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

1. Assessing the Comparative
Advantage of Domestic
Agriculture: 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, 2012
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

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. 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. 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. 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. 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. • 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. Average cassava growers profitability in
producing 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 prices
3.00
2.50
2.00
1.50
1.00
0.50
0.00
$200.00 $250.00 $300.00 $350.00

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 root
Transportation (Naira) 4000 4000 4000 prices!
Cost at bigger market or
Border/ton (Naira) 10,000 18,000 40,000
@ exchange rate of
N156=$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. Cassava
roots
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. 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 plan
is to turn the cassava sector in Nigeria into a major player in
local and international
Starch, Sweeteners, Ethanol, HQCF, and dried Chips
industries by adopting improved production and processing
technologies, and organizing producers and processors into
efficient value-added chains”.

12. The cassava transformation plan of the
ATA 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. An assessment of the current situation
Cassava 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. 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. 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. Processing and marketing costs for HQCF and
Cassava Starch in Ogun State, Nigeria
Medium Scale Large Scale
HQCF: cost of production(Naira) 80,000 > 65,000**
HQCF: cost of production (dollar)* 512.82 416.67
Starch: 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 80,000
Dollar equivalent at N156=$1 641.03 b
512.82
Sale 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 $440
in 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. 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. 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. 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. 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.  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. Thank you…