A Business Proposal On Cassava Farming And Garri Production In Nigeria - Agroraf 286d35

A BUSINESS PROPOSAL ON CASSAVA FARMING AND GARRI ...

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A BUSINESS PROPOSAL ON CASSAVA FARMING AND GARRI PRODUCTION IN NIGERIA By yuusuph - June 21, 2017 - in FEASIBILITY REPORTS 2380 4

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EXECUTIVE SUMMARY Cassava is one of the most popular and widely consumed food crops in Nigeria. Because it is such an important food in our dear country and an extremely versatile crop, it is in fact, the cornerstone of food security in Nigeria. The competing needs for cassava cut across both human and animal consumption. It is fast becoming a popular raw material in industrial production and is now a preferred material for making biofuels. As Nigeria’s population continues to grow rapidly, the demand for food staples like cassava is increasing. This high demand for various forms of processed cassava is pushing prices to the ceiling. Several small scale cassava farmers are making a fortune and additional income through this business. And the profitable way for a farmer to market his cassava is to add value to it: either by selling it as garri or as fufu. The analysis of the present market situation shows that selling as processed cassava (garri, to be precise) will survive the existing competition because demand for garri is elastic. More so, the financial analysis shows that the proposed project is not only profitable, but also viable, feasible and sustainable. Finally, careful assessment of the environmental and organizational factors using SWOT analysis reveals a project that has a promising future and a high propensity of success. 1.0 INTRODUCTION / BUSINESS OVERVIEW Due to the very short shelf life (2-3 days) of harvested cassava tubers, inadequate road and power infrastructure, most of the cassava produced in Nigeria is consumed locally, where it is still unable to address the growing consumption. As a result, a lot of the cassava harvested every year can get spoilt and never make it to the market. This wastage is estimated to be worth millions of naira every year. However, by adding value to the cassava crop and processing it into a ready-to-eat staple like garri, entrepreneurs can earn a very healthy profit on the open retail market. More so, it is worthy to note that as humans, animals, industries and biofuels continuously compete for the valuable cassava crop, the prevailing local market prices will continue to explode. Of all the forms of cassava that can generate income, garri is the cheapest and easiest way for entrepreneurs to enter and exploit the processed cassava market. Garri production is a low-cost and largely traditional process and can be done on a small scale. Garri is one of the most staple Nigerian diets because not only is it cheap, but it is easy to make and can be taken in majorly two ways that are fast to prepare. Those in the garri business know that this is the fastest way to make money especially in the agro processing industry. Garri is one of the major products from processed cassava the staple food for almost all Nigerians, as about 75% of Cassava is processed into garri. Some entrepreneurs are going into the garri processing business especially as this product is recession proof. The recent economic downturn in the country has seen more and more people turning to garri. Also, another factor in favor of the garri processing business is the growth in the population which has pushed the demand for garri and has also caused more garri processing businesses to crop up to be able to meet the growing

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demand. Description of Business It is no news that many people are into cassava farming and garri production in southwest Nigeria, yet the local and international demand is still high. To thrive in the business as a new entrant, creativity and innovativeness in farm management, quality control and garri marketing is necessary. The branding of the garri is expected to be diligently explored and exploited. Vision and Mission Statement The vision of the proposed project is to create an investment pool that will generate an independent and continuous source of income. The mission is to sustain the business, then expand and diversify in the long run to create employment opportunities. Business Objectives The objectives of a proposed cassava farming and garri processing project are: To maximise profit in the short run; To realise a profit differential on yearly basis; and To sustain the improvement in production and market capacity over time. 2.0 Production Plan

2.1 Production Planning Model 2.1.1 Cassava Management Under normal conditions, about 90% of all cassava cuttings planted sprout within 2 weeks of planting. Cuttings that do not sprout should be removed and disposed of away from the cropping area in order to prevent the transmission of any disease that may have caused the failure of the cuttings. New healthy cuttings should be acquired and planted by the third week after the initial planting in order to maintain the planned plant density. However, the new cuttings should not be planted in exactly the same hole from which the failed cuttings were removed, to avoid the risk of repetition of the original problem. Drought conditions could cause a much higher failure rate. In such a situation, one should wait until rains resume before replacing failures. 2.1.2 Weeding Weeds can retard the growth and reduce the performance of cassava. A well-weeded cassava farm can yield 30–40% more roots than a poorly weeded farm. Weed control forms a significant part (30% – 50%) of the labour costs in cassava production. The exact weeding frequency will depend on the type and severity of the local weed problem, but in general: It is important to start weed control 3–4 weeks after planting. This can be done at the same time as the replacement of the failed cuttings (in week 3) in order to maximize the use of labour. Weeding should be repeated in weeks 8 and 12, while the final weeding should be done between 20 and 24 weeks after planting, depending on the rainfall. During dry phases weeding may not be required but it is always recommended to destroy weeds before dry phases and after the resumption of rains. Once the canopy of the cassava and of the intercrops (if any) has closed the shading will effectively control most weed growth. The overall total number of weeding cycles depends, in part, on the resilience of the weeds, and this depends on agro-ecological conditions. Weeding can be done manually (hoe and cutlass), mechanically (using a tractor) or chemically (although there are no specifically prescribed herbicides for cassava). However, mechanical weeding beyond the first 4 weeks after planting can damage the roots. Therefore, manual or chemical weed control is preferred after this period. One should use his local knowledge to decide which weeded material should be left on the plot or removed and discarded. Generally, small broadleaved weeds can be left on the field because they will die from the heat of the sun and become mulch. Bulky weeds, weeds with rhizomes and weed species with the capacity to form roots from stem pieces tend to re-sprout if cut and left on the soil surface, so one should uproot and dispose of these types of weeds away from the field. Tall grasses should be uprooted and removed from the field before they flower in order to prevent seed formation and germination, which will further propagate the weed species.

2.2 Production Process: Garri Processing Processing cassava roots into garri takes several steps, and these are: Peeling and washing cassava roots; Grating cassava roots into mash; De-watering and fermenting mash into wet cake; Sieving wet cake into grits and roasting grits into garri; Bagging and storing the garri; Maintaining good hygiene compliance. 2.2.1 Peeling and washing cassava roots

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Freshly harvested cassava roots are covered with soil and dirt and some may be damaged or rotten. Only healthy roots (without rot or other damage) should be transported to the factory. At the factory, the roots are peeled to remove the outer brown skin and inner thick cream layer and washed to remove stains and dirt. The water source should be checked regularly to ensure it is not dirty or contaminated. 2.2.2 Grating cassava roots into mash Cassava roots are traditionally grated into a mash or pulp as part of the process to remove cyanide and make the roots safe to eat. Traditional cassava graters are usually made from perforated metal sheets. These rust quickly and are difficult to keep clean. They are also very slow and labour intensive to use. Mechanized graters are needed to produce a sufficient quantity of cassava mash to meet market demands and standards. Smallholder processors therefore need to learn how to use and maintain these machines. 2.2.3 De-watering and fermenting mash into wet cake De-watering and fermenting complete the process of removing cyanide from the cassava mash. This is done traditionally by using stones or logs as weights to press excess water out of the bags of cassava mash. The bags are then left to drain and ferment for a few days. As with traditional graters, these methods are slow and unhygienic, and are therefore not suitable for a cassava processing business. Several improved methods are available. Bagged cassava mash can be left on the fermentation rack for one or more days before de-watering. Alternatively, the bags of cassava mash can be pressed for the required number of days, during which time the mash will ferment. At the end of the fermentation period, the mash will become a firm, wet cake. Fermentation periods of longer than one or two days will produce very sour products. Consumer tastes and preferences will therefore determine the length of the fermentation period. 2.2.4 Sieving and roasting grits into garri Garri is made by sieving the wet cake into small pieces – known as grits – and then roasting or frying the grits in a hot frying tray or pan to form the final dry and crispy product. Garri is normally white or cream, but will be yellow when made from yellow cassava roots or when fried with palm oil. It is important to make sure the taste and smell is acceptable to local consumers. The product should be free from mould, insects (dead or alive), dirt and any other material that could be hazardous to health. Garri is usually classified by its particle size: Extra-fine: es through 0.25 mm to 0.5 mm aperture sieve Fine: es through 0.5 mm to 1 mm aperture sieve Coarse: es through 1 mm to 1.25 mm aperture sieve Extra coarse: es through 1.25 mm to 2.0 mm aperture sieve. 3.0 Marketing Plan 3.1 Description of Products In garri business, the colour, taste and friability of the garri particles determine the market. More so, consumer preference varies from place to place, and region to region. Hence, any investor in this business must give due consideration to the consumer’s choice of quality that will satisfy their need. 3.2 Product Packaging and Delivery For easy sale and delivery of garri locally in stores, restaurants, school hostels and offices, it is preferred that the garri are neatly packed in customized nylon. During festivities, they can be packed in hampers and colourful and portable bags. It can be packed in varying smaller sizes so as to reach a broad class of consumers.

3.3 Competition and Target Market It is fairly competitive to market garri in the open markets. Neatly packed garri however goes for price in all markets, stores, restaurants and offices. School hostels, hospitals (both private and government), and hawkers in garages and motor parks can also be targeted. 4.1 Cost-Returns Analysis The following table summarizes all the costs that would be involved in executing this project. Table 1: Fixed and Variable Costs Fixed Cost Hoe

# 1,200

#

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Cutlass Wheel Barrow Total Fixed Cost


2,500 7,000 10,700 10,700

Variable Costs Cassava Cuttings / hectare 3 bags of fertilizer Agro-chemicals Land clearing

25,000 27, 000 10,500 80,000

Ridge making Weeding Garri processing Miscellaneous

100,000 40,000 60,000 15,000

Total Variable Cost

357,500 357,500 368,200

TOTAL COSTS

P.S.: It’s assumed that the investor already has a 2.5 acres of land i.e. 1 ha. RETURNS The type of variety that will be planted will give about 20 tonnes of cassava (per hectare) after 10 months; which is equivalent to 8 tonnes per acre. And experience has it that 1 tonne of cassava tuber is equivalent to 5 baskets. In other words, 8 tonnes makes up 40 baskets per acre. And 3 plastics of garri can be gotten from a basket. Therefore, 120 plastics of garri are realizable from one acre of cassava farmland. Hence, 300 plastics of garri are realizable from one hectare of cassava farmland. Since each plastic of garri costs #2,700 at the moment; Therefore, (300 X 2700) = #810,000 is the expected returns from 1 hectare of cassava farmland. The depreciation of hoe, cutlass and wheel barrow is shown in table 2; using the straight line method: i.e. dt = C – S L Where dt = depreciation; C = cost of asset; S = salvage value. Table 2: Depreciation of Farm Equipment

1,200

SALVAGE VALUE (N) 500

USEFUL LIFE (YRS) 5

DEPRECIATION (N) 140

2,500 7,000

1000 3000

5 5

300 800 1,240

ITEM

COST (N)

Hoe Cutlass Wheel barrow Total

Therefore, profit from the harvest in the production year is: Profit = TR – TVC – Total Depreciation = N (810,000 – 357,500 – 1,240) = N 451,260

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While, Gross Margin = TR – TVC = N (810,000– 357,500) = N 452,500 4.2 Break-Even Analysis The Break-Even Point is the point or level of financial activity at which expenditure equals income, or the value of an investment equals its cost, with the result that there is neither a profit nor a loss. Hence, any return accruable thereafter is a continuous gain or plus to the business. TFC = N 10,700 Unit VC = N 1191.7 Unit Price = N 2700 Contribution = Unit Price – Unit VC = N (2700 – 1191.7) = N 1508.3 To break even in this proposed cassava farm, the amount of plastics that must be sold: TFC / Contribution; i.e.

Break-Even Point = N 10,700 / N 1508.3

= 7.09 ≈ 7.1 In order words, the cassava farm will break even after the sale of about 7 baskets of cassava out of the 100 baskets accruable from one hectare. Therefore, any return accruable from subsequent sales is a profit in continuum. Hence, signifies the birth of a surplus after paying for the initial outlay. 4.3 Investment Analysis The financial viability was carried out using the Net Present Value (NPV), Internal Rate of Return (IRR), Return per Capital Invested and BenefitCost ratio. Net Present Value (NPV) and Internal Rate of Return (IRR) were used to assess the risk of the farm. The NPV is equal to the present value of future net cash flows, discounted at the cost of the capital. The NPV, calculated with 15% discounting rate was positive, implying that the venture is feasible. The payback period (expected number of years required to recover the original investment) is 1 year (Table 3). The quick payback period implies low risk in the proposed investment.

Table 3: NPV AND IRR OF THE CASSAVA/GARRI ENTERPRISE FOR THE FIRST 5 YEARS USING 15% DISCOUNT RATE

YEAR

ANNUAL CASH FLOW – 368200

1 2 3 4 5

810000 810000 810000 810000 810000 NPV= TOTAL PV (for 5 years) – INITIAL OUTLAY

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NPV= NGN 2,715,245.63 – NGN 368,200 = NGN 2,347,045.63 IRR = 219% Analytical Tool Used: MS-Excel The IRR is the discount rate that equates the present value of the project’s expected cash inflows to the present value of the project’s cost. The IRR on a project is its expected rate of return. If the net present value exceeds the cost of the funds used to finance the project, a surplus remains after paying for the capital, and this surplus accrues to the farmer. The IRR for the 1ha cassava farm is 219% implying that the venture is profitable to operate even if the planning horizon is only five years. In fact, the IRR is about 15 (fifteen) times the discounting rate. The findings of the analysis indicate that the proposed cassava farming and garri processing is viable and financially feasible. The results obtained indicate a positive NPV and acceptable IRR. Hence, this business is sustainable because production and market capacity can be built to sustain improvements over time. Return per capital invested= Net income / Gross return = (#810,000 – #451,260) / #810,000 = ₦ 358,740 / ₦ 810,000 = 0.443 ≈ 0.44 The return per capital invested was found to be 0.44. This means that for every naira invested in the cassava/garri project, a 44K gain will be realized. The Benefit-Cost Ratio was also estimated thus:. Benefit-Cost Ratio (BCR) = Benefit / Cost = =

₦ 810,000 / ₦ 368,200 2.199 ≈ 2.20

Indeed, the cassava/garri project can be adjudged to be a viable venture since the Benefit-Cost Ratio is far greater 1. 4.4 Performance Indices of the Cassava Farm The performance indices include: 1. Gross Margin = Total sale income – Total variable cost 2. Gross Margin per plastic of garri = Gross Margin / Total Production (plastics) 3. Production costs of garri per plastic = Total variable cost / plastic of garri produced 4. Percentage return on variable cost = (Gross Margin /Total variable cost) x 100 1. Gross Margin = Total sale income – Total variable cost = N(810,000 – 357,500) = N 452,500 1. Gross Margin per plastic of garri = Gross Margin / Total Production = N 452,500 / 300 plastics = N 1,508 1. Production costs of garri per plastic = Total variable cost / plastic of garri produced = N 357,500 / 300 = N 1191.7 ≈ N 1,192 1. Percentage return on variable cost = (Gross Margin /Total variable cost) x 100 = (N 452,500 / N 357,500) * 100

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= (1.27) * 100 = 127% 1. Percentage return on investment = (TR / TC) X 100 = (#810,000 / #368,200) * 100 = (2.2) X 100 = 220% 5.0 SWOT ANALYSIS It is not enough to emphatically adjudge a business profitable and viable without a proper analysis of Strengths, Weaknesses, Opportunities and Threats at one’s disposal. A detailed and convincing SWOT analysis is the mainframe of any successful business. Hence, SWOT analysis of this proposed cassava/garri project is pivotal to its success. The strengths, weaknesses, opportunities and threats of this proposed project are as follows: I. Strengths: One of the factors critical to a successful outcome of any investment at all, is the availability of time to personally concentrate on its management. It is expected that the investor has the time, ion, determination and tenacious doggedness beaming on all shady paths to breakthrough. He should believe so much in the project. And should effectively and efficiently manage the project given his wealth of experience in project management (especially with regards to farming), and skills that will come to bear in all of the production and marketing processes involving istration, procurement, inventory management and the supply chain. Experience, they say, is the best teacher. It’s indeed a pedagogue that stands as a guide in the path of any successful entrepreneur, making him more courageous, determined and wise. Lessons from his past business management experience should have been learned and should be re-invigorated while executing future plans to extract the best from his courage, devotion and wholesome commitment. II. Weaknesses: Paucity of funds is usually a greater constraint in execution of business. Without means of finance, even the best of ideas may not come to fruition or reality. However, different legal sources of funding should be explored. III. Opportunities: The high market demand for and increasing prices of garri and other derivatives of cassava, leaves a loop hole to exploit and a goldmine to diligently explore. IV. Threats: At any season in monocropping, most of “buffer crops/weeds” are generally absent or limited, hence, exposing a planted sole crop to insect pest infestation. To curtail this however, maize would be planted along side with the cassava which will in turn give a marginal income. Threat of theft or threat of the herdsmen could rear its ugly head depending on location. Hence, security in the proposed location should be adequately evaluated.

6.0 CONCLUSION The proposed cassava farming and garri production project has a reasonable chance of success at the start and it’s sustainable. The cassava farm has the propensity to be produced efficiently and garri can be marketed effectively. Are you inspired or informed? Please, share it to help your friends and to place Nigeria on a better economic pedestal. If you are interested in venturing into this lucrative business in Nigeria, you can reach us through our S. Thank you.

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Tags#CassavaIsReal#GarriIsMoney#StartUrOWNbusiness

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About the author

yuusuph Olufade Yusuf is a dedicated agribusiness consultant with many years of experience in beekeeping, including but not limited to crop and livestock farming. He holds a Bachelor of Agriculture and Masters Degree from the prestigious Obafemi Awolowo University, Ile-Ife. He is the author of the book titled: "Honey Production: Money Generation in the Face of Mass Unemployment in Nigeria. He also has some papers published in both local and international scientific journals.

4 Comments

1. jackson October 1, 2017 at 5:12 pm yusuf i need agood proposal to grow cassava Reply 1. yuusuph

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October 6, 2017 at 9:23 am Thank you Mr. Jackson. Pls on your request, me on 08168925545 or WhatsApp me. Thanks. Reply 2. Margaret Bbosa December 12, 2017 at 7:41 am Helle, Yuusuph I am called Margaret and I want to grow cassava on the 3 acres of land. But I want to know the procedures when starting up the cassava growing project. Thanx Margaret Reply 1. yuusuph December 16, 2017 at 7:46 pm Thank u Margaret. pls reach me through this WhatsApp number: 08168925545 Reply

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yuusuph: Thank u Madam Folashayo. pls reach me through this WhatsApp ..

Folashayo: Thanks Mr yussuf, i think this site solved my idea on bee fa ..

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yuusuph: Thank u Margaret. pls reach me through this WhatsApp number: ..

Margaret Bbosa: Helle, Yuusuph I am called Margaret and I want to grow cassa ..

yuusuph: Thanks. you can send me a WhatsApp msg through 0806 892 5545 ..

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A Business Proposal On Cassava Farming And Garri Production In Nigeria - Agroraf 286d35

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