Assessing the Comparative     Advantage of DomesticAgriculture: The Nigerian Cassava           Value Chain          Presen...
   This project was a collaborative effort between,      »IFPRI- Dr. Saweda Liverpool-Tasie and       Akeem Ajibola      ...
Overview: Looking at Nigeria’s comparative advantage  in the production of cassava within prevailing  global and local ma...
Methodology Value chain analysis – Policy Analysis Matrix  (PAM) framework using detailed information  on farm level prod...
Data… A survey of 60 randomly selected farmers each from two local  governments (Odeda LGA and Ado-Odo LGA) in Ogun  Stat...
Summary of key findings…     • Cassava production structure in Nigeria        Highlylabor intensive        Minimal use o...
• Assumptions:   Rural  farmers in Ogun state   Yield of about 15.7 tons/hectare   FOB of $200/ton of cassava chips   ...
Average cassava growers profitability inproducing cassava chips for the export market• Results: No comparative advantage i...
Nigeria’s cassava production within a global context (Oct/Nov 2011):                                        Farm          ...
Cassavaroots          This is just          cassava root          prices… We have          not talked about          proce...
Summary: Global context Nigeria is not currently able to compete favorably  with major exporters of cassava products (glo...
The cassava transformation plan of theATA places strong emphasis on… Developing strong value added chains of cassava  pro...
An assessment of the current situationCassava processors in Ogun State Out of 3 large scale cassava processors in Ogun st...
Major concerns… The main challenge mentioned by both medium and  large scale processors was the limited market for  HQCF...
Major concerns… Medium scale processors fear being priced out of the  market by larger firms, particularly with their bel...
Processing and marketing costs for HQCF and  Cassava Starch in Ogun State, Nigeria                                        ...
Some observations… In the absence of government intervention, the  domestic market for cassava products does not  compete...
Summary of current challenges… Market for HQCF is still thin Skepticism by processors about the guaranteed  market for t...
Moving forward… Continuing ongoing efforts to   • Expand markets for cassava based products        There is a clear need...
Moving forward Procedure for ensuring that quality of inputs and consequent  outputs of cassava based products can be ver...
 Strategies for promoting job creation and improved  incomes through the cassava value chain need to decide  and appropri...
Thank you…
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Day 1, Session 1: The Role of Policy Analysis for Informing the Agricultural Transformation Agenda (ATA)

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Day 1, Session 1 of the Nigeria Strategy Support Program's 2012 Research Conference

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  • Numerous studies have already been conducted on various commodity value chains in Nigeria….
  • The main source of data was from a survey of 50randomly selected farmers each from two local governments (Odeda LGA and Ado-OdoLGA) in Ogun State, Nigeria. Ogun State was chosen for this study because it is consideredto be a state with a high potential for cassava production, hence a natural location to studywhen exploring issues of cassava production expansion and export opportunities
  • Labor intensive ( about 80% of costs are labor)
  • Root doesn’t make sense ( price of root at rural market is at minimum about N4000 = Other challenges are transportation costs and management practices Price of cassava chips have risen: $195-$200/ton in 2012 compared to 150/ton in 2009** but relatively stable since 2011
  • http://www.agro2.com/cassava-blog/cassava-chips-are-up-with-new-scheme/Tapioca chips (on thai commodities exchange yesterday) sold at 6800 baht/ton which is about 200 dollarsIn 2012, in Cote D’Ivoire, cassava root sold for 48 dollars/ton in 2011. this is higher than
  • http://www.agro2.com/cassava-blog/cassava-chips-are-up-with-new-scheme/Tapioca chips (on thai commodities exchange yesterday) sold at 6800 baht/ton which is about 200 dollarsIn 2012, in Cote D’Ivoire, cassava root sold for 48 dollars/ton in 2011. this is higher than
  • Agricultural Transformation Program of President Goodluck Jonathan and being implemented by the Honorable Minister of Agriculture, Dr Akin Adesin
  • The government has made significant effort to promote the incorporation of cassava flour into the production of bread and other confectionariesThe government has various strategies planned to facilitate the development of a viable market such as the proposed cassava market and trade development corporation (CMTDC)The government also has various strategies to
  • Day 1, Session 1: The Role of Policy Analysis for Informing the Agricultural Transformation Agenda (ATA)

    1. 1. Assessing the Comparative Advantage of DomesticAgriculture: The Nigerian Cassava Value Chain Presented by Dr. Saweda Liverpool-Tasie, Michigan State University, NSSP National Conference 2012: “Informing Nigeria’s Agricultural Transformation Agenda with policy analysis and research evidence” Abuja, Nigeria – November 13-14, 2012INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
    2. 2.  This project was a collaborative effort between, »IFPRI- Dr. Saweda Liverpool-Tasie and Akeem Ajibola »Professor G. B. Ayoola (President, Farm and Infrastructure Foundation (FIF)) and »Dr. Oyeleke, Razaq O.(National Food Reserve Agency, Abuja Nigeria)
    3. 3. Overview: Looking at Nigeria’s comparative advantage in the production of cassava within prevailing global and local market conditions Considerations within the framework of the cassava transformation plan of the Agricultural transformation agenda of President GoodLuck Jonathan administered by the Honorable Minister of Agriculture, Dr. Akin Adesina
    4. 4. Methodology Value chain analysis – Policy Analysis Matrix (PAM) framework using detailed information on farm level production budget as well as on other processing and affiliated costs related to the production and marketing of cassava based products • PAM construction and simulations • Supplementary primary data collection and case studies
    5. 5. Data… A survey of 60 randomly selected farmers each from two local governments (Odeda LGA and Ado-Odo LGA) in Ogun State, Nigeria. Ogun State was chosen for this study because it is considered to be a state with a high potential for cassava production, hence a natural location to study for cassava Its proximity to the ports in Southern Nigeria also provides a good starting point when thinking about marketing cassava products, particularly for export. Additional data was gotten from secondary data and interviews with key informants including farmers, processors, transporters, and government officials in various ministries between 2008 and 2012.
    6. 6. Summary of key findings… • Cassava production structure in Nigeria  Highlylabor intensive  Minimal use of purchased inputs and mechanization • Gender participation  Very active female participation (throughout but particularly in planting, weeding and processing)  Even less use of purchased inputs like fertilizer  Lower yields of about 12.8 tons/ha compared to the representative farmers with yields of 15.7tons/ha
    7. 7. • Assumptions:  Rural farmers in Ogun state  Yield of about 15.7 tons/hectare  FOB of $200/ton of cassava chips  Fertilizer input subsidy, exchange rate distortions,• Back tracking  Production costs  Processing costs from tubers to cassava chips  Transportation costs  Export price of cassava chips
    8. 8. Average cassava growers profitability inproducing cassava chips for the export market• Results: No comparative advantage in production of cassava for the export of the root nor for cassava chips at $200 a ton Social cost benefit ratios for cassava production for cassava chips over various cassava chip FOB prices3.002.502.001.501.000.500.00 $200.00 $250.00 $300.00 $350.00
    9. 9. Nigeria’s cassava production within a global context (Oct/Nov 2011): Farm Farm gate gate Urban market (RM 1) (RM) (2) price**Price/ton (Naira) 6000 14000 36000 This is just cassava rootTransportation (Naira) 4000 4000 4000 prices!Cost at bigger market orBorder/ton (Naira) 10,000 18,000 40,000@ exchange rate ofN156=$1 ≈$65 ≈$115 ≈$256 Yields Thailand: 1,700-1800 baht/ton in Nigeria ≈11.7 2012 = $55-59 from 2,000 -3000 baht/ton ($60- $100 )in June 2011 Thailand ≈ 23 from ≈ $34 in 2009**= FAO food outlook, 2010, ** Nigerian agricultural Marketing information system (NAMIS
    10. 10. Cassavaroots This is just cassava root prices… We have not talked about processing costs for conversion to chips, starch or High quality cassava flour (HQCF)
    11. 11. Summary: Global context Nigeria is not currently able to compete favorably with major exporters of cassava products (globally) like Thailand nor with some of her neighbors in West Africa. But Nigeria has a large domestic market and the cassava plan within the current Agriculture Transformation Agenda (ATA) rightly stresses this…“The overarching strategy of the cassava transformation planis to turn the cassava sector in Nigeria into a major player inlocal and internationalStarch, Sweeteners, Ethanol, HQCF, and dried Chipsindustries by adopting improved production and processingtechnologies, and organizing producers and processors intoefficient value-added chains”.
    12. 12. The cassava transformation plan of theATA places strong emphasis on… Developing strong value added chains of cassava products by linking demand for cassava for cassava- based products to reliable supply Reducing Nigeria’s importation of industrial cassava based products like starch Doubling of cassava productivity from 12 to 25 tons by 2014 Creation of Jobs and increased income Improving the role of cassava in securing national food security through the increased use of bio fortified cassava varieties
    13. 13. An assessment of the current situationCassava processors in Ogun State Out of 3 large scale cassava processors in Ogun state, only 1 was in operation, Thai Farms (recently acquired by FLOURMILLS Nigeria) The processing facility had the capacity to produce 60Metric tons of HQCF daily but was producing between 8-11 tons daily due to poor output market From our interview with the NICAPMA: Nigeria Cassava Processors and Marketers Association CASSAPRAN, we learnt that less than 5 out of the 33 medium scale processors with capacity to produce at least 2.5tons of HQCF daily in Ogun State were in operation One of the medium scale facility we visited had capacity to produce 5 tons of HQCF but was producing about 2.5 tons due to poor output market
    14. 14. Major concerns… The main challenge mentioned by both medium and large scale processors was the limited market for HQCF More emphasis was put on the delays getting product from farms and not on the insufficient amount of the input. • The preference is to have roots delivered and processed within a 24 hour period • To address this, medium scale processors mentioned a preference for local varieties which lasted longer than improved varieties Access to credit to procure necessary machines as well as for the maintenance and repair of their machines
    15. 15. Major concerns… Medium scale processors fear being priced out of the market by larger firms, particularly with their belief that the government wants to import large scale processors from China The large scale processor mentioned the issue of product standardization. Only cassava with at least 19% starch content was considered acceptable for processing Both large and medium scale processors complained about poor electricity supply…the high operational costs due to the need to use generators as well as because of operating at such low capacity levels
    16. 16. Processing and marketing costs for HQCF and Cassava Starch in Ogun State, Nigeria Medium Scale Large ScaleHQCF: cost of production(Naira) 80,000 > 65,000**HQCF: cost of production (dollar)* 512.82 416.67Starch: cost of production (Naira) 150,000 -Starch: cost of production (dollar) @ (N156=$1) 961.54 -Sale price for HQCF in last quarter of 2011 100,000 80,000Dollar equivalent at N156=$1 641.03 b 512.82Sale price for starch in last quarter of 2011 160,000 -Dollar equivalent at N156=$1 1025.64 -Price of cassava starch from Thailand is about $450/ton in 2012 compared to $440in 2011, and $340 in 2009.*** price of cassava flour is usually lower. * Exchange rate N156=$1 **The actual cost for the last quarter of 2011 was higher than this as they were not working at full capacity *** = gotten from the Thai Tapioca starch association
    17. 17. Some observations… In the absence of government intervention, the domestic market for cassava products does not compete favorably with import substitutes either. • The cost of producing cassava starch is close to $970/ton compared to corn starch which ranges between $300-$500/ton • The domestic sales price of HQCF is between $500-$650 /ton compared to the Thai export price of $400-$450/ton.
    18. 18. Summary of current challenges… Market for HQCF is still thin Skepticism by processors about the guaranteed market for their HQCF at acceptable prices Poor infrastructure and electricity and their associated effect on production costs Lack of credit to make necessary investments in machines and other inputs Standardization, cost of verifying starch content too high for small and medium scale processors Limited emphasis on gender specific challenges across the chain
    19. 19. Moving forward… Continuing ongoing efforts to • Expand markets for cassava based products  There is a clear need for a well developed market for cassava based products that will permit processing firms to operate at higher/full capacity thus lowering per unit cost and ensuring that more participants along the chain can benefit from this cassava revolution.  Increasing local production is not enough and without a ready market for cassava products, this could even be detrimental • Increase farmers and processors confidence in the governments long term commitment to the cassava revolution • Ensure farmer/processor access to credit and other inputs • Improving infrastructure to lowering processing costs
    20. 20. Moving forward Procedure for ensuring that quality of inputs and consequent outputs of cassava based products can be verified and a minimum standard guaranteed Similar studies on processors and other actors in the cassava value chain in other states to determine if constraints observed in Ogun are widespread More studies to identify any success stories of arrangements (particularly cluster arrangements) between actors in the cassava value chain and to monitor the rate of development for market for cassava based products. Need to incorporate within the current strategy programs/approaches to address particular needs of different actors e.g. women and youth • Production • Opportunities within small and medium scale enterprises (entrepreneurship training and improving the quality of products and packaging)
    21. 21.  Strategies for promoting job creation and improved incomes through the cassava value chain need to decide and appropriately differentiate programs/policies targeted at processors at different scales of operation More deliberate efforts to capture regional market share and other niche markets • Improving the price, quality and packaging of cassava based products
    22. 22. Thank you…

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