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Market Opportunities for Cassava in Nigeria

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Market Opportunities for Cassava in Nigeria Driving demand for cassava in Tanzania: the next steps Draft report MARKET OPPORTUNITIES FOR CASSAVA IN NIGERIA Andrew Graffham Diego Naziri Andrew Sergeant Lateef Sanni Louise Abayomi Bernard Siwoku May 2013 i Table of contents Abbreviations/Acronyms/Exchange Rates ................................................................................................... iv Acknowledgements ....................................................................................................................................... v Executive summary ...................................................................................................................................... vi Introduction .............................................................................................................................................. 1 High Quality Cassava Flour (HQCF) ........................................................................................................... 3 Instant odourless fufu ............................................................................................................................... 6 Packaged garri/gari ................................................................................................................................... 7 Starch ........................................................................................................................................................ 8 Sugar-syrups / Sweeteners (Glucose syrup, high-fructose syrup & sorbitol) ........................................... 9 Dried cassava chips for export ................................................................................................................ 10 Dried chips for domestic consumption in livestock feed ........................................................................ 12 Ethanol / biofuel ..................................................................................................................................... 13 Beer ......................................................................................................................................................... 15 Cross cutting issues ................................................................................................................................. 16 Raw material supply ................................................................................................................................ 16 Lack of price data .................................................................................................................................... 21 End-user support .................................................................................................................................... 21 Conclusions & recommendations ........................................................................................................... 21 Sub-sectors where BMGF could make interventions at several points in the value chain .................... 22 Sub-sectors where BMGF could make interventions to support the development of smallholder inclusive raw material supplies for large-scale industries ...................................................................... 23 Sectors with no potential in the short to medium-term ........................................................................ 23 The way forward ..................................................................................................................................... 25 ii Annex 1: Notes from the November 2012 and February 2013 missions covering the various sub-sectors for cassava-based products ........................................................................................................................ 26 1. High Quality Cassava Flour (HQCF) ..................................................................................................... 26 2. Instant odour-less fufu ........................................................................................................................ 34 3. Packaged garri ..................................................................................................................................... 36 4. Starch .................................................................................................................................................. 40 5. Sugar Syrups & Sweeteners ................................................................................................................ 45 6. Dried cassava chips ............................................................................................................................. 48 7. Ethanol/bio-fuel .................................................................................................................................. 64 8. Beer ..................................................................................................................................................... 68 9. Other issues ......................................................................................................................................... 70 Annex 2: List of meetings ....................................................................................................................... 73 iii Abbreviations/Acronyms/Exchange Rates AMPU Autonomous Mobile Processing Unit BGMF The Bill and Melinda Gates Foundation Capex Capital Expenditure C:AVA Cassava Adding Value for Africa CIDA Canadian International Development Agency CIF Cost, Insurance and Freight CTAP Federal Government’s Cassava Transformation Action Plan DADTCO Dutch Agricultural Development and Trading Company EEG Export Expansion Grant FAO Food and Agriculture Organisation of the United Nations FCR Fresh Cassava Roots FUNAAB Federal University of Agriculture Abeokuta HFS High Fructose Syrup HQCF High Quality Cassava Flour IITA International Institute of Tropical Agriculture ITC WTO/UN International Trade Centre LPO Local Purchase Order NICAPMA Nigerian Cassava Processors & Marketers Association NRI Natural Resources Institute NSM Nigeria Starch Mills PIND Foundation for Partnership Initiatives in the Niger Delta SME Small and Medium Sized Enterprise TFI Thai Farm International UK United Kingdom USA United States of America USAID United States Agency for International Development WB World Bank N Naira USD US dollar £ Pound Sterling ha Hectare kg Kilogram t Tonne EXCHANGE RATES Phase 1 study: November 2012 = N150 to USD Phase 2 study: February 2013 = N155 to USD iv Acknowledgements This study is an output from a research project funded by the Bill and Melinda Gates Foundation (BMGF) for the benefit of developing countries. The views expressed in this paper are those of the authors and do not necessarily reflect the views or policies of BMGF. v Executive summary Nigeria is one of the largest producers of cassava in Africa with a long history of initiatives aimed at diversifying the market opportunities for this important crop. A favourable and supportive policy environment has encouraged the development of a range of cassava-based industries. However, cassava remains the second choice as a source of raw material for virtually all of the market opportunities seen in Nigeria. Much of the theoretical potential for cassava –based products has not been realised due to problems with accessing raw material supplies (in terms of volume, quality, price and reliability of supply), inefficient processing technologies and lack of appropriate technologies to enable potential end-users to adopt cassava-based alternatives to their existing sources of starch/flour. During the studies in November 2012 and February 2013 the most promising sub-sectors were identified as high quality cassava flour (HQCF) for use in bread, biscuits, snacks and paperboard. Dried cassava for use in floating fish feed pellets for the aquaculture industry, starch for food and industrial applications and ethanol for industrial use and as a fuel for domestic stoves. There is also potential for cassava to be used as a partial substitute for barley in the production of clear beers. In theory these sub-sectors could consume ~10 million tons of fresh cassava root equivalents per annum and support the livelihoods of over 800,000 smallholders. However, based on current capacity and trends with the Nigerian cassava industry a more realistic assessment of achievable demand in medium term would be 755,000 tons of fresh cassava equivalents per annum supporting a maximum of 63,000 smallholders (see table 1 on page 2). Even these more conservative figures will not necessarily be achieved within the next 5 years as they depend on solutions to ongoing technical issues such as the avoidance of volume reduction in bread loaves. In addition raw material supply remains a major cross cutting issue that will influence success. Large-scale involvement of smallholders in these opportunities will depend on our ability to support companies to develop attractive smallholder inclusive procurement models. For C:AVA2 the most promising sub-sectors could be further sub-divided into market opportunities (HQCF, aquaculture feed & ethanol for home cooking) where the BGMF could make useful interventions at several points in the value chain (farm, processor & end user) and market opportunities (starch, industrial alcohol & clear beer) where the BMGF would only focus on supporting the development of smallholder inclusive raw material supplies. The first group of market opportunities is characterised by including
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