29 1,319.19 43,533.23

277.03 14,365.97 1,596.22 57,899.20

34 35,618.10 1,319.19 44,852.42

267.14 14,633.10 1,586.32 59,485.52

35 34,298.91 1,319.19 46,171.61

257.24 14,890.34 1,576.43 61,061.96

36 32,979.72 1,319.19 47,490.80

247.35 15,137.69 1,566.54 62,628.49

37 31,660.53 1,319.19 48,809.99

237.45 15,375.15 1,556.64 64,185.14

38 30,341.34 1,319.19 50,129.18

227.56 15,602.71 1,546.75 65,731.88

39 29,022.16 1,319.19 51,448.37

217.67 15,820.37 1,536.86 67,268.74

40 27,702.97 1,319.19 52,767.56

207.77 16,028.14 1,526.96 68,795.70

41 26,383.78 1,319.19 54,086.74

197.88 16,226.02 1,517.07 70,312.77

42 25,064.59 1,319.19 55,405.93

187.98 16,414.01 1,507.17 71,819.94

43 23,745.40 1,319.19 56,725.12

178.09 16,592.10 1,497.28 73,317.22

44 22,426.21 1,319.19 58,044.31

168.20 16,760.29 1,487.39 74,804.61

45 21,107.02 1,319.19 59,363.50

158.30 16,918.60 1,477.49 76,282.10

46 19,787.83 1,319.19 60,682.69

148.41 17,067.01 1,467.60 77,749.69

47 18,468.64 1,319.19 62,001.88

138.51 17,205.52 1,457.70 79,207.40

48 17,149.46 1,319.19 63,321.07

128.62 17,334.14 1,447.81 80,655.21

49 15,830.27 1,319.19 64,640.26

118.73 17,452.87 1,437.92 82,093.12

50 14,511.08 1,319.19 65,959.44

108.83 17,561.70 1,428.02 83,521.15

51 13,191.89 1,319.19 67,278.63

98.94 17,660.64 1,418.13 84,939.27

52 11,872.70 1,319.19 68,597.82

89.05 17,749.69 1,408.23 86,347.51

53 10,553.51 1,319.19 69,917.01

79.15 17,828.84 1,398.34 87,745.85

54 9,234.32 1,319.19 71,236.20

69.26 17,898.10 1,388.45 89,134.29

55 7,915.13 1,319.19 72,555.39

59.36 17,957.46 1,378.55 90,512.85

56 6,595.94 1,319.19 73,874.58

49.47 18,006.93 1,368.66 91,881.51

57 5,276.76 1,319.19 75,193.77

39.58 18,046.50 1,358.76 93,240.27

58 3,957.57 1,319.19 76,512.96

29.68 18,076.19 1,348.87 94,589.14

59 2,638.38 1,319.19 77,832.14

19.79 18,095.97 1,338.98 95,928.12

60 1,319.19 1,319.19 79,151.33

9.89 18,105.87 1,329.08 97,257.20

95

N'000

Project Cost 142,453.33

Moratorium (Months) 12

Equity Contribution 42,736.00 5 - 10 Tons

Number of Repayment Periods: 48

Loan Amount: N 99,717

Management Fee (1%) 997.17

Annual Interest Rate: 9.00%

Commitment Fee (1%) 997.17

Pmt. Period (months): 1 Total Upfront Fees 1,994.35

Number of Periods: 60

Loan Amortization Schedule

Payment Period

Principal Balance

B/DWN(N'000) Principal (N'000)

Cumulative Principal (N'000)

Interest (N'000)

Cumulative Interest (N'000)

Monthly Payment Amount (N'000)

Cumulative Payments

(N'000)

1 99,717.33 1,319.19 1,319.19 747.88 747.88 2,067.07 2,067.07

2 98,398.14 1,319.19 2,638.38 737.99 1,485.87 2,057.17 4,124.24

3 97,078.96 1,319.19 3,957.57 728.09 2,213.96 2,047.28 6,171.52

4 95,759.77 1,319.19 5,276.76 718.20 2,932.16 2,037.39 8,208.91

5 94,440.58 1,319.19 6,595.94 708.30 3,640.46 2,027.49 10,236.41

6 93,121.39 1,319.19 7,915.13 698.41 4,338.87 2,017.60 12,254.00

7 91,802.20 1,319.19 9,234.32 688.52 5,027.39 2,007.71 14,261.71

8 90,483.01 1,319.19 10,553.51 678.62 5,706.01 1,997.81 16,259.52

9 89,163.82 1,319.19 11,872.70 668.73 6,374.74 1,987.92 18,247.44

10 87,844.63 1,319.19 13,191.89 658.83 7,033.57 1,978.02 20,225.46

11 86,525.44 1,319.19 14,511.08 648.94 7,682.51 1,968.13 22,193.59

12 85,206.26 1,319.19 15,830.27 639.05 8,321.56 1,958.24 24,151.83

13 83,887.07 1,319.19 17,149.46 629.15 8,950.71 1,948.34 26,100.17

14 82,567.88 1,319.19 18,468.64 619.26 9,569.97 1,938.45 28,038.62

15 81,248.69 1,319.19 19,787.83 609.37 10,179.34 1,928.55 29,967.17

16 79,929.50 1,319.19 21,107.02 599.47 10,778.81 1,918.66 31,885.83

17 78,610.31 1,319.19 22,426.21 589.58 11,368.39 1,908.77 33,794.60

18 77,291.12 1,319.19 23,745.40 579.68 11,948.07 1,898.87 35,693.47

19 75,971.93 1,319.19 25,064.59 569.79 12,517.86 1,888.98 37,582.45

20 74,652.74 1,319.19 26,383.78 559.90 13,077.76 1,879.08 39,461.53

21 73,333.56 1,319.19 27,702.97 550.00 13,627.76 1,869.19 41,330.72

22 72,014.37 1,319.19 29,022.16 540.11 14,167.87 1,859.30 43,190.02

23 70,695.18 1,319.19 30,341.34 530.21 14,698.08 1,849.40 45,039.42

24 69,375.99 1,319.19 31,660.53 520.32 15,218.40 1,839.51 46,878.93

25 68,056.80 1,319.19 32,979.72 510.43 15,728.82 1,829.61 48,708.55

26 66,737.61 1,319.19 34,298.91 500.53 16,229.36 1,819.72 50,528.27

27 65,418.42 1,319.19 35,618.10 490.64 16,720.00 1,809.83 52,338.10

28 64,099.23 1,319.19 36,937.29 480.74 17,200.74 1,799.93 54,138.03

96

29 62,780.04 1,319.19 38,256.48 470.85 17,671.59 1,790.04 55,928.07

30 61,460.86 1,319.19 39,575.67 460.96 18,132.55 1,780.15 57,708.21

31 60,141.67 1,319.19 40,894.86 451.06 18,583.61 1,770.25 59,478.46

32 58,822.48 1,319.19 42,214.04 441.17 19,024.78 1,760.36 61,238.82

33 57,503.29 1,319.19 43,533.23 431.27 19,456.05 1,750.46 62,989.29

34 56,184.10 1,319.19 44,852.42 421.38 19,877.43 1,740.57 64,729.85

35 54,864.91 1,319.19 46,171.61 411.49 20,288.92 1,730.68 66,460.53

36 53,545.72 1,319.19 47,490.80 401.59 20,690.51 1,720.78 68,181.31

37 52,226.53 1,319.19 48,809.99 391.70 21,082.21 1,710.89 69,892.20

38 50,907.34 1,319.19 50,129.18 381.81 21,464.02 1,700.99 71,593.19

39 49,588.16 1,319.19 51,448.37 371.91 21,835.93 1,691.10 73,284.29

40 48,268.97 1,319.19 52,767.56 362.02 22,197.94 1,681.21 74,965.50

41 46,949.78 1,319.19 54,086.74 352.12 22,550.07 1,671.31 76,636.81

42 45,630.59 1,319.19 55,405.93 342.23 22,892.30 1,661.42 78,298.23

43 44,311.40 1,319.19 56,725.12 332.34 23,224.63 1,651.52 79,949.76

44 42,992.21 1,319.19 58,044.31 322.44 23,547.07 1,641.63 81,591.39

45 41,673.02 1,319.19 59,363.50 312.55 23,859.62 1,631.74 83,223.12

46 40,353.83 1,319.19 60,682.69 302.65 24,162.28 1,621.84 84,844.96

47 39,034.64 1,319.19 62,001.88 292.76 24,455.04 1,611.95 86,456.91

48 37,715.46 1,319.19 63,321.07 282.87 24,737.90 1,602.05 88,058.97

49 36,396.27 1,319.19 64,640.26 272.97 25,010.87 1,592.16 89,651.13

50 35,077.08 1,319.19 65,959.44 263.08 25,273.95 1,582.27 91,233.40

51 33,757.89 1,319.19 67,278.63 253.18 25,527.14 1,572.37 92,805.77

52 32,438.70 1,319.19 68,597.82 243.29 25,770.43 1,562.48 94,368.25

53 31,119.51 1,319.19 69,917.01 233.40 26,003.82 1,552.59 95,920.83

54 29,800.32 1,319.19 71,236.20 223.50 26,227.33 1,542.69 97,463.52

55 28,481.13 1,319.19 72,555.39 213.61 26,440.93 1,532.80 98,996.32

56 27,161.94 1,319.19 73,874.58 203.71 26,644.65 1,522.90 100,519.23

57 25,842.76 1,319.19 75,193.77 193.82 26,838.47 1,513.01 102,032.24

58 24,523.57 1,319.19 76,512.96 183.93 27,022.40 1,503.12 103,535.35

59 23,204.38 1,319.19 77,832.14 174.03 27,196.43 1,493.22 105,028.57

60 21,885.19 1,319.19 79,151.33 164.14 27,360.57 1,483.33 106,511.90

97

N'000

Project Cost 150,753.33

Moratorium

(Months) 12

Equity Contribution 45,226.00 10 - 15 Tons

Number of

Repayment Periods: 48

Loan Amount: N 105,527

Management Fee

(1%) 1,055.27

Annual Interest

Rate: 9.00%

Commitment Fee

(1%) 1,055.27

Pmt. Period

(months): 1 Total Upfront Fees 2,110.55

Number of Periods: 60

Loan Amortization Schedule

Payment

Period

Principal Balance

B/DWN(N'000) Principal (N'000)

Cumulative

Principal (N'000)

Interest

(N'000)

Cumulative

Interest (N'000)

Monthly Payment

Amount (N'000)

Cumulative

Payments (N'000)

1 105,527.33 1,319.19 1,319.19 791.45 791.45 2,110.64 2,110.64

2 104,208.14 1,319.19 2,638.38 781.56 1,573.02 2,100.75 4,211.39

3 102,888.96 1,319.19 3,957.57 771.67 2,344.68 2,090.86 6,302.25

4 101,569.77 1,319.19 5,276.76 761.77 3,106.46 2,080.96 8,383.21

5 100,250.58 1,319.19 6,595.94 751.88 3,858.34 2,071.07 10,454.28

6 98,931.39 1,319.19 7,915.13 741.99 4,600.32 2,061.17 12,515.45

7 97,612.20 1,319.19 9,234.32 732.09 5,332.41 2,051.28 14,566.73

8 96,293.01 1,319.19 10,553.51 722.20 6,054.61 2,041.39 16,608.12

9 94,973.82 1,319.19 11,872.70 712.30 6,766.91 2,031.49 18,639.61

10 93,654.63 1,319.19 13,191.89 702.41 7,469.32 2,021.60 20,661.21

11 92,335.44 1,319.19 14,511.08 692.52 8,161.84 2,011.70 22,672.92

12 91,016.26 1,319.19 15,830.27 682.62 8,844.46 2,001.81 24,674.73

13 89,697.07 1,319.19 17,149.46 672.73 9,517.19 1,991.92 26,666.64

14 88,377.88 1,319.19 18,468.64 662.83 10,180.02 1,982.02 28,648.67

15 87,058.69 1,319.19 19,787.83 652.94 10,832.96 1,972.13 30,620.80

16 85,739.50 1,319.19 21,107.02 643.05 11,476.01 1,962.24 32,583.03

17 84,420.31 1,319.19 22,426.21 633.15 12,109.16 1,952.34 34,535.37

18 83,101.12 1,319.19 23,745.40 623.26 12,732.42 1,942.45 36,477.82

19 81,781.93 1,319.19 25,064.59 613.36 13,345.79 1,932.55 38,410.37

20 80,462.74 1,319.19 26,383.78 603.47 13,949.26 1,922.66 40,333.03

21 79,143.56 1,319.19 27,702.97 593.58 14,542.83 1,912.77 42,245.80

22 77,824.37 1,319.19 29,022.16 583.68 15,126.52 1,902.87 44,148.67

23 76,505.18 1,319.19 30,341.34 573.79 15,700.30 1,892.98 46,041.65

24 75,185.99 1,319.19 31,660.53 563.89 16,264.20 1,883.08 47,924.73

25 73,866.80 1,319.19 32,979.72 554.00 16,818.20 1,873.19 49,797.92

26 72,547.61 1,319.19 34,298.91 544.11 17,362.31 1,863.30 51,661.22

27 71,228.42 1,319.19 35,618.10 534.21 17,896.52 1,853.40 53,514.62

28 69,909.23 1,319.19 36,937.29 524.32 18,420.84 1,843.51 55,358.13

98

29 68,590.04 1,319.19 38,256.48 514.43 18,935.26 1,833.61 57,191.74

30 67,270.86 1,319.19 39,575.67 504.53 19,439.80 1,823.72 59,015.46

31 65,951.67 1,319.19 40,894.86 494.64 19,934.43 1,813.83 60,829.29

32 64,632.48 1,319.19 42,214.04 484.74 20,419.18 1,803.93 62,633.22

33 63,313.29 1,319.19 43,533.23 474.85 20,894.03 1,794.04 64,427.26

34 61,994.10 1,319.19 44,852.42 464.96 21,358.98 1,784.14 66,211.40

35 60,674.91 1,319.19 46,171.61 455.06 21,814.04 1,774.25 67,985.66

36 59,355.72 1,319.19 47,490.80 445.17 22,259.21 1,764.36 69,750.01

37 58,036.53 1,319.19 48,809.99 435.27 22,694.49 1,754.46 71,504.48

38 56,717.34 1,319.19 50,129.18 425.38 23,119.87 1,744.57 73,249.04

39 55,398.16 1,319.19 51,448.37 415.49 23,535.35 1,734.68 74,983.72

40 54,078.97 1,319.19 52,767.56 405.59 23,940.94 1,724.78 76,708.50

41 52,759.78 1,319.19 54,086.74 395.70 24,336.64 1,714.89 78,423.39

42 51,440.59 1,319.19 55,405.93 385.80 24,722.45 1,704.99 80,128.38

43 50,121.40 1,319.19 56,725.12 375.91 25,098.36 1,695.10 81,823.48

44 48,802.21 1,319.19 58,044.31 366.02 25,464.37 1,685.21 83,508.69

45 47,483.02 1,319.19 59,363.50 356.12 25,820.50 1,675.31 85,184.00

46 46,163.83 1,319.19 60,682.69 346.23 26,166.73 1,665.42 86,849.41

47 44,844.64 1,319.19 62,001.88 336.33 26,503.06 1,655.52 88,504.94

48 43,525.46 1,319.19 63,321.07 326.44 26,829.50 1,645.63 90,150.57

49 42,206.27 1,319.19 64,640.26 316.55 27,146.05 1,635.74 91,786.30

50 40,887.08 1,319.19 65,959.44 306.65 27,452.70 1,625.84 93,412.15

51 39,567.89 1,319.19 67,278.63 296.76 27,749.46 1,615.95 95,028.09

52 38,248.70 1,319.19 68,597.82 286.87 28,036.33 1,606.05 96,634.15

53 36,929.51 1,319.19 69,917.01 276.97 28,313.30

1,596.16 98,230.31

54 35,610.32 1,319.19 71,236.20 267.08 28,580.38 1,586.27 99,816.57

55 34,291.13 1,319.19 72,555.39 257.18 28,837.56 1,576.37 101,392.95

56 32,971.94 1,319.19 73,874.58 247.29 29,084.85 1,566.48 102,959.43

57 31,652.76 1,319.19 75,193.77 237.40 29,322.24 1,556.58 104,516.01

58 30,333.57 1,319.19 76,512.96 227.50 29,549.75 1,546.69 106,062.70

59 29,014.38 1,319.19 77,832.14 217.61 29,767.35 1,536.80 107,599.50

60 27,695.19 1,319.19 79,151.33 207.71 29,975.07 1,526.90 109,126.40

99

N'000

Project Cost 208,410.00

Moratorium (Months) 12

Equity Contribution 62,523.00 20 - 40 Tons

Number of Repayment Periods: 48

Loan Amount: N 145,887

Management Fee (1%) 1,458.87

Annual Interest Rate: 9.00%

Commitment Fee (1%) 1,458.87

Pmt. Period (months): 1 Total Upfront Fees 2,917.74

Number of Periods: 60

Loan Amortization Schedule

Payment Period

Principal Balance B/DWN(N'000)

Principal (N'000)

Cumulative Principal (N'000)

Interest (N'000)

Cumulative Interest (N'000)

Monthly Payment Amount (N'000)

Cumulative Payments (N'000)

1 145,887.00 1,319.19 1,319.19 1,094.15 1,094.15 2,413.34 2,413.34

2 144,567.81 1,319.19 2,638.38 1,084.26 2,178.41 2,403.45 4,816.79

3 143,248.62 1,319.19 3,957.57 1,074.36 3,252.78 2,393.55 7,210.34

4 141,929.43 1,319.19 5,276.76 1,064.47 4,317.25 2,383.66 9,594.00

5 140,610.24 1,319.19 6,595.94 1,054.58 5,371.82 2,373.77 11,967.77

6 139,291.06 1,319.19 7,915.13 1,044.68 6,416.51 2,363.87 14,331.64

7 137,971.87 1,319.19 9,234.32 1,034.79 7,451.30 2,353.98 16,685.62

8 136,652.68 1,319.19 10,553.51 1,024.90 8,476.19 2,344.08 19,029.70

9 135,333.49 1,319.19 11,872.70 1,015.00 9,491.19 2,334.19 21,363.89

10 134,014.30 1,319.19 13,191.89 1,005.11 10,496.30 2,324.30 23,688.19

11 132,695.11 1,319.19 14,511.08 995.21 11,491.51 2,314.40 26,002.59

12 131,375.92 1,319.19 15,830.27 985.32 12,476.83 2,304.51 28,307.10

13 130,056.73 1,319.19 17,149.46 975.43 13,452.26 2,294.61 30,601.71

14 128,737.54 1,319.19 18,468.64 965.53 14,417.79 2,284.72 32,886.43

15 127,418.36 1,319.19 19,787.83 955.64 15,373.43 2,274.83 35,161.26

16 126,099.17 1,319.19 21,107.02 945.74 16,319.17 2,264.93 37,426.19

17 124,779.98 1,319.19 22,426.21 935.85 17,255.02 2,255.04 39,681.23

18 123,460.79 1,319.19 23,745.40 925.96 18,180.98 2,245.14 41,926.38

19 122,141.60 1,319.19 25,064.59 916.06 19,097.04 2,235.25 44,161.63

20 120,822.41 1,319.19 26,383.78 906.17 20,003.21 2,225.36 46,386.98

21 119,503.22 1,319.19 27,702.97 896.27 20,899.48 2,215.46 48,602.45

22 118,184.03 1,319.19 29,022.16 886.38 21,785.86 2,205.57 50,808.02

23 116,864.84 1,319.19 30,341.34 876.49 22,662.35 2,195.68 53,003.69

24 115,545.66 1,319.19 31,660.53 866.59 23,528.94 2,185.78 55,189.47

25 114,226.47 1,319.19 32,979.72 856.70 24,385.64 2,175.89 57,365.36

26 112,907.28 1,319.19 34,298.91 846.80 25,232.44 2,165.99 59,531.35

27 111,588.09 1,319.19 35,618.10 836.91 26,069.35 2,156.10 61,687.45

28 110,268.90 1,319.19 36,937.29 827.02 26,896.37 2,146.21 63,833.66

29 108,949.71 1,319.19 38,256.48 817.12 27,713.49 2,136.31 65,969.97

100

30 107,630.52 1,319.19 39,575.67 807.23 28,520.72 2,126.42 68,096.39

31 106,311.33 1,319.19 40,894.86 797.34 29,318.06 2,116.52 70,212.91

32 104,992.14 1,319.19 42,214.04 787.44 30,105.50 2,106.63 72,319.54

33 103,672.96 1,319.19 43,533.23 777.55 30,883.04 2,096.74 74,416.28

34 102,353.77 1,319.19 44,852.42 767.65 31,650.70 2,086.84 76,503.12

35 101,034.58 1,319.19 46,171.61 757.76 32,408.46 2,076.95 78,580.07

36 99,715.39 1,319.19 47,490.80 747.87 33,156.32 2,067.05 80,647.12

37 98,396.20 1,319.19 48,809.99 737.97 33,894.29 2,057.16 82,704.28

38 97,077.01 1,319.19 50,129.18 728.08 34,622.37 2,047.27 84,751.55

39 95,757.82 1,319.19 51,448.37 718.18 35,340.56 2,037.37 86,788.92

40 94,438.63 1,319.19 52,767.56 708.29 36,048.85 2,027.48 88,816.40

41 93,119.44 1,319.19 54,086.74 698.40 36,747.24 2,017.58 90,833.99

42 91,800.26 1,319.19 55,405.93 688.50 37,435.74 2,007.69 92,841.68

43 90,481.07 1,319.19 56,725.12 678.61 38,114.35 1,997.80 94,839.47

44 89,161.88 1,319.19 58,044.31 668.71 38,783.06 1,987.90 96,827.38

45 87,842.69 1,319.19 59,363.50 658.82 39,441.89 1,978.01 98,805.38

46 86,523.50 1,319.19 60,682.69 648.93 40,090.81 1,968.12 100,773.50

47 85,204.31 1,319.19 62,001.88 639.03 40,729.84 1,958.22 102,731.72

48 83,885.12 1,319.19 63,321.07 629.14 41,358.98 1,948.33 104,680.05

49 82,565.93 1,319.19 64,640.26 619.24 41,978.23 1,938.43 106,618.48

50 81,246.74 1,319.19 65,959.44 609.35 42,587.58 1,928.54 108,547.02

51 79,927.56 1,319.19 67,278.63 599.46 43,187.03 1,918.65 110,465.67

52 78,608.37 1,319.19 68,597.82 589.56 43,776.60 1,908.75 112,374.42

53 77,289.18 1,319.19 69,917.01 579.67 44,356.27 1,898.86 114,273.28

54 75,969.99 1,319.19 71,236.20 569.77 44,926.04 1,888.96 116,162.24

55 74,650.80 1,319.19 72,555.39 559.88 45,485.92 1,879.07 118,041.31

56 73,331.61 1,319.19 73,874.58 549.99 46,035.91 1,869.18 119,910.49

57 72,012.42 1,319.19 75,193.77 540.09 46,576.00 1,859.28 121,769.77

58 70,693.23 1,319.19 76,512.96 530.20 47,106.20 1,849.39 123,619.16

59 69,374.04 1,319.19 77,832.14 520.31 47,626.51 1,839.49 125,458.65

60 68,054.86 1,319.19 79,151.33 510.41 48,136.92 1,829.60 127,288.25

101

N'000

Project Cost 208,410.00

Moratorium (Months) 12

Equity Contribution 62,523.00 40 Tons & Above

Number of Repayment Periods: 48

Loan Amount: N 145,887

Management Fee (1%) 1,458.87

Annual Interest Rate: 9.00%

Commitment Fee (1%) 1,458.87

Pmt. Period (months): 1 Total Upfront Fees 2,917.74

Number of Periods: 60

Loan Amortization Schedule

Payment Period

Principal Balance B/DWN(N'000)

Principal (N'000)

Cumulative Principal (N'000)

Interest (N'000)

Cumulative Interest (N'000)

Monthly Payment Amount (N'000)

Cumulative Payments (N'000)

1 145,887.00 1,319.19 1,319.19 1,094.15 1,094.15 2,413.34 2,413.34

2 144,567.81 1,319.19 2,638.38 1,084.26 2,178.41 2,403.45 4,816.79

3 143,248.62 1,319.19 3,957.57 1,074.36 3,252.78 2,393.55 7,210.34

4 141,929.43 1,319.19 5,276.76 1,064.47 4,317.25 2,383.66 9,594.00

5 140,610.24 1,319.19 6,595.94 1,054.58 5,371.82 2,373.77 11,967.77

6 139,291.06 1,319.19 7,915.13 1,044.68 6,416.51 2,363.87 14,331.64

7 137,971.87 1,319.19 9,234.32 1,034.79 7,451.30 2,353.98 16,685.62

8 136,652.68 1,319.19 10,553.51 1,024.90 8,476.19 2,344.08 19,029.70

9 135,333.49 1,319.19 11,872.70 1,015.00 9,491.19 2,334.19 21,363.89

10 134,014.30 1,319.19 13,191.89 1,005.11 10,496.30 2,324.30 23,688.19

11 132,695.11 1,319.19 14,511.08 995.21 11,491.51 2,314.40 26,002.59

12 131,375.92 1,319.19 15,830.27 985.32 12,476.83 2,304.51 28,307.10

13 130,056.73 1,319.19 17,149.46 975.43 13,452.26 2,294.61 30,601.71

14 128,737.54 1,319.19 18,468.64 965.53 14,417.79 2,284.72 32,886.43

15 127,418.36 1,319.19 19,787.83 955.64 15,373.43 2,274.83 35,161.26

16 126,099.17 1,319.19 21,107.02 945.74 16,319.17 2,264.93 37,426.19

17 124,779.98 1,319.19 22,426.21 935.85 17,255.02 2,255.04 39,681.23

18 123,460.79 1,319.19 23,745.40 925.96 18,180.98 2,245.14 41,926.38

19 122,141.60 1,319.19 25,064.59 916.06 19,097.04 2,235.25 44,161.63

20 120,822.41 1,319.19 26,383.78 906.17 20,003.21 2,225.36 46,386.98

21 119,503.22 1,319.19 27,702.97 896.27 20,899.48 2,215.46 48,602.45

22 118,184.03 1,319.19 29,022.16 886.38 21,785.86 2,205.57 50,808.02

23 116,864.84 1,319.19 30,341.34 876.49 22,662.35 2,195.68 53,003.69

24 115,545.66 1,319.19 31,660.53 866.59 23,528.94 2,185.78 55,189.47

25 114,226.47 1,319.19 32,979.72 856.70 24,385.64 2,175.89 57,365.36

26 112,907.28 1,319.19 34,298.91 846.80 25,232.44 2,165.99 59,531.35

27 111,588.09 1,319.19 35,618.10 836.91 26,069.35 2,156.10 61,687.45

28 110,268.90 1,319.19 36,937.29 827.02 26,896.37 2,146.21 63,833.66

102

29 108,949.71 1,319.19 38,256.48 817.12 27,713.49 2,136.31 65,969.97

30 107,630.52 1,319.19 39,575.67 807.23 28,520.72 2,126.42 68,096.39

31 106,311.33 1,319.19 40,894.86 797.34 29,318.06 2,116.52 70,212.91

32 104,992.14 1,319.19 42,214.04 787.44 30,105.50 2,106.63 72,319.54

33 103,672.96 1,319.19 43,533.23 777.55 30,883.04 2,096.74 74,416.28

34 102,353.77 1,319.19 44,852.42 767.65 31,650.70 2,086.84 76,503.12

35 101,034.58 1,319.19 46,171.61 757.76 32,408.46 2,076.95 78,580.07

36 99,715.39 1,319.19 47,490.80 747.87 33,156.32 2,067.05 80,647.12

37 98,396.20 1,319.19 48,809.99 737.97 33,894.29 2,057.16 82,704.28

38 97,077.01 1,319.19 50,129.18 728.08 34,622.37 2,047.27 84,751.55

39 95,757.82 1,319.19 51,448.37 718.18 35,340.56 2,037.37 86,788.92

40 94,438.63 1,319.19 52,767.56 708.29 36,048.85 2,027.48 88,816.40

41 93,119.44 1,319.19 54,086.74 698.40 36,747.24 2,017.58 90,833.99

42 91,800.26 1,319.19 55,405.93 688.50 37,435.74 2,007.69 92,841.68

43 90,481.07 1,319.19 56,725.12 678.61 38,114.35 1,997.80 94,839.47

44 89,161.88 1,319.19 58,044.31 668.71 38,783.06 1,987.90 96,827.38

45 87,842.69 1,319.19 59,363.50 658.82 39,441.89 1,978.01 98,805.38

46 86,523.50 1,319.19 60,682.69 648.93 40,090.81 1,968.12 100,773.50

47 85,204.31 1,319.19 62,001.88 639.03 40,729.84 1,958.22 102,731.72

48 83,885.12 1,319.19 63,321.07 629.14 41,358.98 1,948.33 104,680.05

49 82,565.93 1,319.19 64,640.26 619.24 41,978.23 1,938.43 106,618.48

50 81,246.74 1,319.19 65,959.44 609.35 42,587.58 1,928.54 108,547.02

51 79,927.56 1,319.19 67,278.63 599.46 43,187.03 1,918.65 110,465.67

52 78,608.37 1,319.19 68,597.82 589.56 43,776.60 1,908.75 112,374.42

53 77,289.18 1,319.19 69,917.01 579.67 44,356.27 1,898.86 114,273.28

54 75,969.99 1,319.19 71,236.20 569.77 44,926.04 1,888.96 116,162.24

55 74,650.80 1,319.19 72,555.39 559.88 45,485.92 1,879.07 118,041.31

56 73,331.61 1,319.19 73,874.58 549.99 46,035.91 1,869.18 119,910.49

57 72,012.42 1,319.19 75,193.77 540.09 46,576.00 1,859.28 121,769.77

58 70,693.23 1,319.19 76,512.96 530.20 47,106.20 1,849.39 123,619.16

59 69,374.04 1,319.19 77,832.14 520.31 47,626.51 1,839.49 125,458.65

60 68,054.86 1,319.19 79,151.33 510.41 48,136.92 1,829.60 127,288.25

103

ORGANIZATION

AND

MANAGEMENT

104

8. ORGANIZATION AND MANAGEMENT

The success of an organization depends very much on its Management. It is the pivot on which organization effectiveness rests. For effective operations, a good and effective management is essential for the project. A Board of Director, Managing Director/Chairman, a General Manager and Departmental Managers should

manage the company. This could be increased as the company grows. The departments are:- i. Factory Operations or Production ii. Marketing / Sales

iii. Finance / Administration iv. Outgrowers Unit/Farm Operation

The recommended organization structure is in Chart I-IV. The charts shows the personnel that should be

employed.

8.1 The Board There should be a Board of Directors for the company to be chaired by the Investor. The Board would

responsible for formulating policies and objectives of the company. In particular, the Board would be responsible for:- i. Growth and profitability

ii. High level contact iii. Policy direction and control iv. Corporate development plans

v. Market share vi. Product development

8.2 The Management

The Managing Director would be responsible for the overall management and co-ordination of the activities of the above departments. He would implement board policies for the company. His duties and responsibilities include amongst others:-

i. Policy Implementation and Initiation ii. Raw Material Procurement iii. Product Development

iv. Budgets v. High Level Contact vi. Market share

vii. Corporate Planning

8.3 Production Department

The production department shall be headed by an experienced and skilled personnel. He would initiate training programmes to ensure that the workers are properly trained in the production process. He is to ensure effective machine utilization into less than 60%. He would be responsible for production scheduling and effective labour control. He would be expected to achieve results in the following key areas:-

i. Production volume ii. Quality control iii. Labour control

iv. Production planning v. Materials Availability and Control vi. Safety and Security

Production and Maintenance supervisors would assist him. A Preventive maintenance scheme should be instituted. Regular and effective maintenance policy should be pursued. Safety rules and regulations should

be developed and employees should be encouraged to adhere to them. Safety is a sine-qua-non for a production set-up.

8.4 Marketing/Sales Department

The Marketing department would execute the company’s marketing programme and co-ordinate field activities. It should engage in market research to determine from time to time the customer’s needs and ensure that production satisfies the identified needs. Advertising, promotion and packaging should be given

105

prominence. The Marketing/Sales manager should be experienced and knowledgeable. He would be expected

to excel in the following key areas:- i. Sales volume ii. Profitability

iii. Sales promotion and advertising iv. Product development v. Channels or distribution

8.5 Finance/Administration The Administration/Finance department should institute good administrative procedures that would enable

the employee feel free to give their utmost service to the organization. Personnel recruitment and training

should be planned and monitored to ensure that the company is receiving benefit from training. Good conditions of service viz, salaries, fringe benefits, car allowance, and housing allowance should be enunciated the company should develop a Staff handbook which would spell out the terms and conditions of working

for the organization.

The Procurement Unit should be given attention. Materials represent a very important resource for the organizations. In fact, 30-40% of capital outlay would be on materials. Procedure for issue, receipt and

storage of materials should be instituted and employees trained to adopt and imbibe these procedures.

Qualified and experienced personnel should man the Accounting and Personnel section.

8.6 Source of Personnel The Cassava industry is still emerging. The company’s remuneration must be such that could attract and

retain skilled and experienced employees. Universities, Open Market, Polytechnics etc. abound with

experienced and knowledgeable employees who can be recruited. Agroec Consultants can assist in such recruitment and selection.

8.7 Training and Development

The importance of Training development cannot be over emphasized. It is pertinent to note that the company would be engaged in manufacturing. The staff should be well trained to enable them acquire enough skills and experience to perform efficiently and effectively and helps in achieving the company set goals and

objectives. Agroec Consultants runs In-plant training courses from which the company can benefit.

8.8 The organization structure proposed for the company is not rigid. It should be made flexible and must be

adjusted as the scale of operations increase. Experience has shown that organization apart from defining work relationships can also serve as a means of control.

106

8.9 Labour Requirements

S/N POSITION

1 -5

Tons

5 - 10

Tons

10 – 15

Tons

20 -40

Tons

40 Tons and

above

1 Managing Director

1 1 1

2 General Manager 1 1

3 Farm Manager 1 1 1 1 1

4 Agronomist 1 1 1 1 1

5 Factory Manager

1 1 1

6 Finance/Admin. Manager (Group)

1 1 1

7 Quality/Procurement Manager 1 1 1 1

8 Personnel Manager 1 1 1 1

9 Maintenance Manager 1 1 1 1

10 Internal Auditor 1 1 1 1

11 Stores Officer 1 2 2 2 2

12 Shift Supervisor (Factory) 2 3 3 3 3

13 Security Officer 1 1 1 1

14 Security Guards 2 4 8 8 8

15 Marketing Manager

1 1 1

16 Sales Officers 2 3 6 6 6

17 Farms Workers (Women & Youth) 12 20 70 70 70

18 Senior Driver/Drivers 2 2 4 6 6

19 Factory Workers 9 10 23 23 23

20 Accounts/Store Clerks 2 2 6 6 6

21 Workshop Supervisors- Electrical Mechanical 1 2 4 4 4

36 58 137 139 139

107

Organogram (Suggested) 1-5 tons/day

Board

Agronomist

Gen. Manager

Sales Officers Personnel/Finance

Supervisor

Factory Supervisor

Factory Workers

(12)

Quality Control

Account

Clerk

Security

Officers

Clerks Sales Clerk Farm Hands

108

Organization Structure Suggested (5-10 tons & 10 – 15 tons/day)

Board

Agronomist

Gen. Manager

Admin/Finance

Officer

Factory Supervisor

Farm Hands

Factory Workers

(Shift)

Quality Control

Account

Clerk

Security

Officers

–

Clerks

109

Organization Structure Suggested (20-40 tons/day)

Board

Gen. Manager

Shift

Supervisor

Policy Formulation

Audit

Corporate Planning

Farm

Manager

Factory

Manager

Admin/Fin

Manager

Marketing

Manager

Quality Control

Manager

Agronomist

Farm Hands

Factory

Worker

Shift

Supervisor

Marketing

Worker

Sales

Clerks

Adv.

Supervisor

Quality

Control

Quality

Clerk

Personnel

Officer

Security

Officer

Clerks

110

Organization Structure Suggested (40tons and above)

B O A R D

MANAGING DIRECTOR

FACTORY

MANAGER

PRODUCTION

MANAGER

PROCUREMENT /

QUALITY MANAGER

MAINTE

NANCE

QUALITY

CONTROL

PURCHASIN

G

FINANCE/ADMIN.

MANAGER

ACCOUNTS PERSONNEL

ADMIN.

MARKETING

MANAGER

SALES MARKETING

MGR.

FARM

MGR.

FOREMAN WORKSHOP

SURPV STORES OFFICER SECURITY

FARM

WORKERS

SUPERVISOR

INTERNAL AUDIT

SECRETARY

CORPORATE PLANNING

111

ECONOMIC FEASIBILITY

&

SOCIAL COSTS

112

9 ECONOMIC FEASIBILITY

9.1 Farms and Production Operation Our investigations show that the scalable production of Starch by investors is economically feasible

and viable in any part of the country. The various scales of operations from 1-5tons/day, 5-10tons/day,

10-15tons/day to 40tons/day are economically feasible and would generate considerable returns on investment. Besides, the investment would offer the under listed advantages to the economy such as:-

(i) Offer of employment to Nigerians, (ii) Helping to conserve the country’s foreign exchange. (iii) Offering training opportunities to Nigerians,

(iv) Reduction of production cost and hence higher sales prices on the long run, (v) Contributing to the general industrialization of the economy and environmental sanitation.

Investing in any of the scale of operation by any investor would assist in industrializing the community

and the country at large. It would help in generating employment. For instance, 1-5tons per day would employ 36 Nigerians (Youth and Women mostly on the farms and (production floor) in the 1st year of operation while a factory of 40tons and above would employ 139 Nigerians initially. The employment

would grow substantially over the years.

9.2 Value Added to Economy

Investments in the various scales of operations by an interested investor would yield substantial value added to the economy as indicated overleaf.

9.3 Staff Training & Development

There would be Training and retraining of employee, would help in to enable them acquire the necessary skills and dexterity in factory and farm operation. A well defined training programme should therefore ensure sustainability.

9.4 Backward Integration It is expected that as there would be continuous backward integration through the Outgrowers Scheme would continue to update farmers’ skills, knowledge and productivity in growing and

exploiting Cassava.

Costs of production would reduce over time thus helping in price reduction of the products and hence

make them available to more Nigerians.

9.5 Benefit to the Economy There is no doubt that the development of Starch Industry through Farm and Factory Operations

would aid tremendously in industrializing the country.

Every encouragement should therefore be given to Investors to undertake establishment of the various scales of operation for the benefit of the economy.

Besides, the waste emanating from Production would be converted into useful products. This would eliminate the menace of industrial waste – a factor which has been responsible for poor environmental

sanitation in the country.

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9.4 Value Added to the Economy (N’000) Year 2017 2018 2019 2020 2021

Items

Scale of Operation

Out

put

Industry

cost

Value

Added

Out

put

Industry

cost

Value

Added

Out

put

Industry

cost

Value

Added

Out

put

Industry

cost

Value

Added

Out

put

Industry

cost

Value

Added

1-5 Tons/day 156,060 117,000 39,060 182,070 136,500 45,570 208,080 156,000 52,080 221,085 165,750 55,335 234,090 175,500 58,590

5-10 Tons/day 294,451 224,640 69,811 343,526 262,080 81,446 392,601 299,520 93,081 417,139 318,240 98,899 441,676 336,960 104,716

10-15 Tons/day 461,306 351,936 109,370 538,191 410,592 127,599 615,079 469,248 145,827 653,578 498,576 154,942 691,960 527,904 164,056

20-40 Tons/day 1,230,560 938,808 291,752 1,435,654 1,095,276 340,378 1,640,747 1,251,744 389,003 1,743,294 1,329,978 413,316 1,845,840 1,408,212 437,960

40 Tons and above 1,538,507 1,173,744 364,763 1,794,925 1,369,368 425,557 2,051,343 1,564,992 486,351 2,179,552 1,662,804 516,748 2,307,761 1,760,616 547,145

The Value Added to the Economy increased from N39million for 1-5ton capacity plant to N547million for 40tons and above capacity plant. The Value Added is quite significant in that it helps to increase our Gross Domestic Product (GDP).

114

RECOMMENDATIONS &

CONCLUSIONS

115

10 RECOMMENDATION AND CONCLUSIONS

10.1 We have set forth conditions, the marketing structure and the economic environment under which the

proposed Starch industry would operate. In light of the observations and inferences in the analytical chapters of this report, we recommend the provision of funds for the Investors.

Profitability of Operations depends on:- - Aggressive marketing strategy - Production efficiency and volume

- Product quality - Operational efficiency effectiveness - Expense ratio

The expense ratio is the total amount of expenses incurred over the total income by the company.

10.2 Projects at a Glance – Scale of Operations

Scale of Operations

Items

2017 2018 2019 2020 2021

N’000 N’000 N’000 N’000 N’000

1-5 Tons

Land Acquisition (ha) (Factory) 17,400 17,400 17,400 17,400 17,400

Capacity Utilization 60% 70% 80% 85% 90%

Land development (clearing, stumping, planting, harvesting) (ha)

80,400

80,400

80,400

80,400

80,400

No and cost of cassava Stems Needed 1200 1200 1200 1200 1200

Hire of agricultural equipment etc 7,200 7,200 7,200 7,200 7,200

Purchase of fertilizer 50,000 50,000 50,000 50,000 50,000

Plant & machinery 17,400 17,400 17,400 17,400 17,400

Fresh cassava tuber production (Tons) 7,500 8,750 10,001 10,625 11,250

Factory production (Ton) Industry Starch (60%) Food Grade Starch (40%) (60% Prod capacity projected)

900 540 360

1,050 630 420

1,200 720 480

1,275 765 510

1,350 810 540

Total sales revenue 156,060 182,070 208,000 221,085 234,000

Outgrowers Scheme (1000 farmers/ 2400ha each at 15tons/ha yield)

36,000

36,000

36,000

36,000

36,000

5-10 Tons

Land Acquisition (ha) (Factory) 19,200 19,200 19,200 19,200 19,200

Capacity Utilization 60% 70% 80% 85% 90%

Land development (clearing, stumping, planting, harvesting) (ha)

80,400

80,400

80,400

80,400

80,400

No and cost of cassava Stems Needed 1200 1200 1200 1200 1200

Hire of agricultural equipment etc 7,200 7,200 7,200 7,200 7,200

Purchase of fertilizer 50,000 50,000 60,000 60,000 60,000

Plant & machinery 19,200 19,200 19,200 19,200 19,200

Fresh cassava tuber production (Tons) 14,400 16,800 19,200 20,400 25,920

Factory production (Ton) Industry Starch (60%) Food Grade Starch (40%) (60% Prod capacity projected)

1,728 1,036 6,912

2,016 1,209 806.4

2,304 1,382 921.6

2,448 1,468.8 979.28

2,592 1,555.2 1,036.8

Total sales revenue 294,451 345,526 392,601 417,139 441,676

Outgrowers Scheme (1000 farmers/ 2400ha each at 15tons/ha yield)

36,000

36,000

36,000

36,000

36,000

Land Acquisition (ha) (Factory) 19,200 19,200 19,200 19,200 19,200

Capacity Utilization 60% 70% 80% 85% 90%

Land development (clearing, stumping, planting, harvesting) (ha)

80,400

80,400

80,400

80,400

80,400

116

10-15 Tons

No and cost of cassava Stems Needed 1200 1200 1200 1200 1200

Hire of agricultural equipment etc 7,200 7,200 7,200 7,200 7,200

Purchase of fertilizer 60,000 60,000 60,000 60,000 60,000

Plant & machinery 27,500 27,500 27,500 27,500 27,500

Fresh cassava tuber production (Tons) 22,558 26,316 30,083 31,958 33,842

Factory production (Ton) Industry Starch (60%) Food Grade Starch (40%)

2,707 1,624 1,082

3,158 1,894 1,263

3,610 2,166

994

3,835 2,310 1,534

4,061 2,436 3,817

Total sales revenue 461,306 538,191 615,075 653,518 691,960

Outgrowers Scheme (1000 farmers/ 2400ha each at 15tons/ha yield)

36,000

36,000

36,000

36,000

36,000

20-40 Tons

Land Acquisition (ha) (Factory) 42,800 42,800 42,800 42,800 42,800

Capacity Utilization 60% 70% 80% 85% 90%

Land development (clearing, stumping, planting, harvesting) (ha)

80,400

80,400

80,400

80,400

80,400

No and cost of cassava Stems Needed 1,200 1,200 1,200 1,200 1,200

Hire of agricultural equipment etc 7,200 7,200 7,200 7,200 7,200

Purchase of fertilizer 60,000 60,000 60,000 60,000 60,000

Plant & machinery 102,050 102,050 102,050 102,050 102,050

Fresh cassava tuber production (Tons) 60,183 70,208 80,241 85,258 90,266

Factory production (Ton) Industry Starch (60%) Food Grade Starch (40%)

7,222 4,333 3,611

8,425 5,055 3,370

9,629 5,777 3,851

10,231 6,139 5,107

10,832 6,499 4,332

Total sales revenue 1,220,450 1,423,858 1,627,267 1,728,971 1,830,675

Outgrowers Scheme (1000 farmers/ 2400ha each at 15tons/ha yield)

36,000

36,000

36,000

36,000

36,000

40 Tons and above

Land Acquisition (ha) (Factory) 42,800 42,800 42,800 42,800 42,800

Capacity Utilization 60% 70% 80% 85% 90%

Land development (clearing, stumping, planting, harvesting) (ha)

80,000

80,000

80,000

80,000

80,000

No and cost of cassava Stems Needed 1,200 1,200 1,200 1,200 1,200

Hire of agricultural equipment etc 7,200 7,200 7,200 7,200 7,200

Purchase of fertilizer

Plant & machinery 102,050 102,050 102,050 102,050 102,050

Fresh cassava tuber production (Tons) 75,241 87,783 100,361 106,591 112,858

Factory production (Ton) Industry Starch (60%) Food Grade Starch (40%)

9,029 5,417.4 3,611.6

10,534 6,320.4 4,213.6

12,038 7,222.8 4,815.2

12,791 7674.6

5,111.4

13,543 8,125.8 5,417.2

Total sales revenue 1,538,507 1,794,925 2,051,343 2,179,582 2,307,761

Outgrowers Scheme (1000 farmers/ 2400ha each at 15tons/ha yield)

36,000

36,000

36,000

36,000

36,000

10.3 Production/Factory Operations

Farm Operations The farm would adopt the best agronomic practices to ensure optimum yield from the farm. Such practices include:-

- Choice of the high yield varieties - Acquisition of quality planting materials - Ensuring adequate plant population per hectare (10,000/ha)

- Proper weed and pest control (Mechanical/Chemical) - Training of farm personnel on optimum operation - Fertilizer application would be based on soil analysis and/or land history /vegetation

117

10.4 Machinery/Plant

The plant/machinery recommended are capable of meeting the projected sales revenue. It is however of utmost important that a preventive maintenance be established to ensure the overall useful life span of the Plant/Machinery. Preventive maintenance scheme would ensure:-

i. An equipment record ii. Preventive maintenance inspection records iii. Work orders

iv. Maintenance time cards v. A storeroom withdrawal order vi. A monthly report of preventive maintenance inspections

vii. A mechanical down-time report

The major objective is to keep equipment in excellent conditions at all times, regardless of the number of shifts being operated. Maintenance also enables adequate knowledge of the condition of every piece of

equipment in the Petrol Station, to add forecast of its life and dependability. It is preventive maintenance more than breakdown maintenance that readily meets these objectives.

The effective operation of the plant/machinery is very essential to ensure high level of productivity and realize the expected sales revenue and attendant profit. The employees should be properly trained and educated in the operations of the plant/machinery.

10.5 Factory Operations Proper and consolidated arrangements must be made with financiers to ensure uninterrupted supply of fresh cassava root and have sustained sales revenue projected in the Performa Income statement. It is

recommended that the proposed scalable production should buy a month’s stock of materials as safety stock to prevent the consequences of frequent shortage of products. The materials should be properly stored and secured to prevent loss or misuse.

The shift supervisor should ensure effective labor control and discipline and prevent theft amongst all categories of staff. An Instructional Handbook should be complied to train employees in factory operational procedures to minimize constant breakdown of machinery. Records keeping and administration should be

given proper attention and log book opened to record event happenings at each shift.

10.6 Marketing

An aggressive marketing strategy aimed at market penetration should be developed in the area of promotion and marketing services. Effort should be geared towards effective advertising and sales promotion of the factory product.

Brand loyalty while no too important in the industry, the identity of the product could be established through efficient operations and marketing incentives that would endear the product to its customers.

It is essential that clear marketing objectives are set both on the medium and long term. The objectives

should give answer to the following:-

i. What sales volume (in units/naira) do we aim for? Will the market absorbs it all

ii. What is the target coverage level in terms of units/area iii. What staff do we need to ensure achievement of objective

In conclusion, marketing should be seen as major answer to most organization’s problems. Every

organization is served by at least 3 kinds of publics – those who consume their services, public whose goodwill is important to the organization and publics who supply the necessary resources. An organization should therefore use marketing to develop the right services for its customers, to attract the resources it

needs and to communicate and win goodwill.

10.7 Personnel Policy/Organization A sound personnel policy should be initiated to ensure continuous motivations and retention of staff.

Remunerative package already recommended should be adjusted and improved upon as situation dictate.

118

The investor should not operate under the impression that employees are unimportant in the operation.

Close attention should be given to policies that would enhance the productivity of the employee with its resultant effect on the organization.

Personnel policy should be set in the following areas:-

- Recruitment and selection - Indoctrination - Promotions and Transfer

- Work Schedule and Control - Industrial Relations - Employees Discipline and Reward

- Personnel Research

It is essential that the organization is effectively organized and capable staffed. The proposed investors should undertake the under listed activities:-

- Organizational Planning - Analyse Key Positions - Forecast Manpower Requirements

- Training - Establishing Plant Training Programmes - Train Supervisors

- Evaluate Training Programme - Employee Service - Medical Service

- Recreation - Safety - Protection/Security

10.8 Outgrowers Scheme The investor to ensure uninterrupted supply of fresh cassava root would establish an

Outgrowers Scheme. The scheme is outline below:-

5000 HECTARES OUTGROWER CASSAVA FARMS (SECOND YEAR PROJECTIONS)

Revenue

Projected yield/Hectare (Tons) 15.00

Aggregate Farm Size (Hectare) 2400

Projected Selling Price/Ton (N) 18000.00

Annual Expected Revenue (N) 648,000,000.00

Expenditures Cost/Unit (N) No. Frequency Total (N)

Pre-Planting Operations

Land Clearing

180,000.00 2400 1 432,000,000.00

Land Preparation 7,500.00 2400 4 72,000,000.00 504,000,000.00

Material Purchases

Cassava Stem 500.00 2400 30 36,000,000.00

Fertilizers

10,500.00 2400

2.00 50,400,000.00

Herbicides 5,000.00 2400 2 24,000,000.00

Pesticides 2,500.00 2400 2 12,000,000.00 122,400,000.00

Planting & Management

119

Planting 12,000.00 2400 1 28,800,000.00

Weeding/Hoeing 0.00

Herbicides Application 7,500.00 2400 2 36,000,000.00

Others 6,500.00 2400 1 15,600,000.00 80,400,000.00

Harvesting 35,000.00 2400 1 84,000,000.00

Sub-Total Cost of Production (N) 367,440,000.00

Transportation Logistics (N) @ 2.5% of Production Cost 9,186,000.00

Ground Rent (N) 5,000.00 2400 1 12,000,000.00

Technical Services Fee (N) @2% of Gross Revenue 12,960,000.00

Total Production Costs/Annum (N) 401,586,000.00

Gross Margin/Annum (N) 246,414,000.00

Total Number of Outgrowers 1000

Average Annual Income Per Outgrower 246,414.00

11. CONCLUSION

11.1 We have undertaken investigations into the feasibility/viability of establishment of scalable starch production

in any part of Nigeria. The report indicates that the project is feasible and viable if effectively managed.

11.2 We hope our final findings and conclusions would meet your requirements.

11.3 We thank you immensely for commissioning us to undertake the feasibility/viability report. We assure you of our qualitative service at all times.

Yours faithfully,

For: AGROEC CONSULTANTS

CHIEF A.I. ADEWUNMI MANAGING PARTNER

120

APPENDICES

121

122

123

List of processing equipment for a cassava starch factory producing 24 tons per day

Cleaning of fresh roots 3 belt conveyors with suitable gear motors and supports for transporting the roots 1 rotating root washer with gear motor

1 root breaker with motor for chopping washed roots 1 bucket conveyor with gear motor 1 pre-grater with motor

1 pump with stainless steel rotor and motor

Extraction of starch 3 sets of extractors with sieves and motors or a set of DSM screens for the separation of starch from fibres

2 screw conveyors with gear motors for grated material 4 pumps with stainless steel rotor and motor

Purification of starch

3 centrifugal separators or continuous channel separators with motors or Dorr Cloves 3 stainless steel stirrers with gear motors for the agitation of starch milk in basins 3 pumps with stainless steel rotors and motors

Dewatering and drying of starch 1 rotary vacuum filter with vacuum pump and motors or basket centrifuge

1 flesh drier complete with steam heating, pneumatic cooking system, ventilation, insulation, supports and motors 3 screw conveyors with gear motors 2 bucket-type elevators with gear motors 1 warm blending machine with conical mixer and gear motor

1 sifter and motor 1 sack-filling screw with two sack-filling sockets equipped with motors

Sulfurous acid plant 1 air compressor with motor 1 sulfur burning furnace with filler cap and water cooling

1 absorption tower (wood or ceramics) 1 storage tank (wood or concrete) 1 stainless steel pump with motor

Waler supply and piping Drilling of two artesian wells 2 centrifugal pumps for well water

Piping inside factory (includes valves, fittings and condenser line for boiler) Material handling equipment 2 storage tanks for fuel oil

2 platform scales for roots and starch fork-lift truck and handcarts

Other Packaged boiler to supply steam for drying starch

Power generation (stand-by unit) Electrical installation, including switch gear, power distribution, transformer Outside lines for water, power and sewage

Maintenance shop equipment Quality control laboratory equipment Trucks for transporting roots and starch

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FINAL REPORT

A MODEL TURNKEY FEASIBILITY/VIABILITY STUDY AND BUSINESS PLAN - An Operations Manual

ON

SCALABLE CASSAVA PROCESSING

INTO

STARCH – Industry and Food Grade An Industry Wide Study to Attract Investors and Spur Investments

For CARANA CORPORATION

20, Port Harcourt Crescent, Off Gimbiya Street, Garki II,

Abuja, Nigeria.

BY AGROEC CONSULTANTS 4, Ore Ekpen Crescent, Ifelodun Street,

Near Gbagada General Hospital, Oremeji, Gbagada, Lagos.

125

TABLE OF CONTENTS

S/N CONTENT PAGE

1 Introduction 2

2 Overall Economic and Industry Survey 2

2.1 Overall Economic Environment

2.1.1 Economic Recovery and Growth Plan (2017) Highlights

3. Background Information 3

3.1 Production – Commodity Context 3.2 Growing Cassava in Nigeria 3.3 Trends in Cassava Industry – Global and Nigeria

3.4 Opportunities (By Products) 3.5 Challenges, Risks and Contribution to Addressing challenges 3.6 Demand/Economic Potential for Cassava Products

3.7 Getting Involved 3.8 Governments Latest Efforts

4. Cassava Starch Industry – Problems and Prospects 21 4.1 The Product 4.2 Types of Starches 4.3 Cassava Starch – Global and Nigeria Trends

4.4 Cassava Starch Industry in Nigeria 4.5 Characteristics of the Starch Industry 4.6 Cassava Starch Factories

5. Technical Operation 27

5.1 Raw Materials, Supplies and Utilities

5.2 The Product 5.3 Starch Production – Process 5.4 Machinery and Equipment

5.5 Quality Control/Good Manufacturing Practices 5.6 Waste Disposal 5.7 Utilities – Fuel, Diesel, Water etc.

6. Market Study 47

6.1 Supply Situation

6.2 Demand Position - Global 6.3 Export Potential 6.4 The Nigeria Demand

6.5 Gap Analysis 6.6 Strategic Marketing Programme

7. Financial Analysis 55 7.1 Production Cost Schedule 7.2 Financial Plan

7.3 Production Schedule 7.4 Labour Schedule 7.5 Profit and Loss Account 7.6 Statement of Financial Account (Balance Sheet)

7.7 Cash Flow 7.8 Depreciation

126

7.9 Risk Analysis

7.10 Financial Highlight - Ratio 7.11 Profitability and Viability Outlook 7.12 Loan Schedule

8. Organization and Management 101 8.1 The Success of an Organization

8.2 The Management 8.3 Production Department 8.4 Marketing/Sales Department

8.5 Financial/Administration 8.6 Source of Personnel 8.7 Training and Development 8.8 The Organization Structure

8.9 Labour Requirements

9. Economic Feasibility & Social Costs 108

9.1 The Farm (Outgrowers Scheme) 9.2 Backward Integration

9.3 Benefit to the Economic

9.4 Value Added to the Economic

10. Recommendation & Conclusions 112 10.1 Profitability of Operations

10.2 Production/Factory Operation

Appendices 118 Performa Invoice for scale of Starch production (3)

List of Equipment

Tables

Table 1 - Top Ten Cassava Producing Countries in 2010 Table 2 - Main Producing Figures for Cassava in Nigeria Table 3 - Characteristics of Cassava Production in Nigeria and Thailand

Table 4 - Estimated Costs – Sustainability Issues Table 5 - Potential Market for Cassava-derived Products in Nigeria Table 6 - Expected Fresh Roots Demands & Processing Plants to be Established

Table 7 - Scalable Production Figures Table 8 - Proposed Production Schedule Table 9 - Expected Fresh Roots Demands & Processing Plants to be Established (ATA 2015) Table 10 - Projected Supply 2017-2021

Table 11 - Projected Demand 2017-2021 Table 12 - Project Sales Volume

Figure Figure 1 - Cassava Derivatives and their Uses

Figure 2 - Relationship between Corn Prices and Starch Imports

Figure 3 - Process Flow – Manufacture of Starch Figure 4 - Cassava Tubers are the Root of the Matter Figure 5 - Flow Diagram of Operations in an Old Fashioned Small to Medium Size

Processing Factory Figure 6 - Flow Diagram of Operations in a Modern Medium to Farce Processing Factory Figure 7 - Flow Diagram of Operations Proposed for a Large Modern Processing Factory in Nigeria Figure 8 - Processing Cassava Starch

Charts Chart 1 – 4 Suggested Organizational Structures