Business

Prioritising cassava value chain for revenue growth

For the attainment of economic growth recovery that will create more income for all actors, generate employment and sustainable livelihood, there is need for another Presidential Cassava Initiative (PCI) to be anchored by competent professionals in the country. TAIWO HASSAN reports

Nigeria’s retail sector is currently undergoing a transformation with international supermarket brands entering the country, new malls being constructed and the conversion of informal markets into more modern facilities. Although only a small portion of retail trade is formal at present, the advantages of shopping in supermarkets and convenience stores have become increasingly apparent to domestic consumers. More women are entering the labour force and, to them, the timesaving benefits of shopping in supermarkets are becoming ever more apparent. Irrespective of poverty levels and the fairly challenging business environment, Nigeria cannot be ignored, given the large market it offers. Nigeria is world’s largest cassava producer, at an estimated 59 million metric toNigeria is world’s largest cassava producer, at an estimated 59 million metric tonnes. The present economic challenges have forced many companies into the ‘narrow path’ of backward integration and local sourcing of raw materials.

Cassava value chain

The cassava value chain in Nigeria remains highly fragmented. The majority of production and processing is done by very small-scale players. Firstly, most cassava is consumed as traditional food products, either on-farm or through sale in local markets. Opportunities in the sector exist because Nigeria has a total of 20.4 per cent (59 million tonnes) world share of cassava production and remains the highest producer of cassava in the world. Secondly, cassava is regarded as an important staple food for human consumption (90 per cent) and also as secondary industrial material (five to10 per cent) mainly used as animal feed. Thirdly, 10 per cent of Nigeria’s industrial demand consisting of high quality cassava flour is used in biscuits and confectioneries, dextrin pre-gelled starch for adhesives, starch and hydro-lysates for pharmaceutical products and as seasonings. Again, garri, the derivative from cassava, accounts for 70 per cent of human food from the tuber. Other common cassava products mainly for human consumption include elubo/ lafun, fufu/akpu and abacha in Nigerian parlance, among others. Also, processed cassava’s primary products include garri, fufu, la-fun/ elubo, starch, pellets (obtained directly from cassava tuberous roots). Furthermore, processed primary cassava product include glucose syrup, dextrin and adhesive, which are obtained from starch (including liquid starch, pre-gel starch and dextrin based adhesives). In Nigeria, secondary products obtained from cassava include modified cassava starch, glucose syrup, extra neutral meat, noodle, bakery and confectionery industries, meat and textile processing. There is a also a huge potential demand of about 250,000 tonnes/year in the HQCF through the initiative of 10 per cent HQCF replacement in bread flour (as wheat flour is also used in bread making) and also required in bouillon, noodle and the adhesive industries. The huge demand for local and modified starch was reported to surpass 230,000 tonnes per year in the food, paint and pharmaceutical industries in Nigeria. In confectionery industry, a growing demand of 150,000 tonnes per year exist in fructose syrup, which serves as a means of replacement for growing demand for imported sugar in Nigeria. Dried cassava chips market has a potential demand of about 900,000 tonnes and also about 520,000 tonnes demanded by the China export market. Adoption of blending gasoline with 10 per cent ethanol (E-10 policy) – this will create about one billion litres in a year for fuel ethanol with a potential demand of 2.3 million tonnes of fresh cassava roots.

FMCG roles in packaging

Indeed, Nigeria is a good market for consumer goods, with many fastmoving consumer goods firms able to record positive sales. Good and efficient packaging, especially the flexible type, has helped to boost a number of them. Many companies are able to record increased sales based on the attractiveness and designs of their products. Packaging represents a significant part of Nigeria’s fast moving goods, which are products bought over the counter, including foods, drugs, shoes, plastics, phones and electronics, among others. Many consumers are attracted by packaging designs. The country’s packaging industry has seen 12 to 14 per cent growth over the last decade, driven majorly by innovations in fast moving goods market valued at over $40 billion. Nigeria has a viable demography, comprising a growing middle-class and creative and vibrant youths, which support the growth of packaging and FMCGs. Urbanisation has continued to spike, as majority of the population in the cities prefer packaged foods to traditional ones, owing to increased work pressure, traffic gridlocks and social demands. One key segment of the packaging industry that has seen growth in recent times is food packaging, which has spiked on the back of emergence of retail shops such as Shoprite, Spar and online shops like Konga and Jumia, among others.

Nigeria’s food packaging segment

Nigeria’s food packaging segment is one of the best-performing industries in the country, despite the economy and consumer spending power stagnating over a decade ago. Most of the leading companies in the food packaging segment are local players such as Promasidor Nigeria Limited, Dufil Prima Foods Plc and Yale Foods Nigeria Limited, while long-standing Nigerian representatives of multinationals such as Cadbury Nigeria Plc and Nestlé Nigeria Plc also have a strong presence. A Purchasing Managers Index (PMI) report released by the Central Bank of Nigeria (CBN) showed that the manufacturing sector is influenced indirectly by improved packaging of products by manufacturing firms.

Cassava starch supply

However, a glance at the starch companies have long established deals to supply cassava starch to Nestle, Cadbury, Unilever and so on. Unfortunately, most of them are only running at around 60 per cent capacities (less than 50,000 tonnes of starch per annum). The demand for starch is expected to continue to grow at five per cent yearly and this puts total demand for starch at 357,000 metric tonnes as at 2020, especially as more companies seek to establish local production lines to service the expanding Nigerian and West African markets (sorbitol for toothpaste, sugar-syrups and sweeteners from starch). Also, net imports for ethanol stand at 300 to 350 million litres per annum. AADL (Allied Atlantic Distilleries Limited) produces only nine million litres.

Cassava forecast

Growth forecast from recently concluded “Cassava: Adding for Africa (C:AVA 2) Project,” showed a sharp rise in the demand of cassava roots for the two industrial products in the next five to 10 years. This, however, is the overall demand for industrial starch within Nigeria, which has far outpaced demand for Nigerian cassava starch (or the ability of Nigerian companies to produce competitively priced starch). Indeed, Nigeria is blessed with billions of naira worth of investment for ethanol and cassava starch industries. Some of those companies are Allied Atlantic Distilleries Limited, Igbesa, Ogun and Unicane, Lokoja, Kogi State (Ethanol); (Nigeria Starch Mill, Ihiala, Anambra State; Matna Starch, Ogbese road, Akure, Ondo State; Psaltry International Limited, Ado Awaye, Oyo State; Niji Farms, Ilero, Oyo State; Greentech Starch, Agbara, Ogun State; Tempo Starch, Adigbe, Abeokuta, Ogun State and Harvest Feed Agro Processing Limited, Ajura, Ogun State (Starch Mills).

Last line

Stakeholders in the country’s cassava sector are advocating that there is need for the current administration of President Muhammadu Buhari to prioritise cassava sector development towards achieving food sufficiency at this critical period of insecurity threatening Nigeria’s food system.

 

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