PROFILE ON PRODUCTION OF CASSAVA CHIPS

 

Cassava Chips and is a product derived from cassava. Nigeria is the largest producer of cassava in the world with a yield of about 54 million tonnes of cassava in 2012. Cassava is a tropical perennial crop cultivated mainly for its edible root, is a staple food consumed worldwide and provides much economic benefit to the producers. Cassava can be processed in a variety of ways to arrive at different products including as gari, fufu, lafun, starch, chips and pellets etc. Cassava chips are unfermented white dried products of cassava with an average diameter of 3mm – 5mm often used as a carbohydrate base in the animal feed industry particularly in Europe, or milled into flour for other uses such as in the production of ethanol, cakes, dough-nut and biscuits.

This profile envisages the establishment of a plant for cassava chips production with a capacity of 3,000 Tons per annum. The estimated demand for Cassava Chips in Nigeria was found to be in excess of 1,500,000T/annum. The plant will create employment opportunities for 32 persons. The total investment requirement is estimated at about N32.982million, out of which N5.0 million is required for plant and machinery.

The project is financially viable with the following profitability indices:

 

 Average Return on Assets                             10.7%

 Average Return on Equity                              86.0%

 Average Return on Sales                                16.4%

 Average Debt service coverage                      17.8

 Average proportion of Debt                            0.116

 Average proportion of Equity                         0.884

 Average Debt/Equity Ratio                            11.6:88.4

 Average Operating ratio                                 68.9%

 Average current ratio                                      15.25

 Undiscounted Pay-back period (yr)               3.2

 Net present Value (N000)                              52555.9

 Internal Rate of Return                                   63.3%

 Profitability Index                                          1.6

 Break Even point(Based on year1)(Sales)     40143.6

 Fractional capacity utilization                        0.425

 Selling Price N000.00                                    50.0000

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I.                 PRODUCT DESCRIPTION AND APPLICATION

 

Cassava is a tropical perennial crop cultivated mainly for its edible root, is a staple food consumed worldwide and provides much economic benefit to the producers. Cassava can be processed in a variety of ways to arrive at different products including as gari, fufu, lafun, starch, chips and pellets, etc. Cassava chips are unfermented white dried products of cassava with an average diameter of 3mm – 5mm often used as a carbohydrate base in the animal feed industry particularly in Europe, or milled into flour for other uses such as in the production of ethanol, cakes, dough-nut and biscuits.

 

 

II.               MARKET STUDY

 

The demand for Cassava Chips as an industrial product is wide. It cuts across so many industries such as distilleries, pharmaceutical, food and most especially the animal feed industry. The estimated demand for Cassava Chips in Nigeria was found to be in excess of 1,500,000T/annum. There is a high export demand in China especially for ethanol production. In fact, Nigeria is planning to export chips to China to the tune of 1,100,000T this year. This is a clear indication that Cassava Chips has a high market potential. An importer of dried chip from China has expressed interest in importing 520,000 tons of chips every year from Nigeria or 10,000 tons per week. This brings the total potential demand of chips and chunks to 900,000 tons per annum. Therefore to produce 900,000MT, a total of 3.36 million MT of cassava roots are needed. If the average yield/ha of cassava is 25 MT the area to be cultivated will be 134,280 hectares. If one cluster for the production of chips is about 120ha, 1,119 locations will be required. An estimated 268,560 jobs will be created. The only way chips from Nigeria can be competitive is to produce at a price that is cost effective for the producer, processor and exporter and to identify a cheap means of transport of dried chips from the hinterland to the ports and an elimination of all import tariffs at the ports in China. The principal constraints of the dried cassava chip market is the low productivity of cassava, leading to high prices of dried chips, high transport costs, and lack of strong markets, as demonstrated by the wide swing in prices of dried chips due to oversupply by farmers at harvest and a lack of storage capacity. Over the course of a single year, a 100Kg bag of chips can be bought from farmers for as little as N2,000 and as much N3,000.

 

III.            RAW & AUXILIARY MATERIALS

 

The raw material for Cassava chips production is cassava roots. Cassava is grown in almost all the states in Nigeria with Nigeria being the highest producer of cassava in the world with an output of about 54 million tonnes in 2012. The table2 shows cassava production output between 2008 and 2012.

 

Year

Output(Tonnes)

2008

44,582.000

2009

36,822,250

2010

42,533,180

2011

52,403,455

2012

54,000,000





Table 2 Output of Cassava (2008-2012)   

Source: http://www.manufacturingtoday.com.ng

Benue and Kogi state in the North Central Zone are the largest producers of cassava (IITA, 2004).


 

Cross River, Akwa Ibom, Rivers and Delta dominate state cassava production in the South South. Ogun, Ondo and Oyo dominate in the South West and Enugu and Imo dominate production in the South East. Kaduna alone in the North West is comparable in output to many of the states in the southern regions at almost 2 million tonnes a year with very little currently produced, in the North East. 

 


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