CASSAVA PRODUCTION: FROM START TO

FINISH
By Agroraf - April 11, 2018

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. Cassava production therefore becomes imperative in the
real Nigerian context.

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. According to a priori investigation, the profitable way for a farmer to market his
cassava is to add value to it; especially by selling it as garri.
The analysis of the present market situation shows that selling as toasted cassava granules (i.e.
garri) will survive the existing competition because demand for garri is elastic. On another hand, an
a priori fact gotten from a feasibility study carried out on the market for dried high quality cassava
peel DHQCP reveals a raving demand for it as well. Hence, my resolve to include the latter because
it comes with no additional cost, but instead, with additional income, high productivity and robust
economics of scale.  For more details, kindly see this video.

More so, the financial analysis shows that the proposed project is not only profitable, but also
viable, feasible and sustainable. From the second year, the project will generate sufficient cash to
sustain production, hence; payback period is less than a year and a half (i.e. 11/2years).

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.

TABLE OF CONTENT

Cover sheet                                                                                 1

Executive summary                                                                  2

Table of content                                                                         3

List of tables                                                                                4

Introduction                                                                                5

Production Plan                                                                          7

Marketing Strategy and Plan                                                   11

Organizational and Management Plan                                  12

Financial Analysis                                                                      14

SWOT Analysis                                                                           25

Conclusion                                                                                   26

Appendix                                                                                      27

Business Profile

Personal Information

Environmental and Social Impact of the Value Chain Business Activities

 
 

LIST OF TABLES

Table 1: Input Suppliers and Target Markets

Table 2: Personnel Requirement

Table 3: Fixed and Variable Costs

Table 4: Recommended Inputs

Table 5: Labour input (per annum)

Table 6: Productive Asset Requirements

Table 7: Summary of Cost Estimate

Table 8: Summary of Returns

Table 9: Depreciation of Equipment

Table 10: Gross Margin Analysis (for each product)

Table 11: Balance sheet for the First Production Year

Table 12: MS-Excel worksheet showing estimated NPV and IRR

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
demand.

Cassava peels are perishable and are mostly disposed of by burning or allowing them to rot in
heaps, causing pollution. On the other hand, several researchers have confirmed the suitability of
cassava peel for feeding livestock and the potential of cassava peels as a good substitute for
maize for all classes of both ruminant and non-ruminant animal. High levels of HCN in cassava
peel based products are reduced substantially through the innovative processing where grating,

dewatering, fermenting and sun drying results in reduction of hydrocyanic acid (HCN) levels below
the permissible levels of 100 ppm. Cereal production particularly maize in Nigeria is not sufficient
to cater for the growing demand of food, feed and industrial uses. Identifying alternate feed
resources as a substitute for maize would reduce feed costs and spare maize (to a large extent) for
food and industrial uses.

Description of Business

Many people are into cassava farming and garri production in southwest Nigeria, yet the local and
international demand is still high.  More so, many feed millers are demanding for the Dried High
Quality Cassava Peel (DHQCP) mash because it’s cheaper than and as efficient as the maize
substitute. To thrive in the business as a new entrant, creativity and innovativeness in farm
management, quality control, effective garri marketing and efficient delivery of dried high quality
cassava peel is necessary. The branding and packaging of the garri and DHQCP by AGRORAF
FARMS is expected to be diligently explored and exploited.  Inclusion of DHQCP production is of
essence because it creates additional income with no additional cost. This is due to waste
conversion propensity and the economics of scale (in using the same set of machine for both garri
and DHQCP processing).

AGRORAF INTEGRATED FARMS is in Oyo State on latitude 793596.433mNLat and longitude

552975.505mELon. It covers a large expanse of land, however; only two hectares will be put into
use for a start.

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 create supplementary employment opportunities (every year) by sustaining the
business, expanding, thereby etching a landmark in the industry (in the long run).

Business Objectives

The objectives of the proposed cassava farming for garri and Dried High Quality Cassava Peel
DHQCP production project are:

To maximise profit in the short run;

To realise a profit differential on yearly basis; and

To sustain the improvement in productivity and market capacity over time.

 2.0 REQUIREMENTS

2.1 PRE PRODUCTION REQUIREMENTS

The basic requirements before production include: acquiring a farmland, developing the farmland
to suit cassava production, selecting the best variety of cassava, and selecting the best cassava
stem cutting to plant.

2.1.1 Acquiring a Farmland

Cassava is a crop capable of surviving drought. However, it grows best on a flat or slightly slope
land composed of humus soil which has capacity to retain water.

The land must be in an area with an adequate amount of rainfall. Some of the qualities one should
watch out for while acquiring land for cassava planting include:

the land should contain dense vegetation,

check for the texture of the soil, and

the land must be flat or gently slope due to reduce the tendency of erosion to occur, washing away
the soil’s nutrient.

A land which has thick vegetation is likely to favor the cultivation of cassava, drastically increasing
the yield. The dense vegetation serves as covering for the soil, reducing the rate of water loss from
the soil and improving the organic content of the soil when leaves fall and decay.

For best yield of cassava, one should make sure that the land acquired is mostly loamy soil. Sandy
or clay soils do not support proper growth of cassava. Also, deep loamy soil is more easily tilled,
contain less gravels, and more nutrient that the cassava plant will need.
2.1.2 Develop the Farmland to Suit Cassava Production

A land with good soil favors the quick growth of cassava. Plants grown on such land usually have
high resistance to pests and diseases. However, if one is not so fortunate to get a fertile land to
cultivate cassava all hope is not lost.

There are some agricultural practices one can carry out on a less suitable land to improve its
suitability for cassava production. They include:

Application of manure

The fertility of the soil could be greatly increased by adding manure to the land. One could apply
green manure in the form of dead plants or plant crop such as beans, groundnut, and the like.

Work green materials into the soil while ploughing the land to improve the soil’s texture, nutrient
and water retention capacity. Animal wastes are also good source of organic manure.

Inter-cropping cassava with other plants

Legumes are excellent source of soil nutrients. Their falling leaves rot in the ground, improving the
soil’s characteristics. Inter-cropping cassava alongside crops like melon, cowpea, maize, rice, and
legumes improves the soil’s nutrient.

Mulching the farmland

Mulching involves covering the surface of the farmland with lots of dead foliage (dead mulch).
Examples of materials you can use as dead foliage are: rice husk, coffee hull, and foliage from
leguminous crops.

If one have to cultivate cassava on a steep sloped land, then planting cassava varieties with quick
and low-growing leaves will be helpful. The low leaves make a good covering for the ground and
reduce the chances of erosion. Furthermore, one could also build ridges along the slope to prevent
erosion and hold more water.

2.1.3 Selecting the Best Variety Of Cassava

To ensure maximum yield, it is important to select the best variety of cassava. This will also go a
long way to increase your plants’ immunity against disease, rapid growth, and increase their soil
quality. Some qualities to check for while selecting the best variety include:

Look for varieties that have a lot of dry matter and are good for food.

Select varieties that bulk (swell) quickly in the ground, producing large quantities of food.

Look for variety with good ground storability. A good variety of cassava (such as TMS 419)
matures in about 8-9 months. However, they can be left (stored) in the ground for up to 18 months
before harvest.

Look for a variety with high resistance against pests and diseases.
2.1.4 Select Healthy Cassava Stem Cuttings

After locating the best variety of cassava, the next step is to select healthy cassava stem cuttings
for planting. This is important to ensure the production of good and marketable cassava crops. The
following are qualities to look out for when selecting healthy cassava stem cuttings:

Healthy cassava has strong stems and branches with fresh leaves.

Avoid selecting stem from plants that have been damaged by pests and diseases.

Cut cassava stem of length 20-25cm and select those that have at least 5-8 nodes.

For first planting, cassava stems can be bought from local farms and market. However it is more
beneficial to get the stem from one’s farm for next planting.

2.2 PRODUCTION REQUIREMENTS

2.2.1 Planting the Cassava

After tilling the land with either manual or mechanical labor, planting cassava stems can be
commenced. Plant the stems with about two-third of the total length buried in the ground.

Cassava farming requires water; it is best for you to start planting early (usually immediately the
rains begin) to ensure rapid growth and maximum yield. With proper preparation and planting, 1
hectre of land can produce about 12-15 tons of cassava (depending on the variety).

After planting, constant weeding is required to rid the farm from weed that competes for nutrient
with the cassava plant. Remains of leguminous plants should also be left or tilled into the ground
to improve soil nutrients.

Weeding is usually done two week after planting. To further enhance the growth and overall yield of
the farm, one will need to apply fertilizers.

2.2.2 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, the farmer should wait until rains resume before replacing failures.

2.2.3 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. Farmers should use their local knowledge to decide which weeded
material should be left on the plot or removed and discarded. Generally, small broad-leaved 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 the farmer 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.

2.3 Production Plan: 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.

2.3.1 Peeling and washing cassava roots

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.

2.3.2 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.

2.3.3 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.

2.3.4 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: passes through 0.25 mm to 0.5 mm aperture sieve

Fine: passes through 0.5 mm to 1 mm aperture sieve

Coarse: passes through 1 mm to 1.25 mm aperture sieve

Extra coarse: passes through 1.25 mm to 2.0 mm aperture sieve.

2.4 Production Planning of Dried High Quality Cassava Peel

An innovative processing technology for converting fresh peels into high quality cassava peel
(HQCP) mash for use as livestock feed has been developed. The process is simple and can be
carried out by small-scale processors, more than 80% of them women, to transform waste into a
valuable feed resource, generate new incomes, create employment, improve livelihoods, and clean
up the environment around cassava processing centres. The various steps followed in processing
peels into DHQCP are listed below:

Sorting;

Grating;

Pressing;

Sieving;

2.4.1 Sorting

The quality of the finished product is as good as the quality of the raw material used, so cassava
peels that enter the process should be fresh (harvested the same day) and free from contaminants.
When processing is delayed beyond a day, the peels start to ferment and become soggy/slippery
and difficult to grate. Stumps, large-sized wood tubers, and other foreign materials have to be
sorted out and discarded before grating the peels to avoid damage to the rasper.

 2.4.2 Grating

Grating has to be done three times because of the tough nature of peels. With each grating, the
particle size reduces gradually. The reduced particle size facilitates rapid dewatering, drying, and
easier handling.

2.4.3 Pressing

Pressing the grated peel requires a hydraulic jack, wooden planks, woven bags, and a metal frame
which holds loaded bags of freshly grated peels. Grated peels are packed in small quantities of
8−10 kg and the bags are stacked in the metal frame. Using planks and jacks, the grated peels are
squeezed to rapidly get rid of as much water as possible.

Approximately 50% of the weight of grated material is lost as the water is removed during this
process. The resulting cassava peel cake after dewatering has around 38−42% moisture and has a
shelf life of 5−7 days. As is, cassava cake can be fed directly to cattle, goats, sheep, and pigs.
2.4.4 Sieving

To process it further into dry mash, cassava peel cake is re-grated to loosen it into a free flowing
material that can be subjected to sieving to separate the fine mash (lower fiber, high energy
content) from coarse mash (higher fiber, lower energy content). Sieving can be done manually or by
using a mechanical device.

3.0 POST PRODUCTION REQUIREMENT

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, the company must
give due consideration to the consumer’s choice of quality that will satisfy their needs. More so,
DHQCP will be of two (2) kinds: the fine mash (for poultry, fish, and pigs); and the coarse mash (for
cattle, sheep, goat and pigs).

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. Furthermore, the DHQCP (both fine and coarse) should be
packaged in the 50kg rubber bags for easy storage and delivery to feed millers.

3.3 Competition and Target Market

Ab initio, while carrying out feasibility survey, questionnaire were administered to 500 randomly
sampled staff of both Federal and State secretariat in Ibadan (Oyo State, Nigeria) and 500
randomly sampled buyers (across 3 major markets in Ibadan, Oyo State, Nigeria); making a total of
1000 respondents. Out of which, 95% of them said they will prefer packaged garri to the open
market ones at the prevailing market price. Hence, a ready market for the packaged garri is
guaranteed.

More so, when carrying out feasibility study, 15 outstanding feed millers in Ibadan North East and
Ibarapa East Local Government Areas were reached out to and they have all shown ardent interest
in buying both fine and coarse mash of the DHQCP. They are ready to buy 50kg of DHQCP (both
fine and coarse mash) at #3000. In other words, there is ready market for DHQCP.

Table 1: Input Suppliers and Target Markets

Company Supplies Farm Supplies Target Market

GNLD–Supergro Agroraf farms —cassava Dried High Quality Cassava
cuttings Peels supplied to Feed
 Millers
Packaged Garri supplied to
FIIRO—processing equipments
Super stores like Shoprite
KAYRAM WATER AND GEOPHYSICS—
borehole etc
AGBELOBA AGROCHEMICAL LIMITED
— Fertilizers, herbicides and
insecticides

4.0 Organizational and Management Plan

4.1 Ownership of the Business

The proposed cassava farming for garri and Dried High Quality Cassava Peel (DHQCP) production
business will be solely owned by the company.

4.2 Management and Personnel Requirement

The proposed farm will require a qualified farm manager with profound knowledge and experience
in farm management, two farm assistants with innate skill and experience in cassava farming and
two processors with adequate knowledge and technical know-how of both garri production and
DHQCP production.  Table 1 explains further in details:

Table 2: Personnel Requirement

Personnel Attitude Skill Knowledge Qualification

Highly skilled in
Must be zealous, Knowledgeable in
various innovative
determined, general farm Minimum of
FARM MANAGER techniques in
dedicated, and management and HND/BSc.
cassava
dogged record keeping
production
Having a robust
Must be timely, Highly skilled and
and adequate
FARM diligent, smart,  experienced in Minimum of Sec.
knowledge in
PROCESSOR dynamic and handling sch. Cert.
cassava
open to change machines
processing
Wealth of
Must be time knowledge in
Innate skill in
FARM conscious, cassava Minimum of
cassava
ASSISTANT hardworking and production primary sch. Cert.
production
honest garnered through
experience

 
4.3 Details of Salary Schedule

The farm manager is assumed to be paid #30,000 per month while each farm assistant will be paid
#200,000 per annum and the processors, #20,000 monthly.

5.0 FINANCIAL ANALYSIS

5.1 Cost-Returns Analysis

The following table summarizes all the costs that would be involved in executing this project.

Table 3: Fixed and Variable Costs

Fixed Cost # #
1ton/hr stainless steel Grater 480,000
Pressers (more than 10bags at a time) 150,000
Stainless steel fryers 260,000
Generator 150,000
Borehole 500,000
Two 2,500L tanks 80,000
Scaffolding 40,000
Farm house construction 150,000
Total Fixed Cost 1,810,000  
  1,810,000
Variable Costs  
Cassava Cuttings  for 2 hectares 50,000  
5 bags of fertilizer 33,000  
Agro-chemicals 19,500  
Fuel     32,625  
Salary (Manager / annum) 360,000  
Salary (2 processors/annum) 480,000  
Salary (2 Permanent labourers/ annum) 400,000  
Total Variable Cost 1,375,125  
  1,375,125
TOTAL COSTS 3,185,125

Table 4: Recommended Inputs

Inputs Type Qty needed/ha. Unit cost (#) Total cost (#)
Fertilizer NPK 15:15:15 300kg 5,500 33,000
Soil improvement Super gro 5L 15,000 15,000
 chemical
Insecticide DD force 2L 4500 4,500
Cassava cuttings TMS 419 50 bunches 1,000 / bunch 50,000
Fuel PMS 3L / day 145/L 32,625
TOTAL       135,125

Table 5: Labour input (per annum)

Cost / person / annum

Labour Required Quantity Total (#)
(#)
Farm manager 1 360,000 360,000
Permanent farm assistants 2 200,000 400,000
Processors 2 240,000 480,000
TOTAL     1,240,000

Table 6: Productive Asset Requirements

ITEMS Quantity Unit Cost (#) Total (#)

1ton/hr stainless steel
1 480,000 480,000
Grater
Pressers 1 150,000 150,000
Generator 1 150,000 150,000
Stainless steel fryers 1 260,000 260,000
Borehole 1 500,000 500,000
Tanks 2 40,000 80,000
Scaffolding 1 40,000 40,000
Farm house 1 150,000 150,000
TOTAL 1,810,000

Table 7: Summary of Cost Estimate

Description of Activity Cost Estimates (#) Remark

Labour requirement 1,240,000 §  Farm manager
§  Farm assistants
 §  Processors

§  Fertilizer
§  Insecticides

§  Super gro
Input support 135,125
§  TMS 419

§  Fuel

·         1ton/hr stainless steel Grater

·         Pressers

·         Generator

·         Fryers

Productive assets 1,810,000 ·         Borehole

·         Tanks

·         Scaffolding

·         Farm house

TOTAL 3,185,125  

RETURNS

Returns from Sale of Garri

The type of variety that will be planted (i.e. TMS 419) will give about 40 tonnes of cassava (per
hectare) after 10 months.

In other words, from the available 2ha. of land, 40 tonnes of cassava tubers is expected.

And experience has it that 1 tonne of cassava tuber is equivalent to 5 baskets. In other words, 40
tonnes makes up 200 baskets.

And 3 plastics of garri can be gotten from a basket.

Therefore, 600 plastics of garri is realizable from the 2 hectares of cassava farmland.
Since each plastic of garri costs #2,500 at the moment;

Therefore, (600 X #2500) == # 1,500,000 is the expected returns from the 2 hectares of cassava
farmland.

Returns from Sale of Dried High Quality Cassava Peel

At a start, the company will randomly source for 50 tonnes of cassava peels in the first year of
production.

50 tonnes is equivalent to 50,000kg.

And the Dried High Quality Cassava Peel (DHQCP) will be bagged in 50kg rubber bag.

Therefore, the total number of bags realizable from 50 tonnes is 1000 bags.

Hence, (1000 X #3000) == # 3,000,000 is the expected returns from DHQCP

Table 8: Summary of Returns

Product Estimated Yield Packaged Units Unit Price (#) Total Value (#)
Garri 600 plastics/ha 600 plastics 2500 1,500,000
DHQCP 50 tonnes 1000 bags 3000 3,000,000
Total Revenue       4,500,000

The depreciation of hoe, cutlass, wheel barrow, grater, presser and fryer is shown in table 8; using
the straight line method:

i.e. dt = C – S

                 L

Where dt = depreciation;

C = cost of asset;

S = salvage value.

Table 9: Depreciation of Equipment

ITEM COST (N) SALVAGE VALUE USEFUL LIFE DEPRECIATION (N)

 (N) (YRS)
Grater 280,000 100,000 10 18,000
Presser 150,000 70,000 10 8,000
Fryer 460,000 200,000 10 26,000
Generator 150,000 30,000 10 12,000
Borehole 500,000 200,000 10 30,000
Total       94,000

Therefore, profit from the harvest in the production year is:

Profit = TR – TVC – Total Depreciation

= N (4,500,000 – 1,375,125 – 94,000)

= N 1,502,875

While,

Gross Margin = TR – TVC

= N (4,500,000 – 1,375,125) = N 3,124,875

Return per capital invested= Net income / Gross return

= (4,500,000 – 3,185,125) / 3,124,875

= ₦ 1,314,875/ ₦ 3,124,875

= 0.42

The return per capital invested was found to be 0.42

This means that for every naira invested in this project, a 42K gain will be realized.

The Benefit-Cost Ratio is estimated as follows:

Benefit-Cost Ratio (BCR) = Benefit / Cost

 
=       ₦ 4,500,000 / ₦ 3,185,125

= 1.413 ≈   1.4

Hence, this project can be adjudged to be a viable venture since the Benefit-Cost Ratio is greater
1.

Table 10: Gross Margin Analysis (for each product)

Gross Margin
Product Total Revenue Total Variable Cost (TR – TVC)

Garri 1,500,000 1,375,125 124,875

DHQCP 3,000,000 1,375,125 1,624,875
OVERALL GROSS
4,500,000   1,749,750
MARGIN

5.2 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 = # 1,810,000

Unit VC = # 1375

Unit Price = # 3000

Contribution = Unit Price – Unit VC

= # (3000 – 1375)

= # 1625

Note that Contribution is the gross margin per unit of DHQCP.

To break even in this proposed DHQCP production, the amount of bags that must be sold:
TFC / Contribution;

i.e.    Break-Even Point =   N 1,810,000 / # 1625

= 1113.85 ≈ 1114

In order words, one will break even producing DHQCP immediately after the sale of 114 bags of
DHQCP in the second year of production. 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.
Therefore, payback period is less than a year and a half (i.e. 11/2years).

Table 11: Balance sheet for the First Production Year

1) Cash 21,000.00
2) Accounts Receivable 5,250.00
3) Fertilizer and Supplies   102,500.00
4) Investment in Growing Crops 630,000.00
5) Crops Held for Sale 50,850.00
6) Other Current Assets           –
 
7) TOTAL CURRENT ASSETS 809,600
 
8) Machinery and Equipment 1,660,000.00
9) Buildings 150,000.00
10) Land 1,100,000.00
 
11) TOTAL NONCURRENT ASSETS 2,910,000.00
 
12) TOTAL FARM ASSETS 3,719,600.00
 
LIABILITIES AND NET WORTH:
  January 1 (NGN-in naira)
13) Accounts Payable/Accrued Expenses 5,100.00
14) Income & Social Security Taxes Payable 16,500.00
15) Current Portion: Deferred Taxes             –
16) Current Loans Due Within One Year 130,000.00
17) Accrued Interest 28,477.00
 
18)TOTAL CURRENT LIABILITIES 180,077.00
 
19) Noncurrent Portion: Deferred Taxes          –
20) Noncurrent Portion: Intermediate Loans 154,933.42
 21) Noncurrent Portion: Long-term Loans 526,494.71
 
22) TOTAL NONCURRENT LIABILITIES 681,428.13
23) TOTAL FARM LIABILITIES 861,505.13
24) FARM NET WORTH 2,858,094.87

25) TOTAL LIABILITIES AND NET WORTH 3,719,600.00

5.3 Investment Analysis

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
viable. The payback period (expected number of years required to recover the original investment)
is about 1 ½ years. The quick payback period implies low risk in the proposed investment.

More so, given the positive NPV, the project can therefore be accepted as viable. We will also
accept the feasibility and sustainability of the proposed garri cum DHQCP production given the fact
that IRR (i.e. the rate at which Net Present Value equals zero) is greater than the assumed market
interest rate (i.e. 139% > 15%). It therefore implies that if the project is established with  an initial
outlay of  ₦ 3,185,125 on a loan of the said amount, then a surplus of  ₦ 11,899,572.94 is realisable
(after paying the initial outlay) in 5 years time because the internal rate of return (which is 139%) is
about 9 times the assumed interest rate on loan (which is 15%).

Given that the status quo (of labour cost and prices of other input materials) remains the same in
the next 5 years, the NPV and IRR are analyzed as follows:

Table 12: NPV AND IRR OF THE CASSAVA ENTERPRISE FOR THE FIRST 5 YEARS USING 15%
DISCOUNT RATE

YEAR CASH FLOW/HARVEST YEAR CASH FLOW/HARVEST

1 -3185125 1                   -3185125
4500000 4500000
2 4500000 2 4500000
3 4500000 3 4500000
4 4500000 4 4500000
5 4500000 5 4500000
NPV= TOTAL PV (for 5 years) – INITIAL OUTLAY          IRR = 139%
NPV= NGN( 15,084,697.94 – 3,185,125)
        = NGN 11,899,572.94

Analytical Tool Used: MS-Excel

 

The IRR is the discounting rate that equates the present value of the project’s expected cash
inflows to the present value of the project’s cost. If the net present value exceeds the cost of the
funds used to finance the project, a surplus remains after paying for the capital. The IRR for this
proposed project is 139%, implying that the venture is profitable to operate even if the planning
horizon is only five years. In fact, the IRR is 9 (nine) times the discounting rate.

The findings of the analysis indicate that the proposed garri processing cum DHQCP production 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.

5.4 Performance Indices of Garri Production

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

5. Percentage return on investment = (TR / TC) X 100

. Percentage of gross margin = (Gross margin / Total cost) X 100%

1. Gross Margin = Total sale income – Total variable cost

= N (4,500,000 – 1,375,125)

= N 3,124,875

1. Gross Margin per plastic of garri = Gross Margin / Total Production

= N 3,124,875 / 600 plastics = N 5208.125

1. Production costs of garri per plastic = Total variable cost / plastic of garri produced

= 1,375,125 / 600

= 2291.875 ≈   2292

1. Percentage return on variable cost = (Gross Margin /Total variable cost) X 100
= (N 3,124,875 / N 1,375,125) * 100

= (2.27) * 100

= 227%

1. Percentage return on investment = (TR / TC) X 100

= (N 4,500,000 / N 3,185,125) * 100

= (1.41) X 100

= 141%

1. Percentage of gross margin = (Gross margin / Total cost) X 100%

= (N 3,124,875 / N 3,185,125) X 100%

= 0.981 X 100%

= 98.1%

6.0 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 project is pivotal to its success. The strengths, weaknesses, opportunities and threats of
this proposed project are as follows:

1. 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. AGRORAF FARMS have the time,
passion, determination and tenacious doggedness beaming on all shady paths to breakthrough.
We believe so much in the project. More so, we are fully equipped with the technical know-how and
skills of cassava farming, garri production and production of dried high quality cassava peel (for
feed).

And we can effectively and efficiently manage the project given our 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 administration, 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
past business management experience must have been learned and would be re-invigorated while
executing future plans to extract the best from my courage, devotion and wholesome commitment.

1. Weaknesses: Paucity of funds is usually a greater constraint. Without means of finance, even the
best of ideas may not come to fruition or reality. However, aside the available equity, additional
funding would be sourced to offer the necessary financial backbone.

2. Opportunities: The high market demand for garri and dried high quality cassava peel DHQCP
leaves a loop hole to exploit and a goldmine to diligently explore.

3. Threats: At any season in mono-cropping, 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 is not likely to rear its ugly head. There is therefore no foreseeable threat of the
herdsmen on the farmland, given its location.  

7.0 CONCLUSION

The proposed cassava farming for garri and Dried High Quality Cassava Peel (DHQCP) production
has a reasonably high chance of success at the start and it’s profitable. Aside the profitability, most
fascinating about this proposed project is that it directly depicts sustainable agriculture as it were,
because it increases productivity, bolsters economics of scale, its environmentally sound,
economically viable and ensures continuous stream of income. Increasing employment generation
is also a key benefit of this enterprise as the business expands over time. The products have the
propensity to be produced efficiently and can be marketed effectively.

APPENDIX

 BUSINESS PROFILE

NAME AGRORAF INTEGRATED FARMS

CROP OF INTEREST CASSAVA
LOCATION IBADAN
L.G.A. IBADAN NORTH EAST
STATE OYO
SIZE OF LAND UNDER CULTIVATION 2  HECTARES (5 acres)

PERSONAL INFORMATION

NAME OLUFADE, Yusuf

 GENDER MALE
PHONE NUMBER 08168925545
FARM SIZE 2  HECTARES (5 acres)
MODE OF LAND ACQUISITION CORPORATE
VALUE OF LAND 4,640,000.00
GEO-REFERENCE 793596.433mNLat  // 552975.505mELon
CROPPING PATTERN INTEGRATED FARMING

 
ENVIRONMENTAL AND SOCIAL IMPACT OF THE VALUE CHAIN BUSINESS ACTIVITIES

Environmental
Proposed
and Social Key Time Costs (N)
S/N Mitigation Responsibility
Impact Indicator Frame* per
Measures
Identified
Low income Cassava
Conversion of Production of
01 due to Crude value 5years 1,810,000
cassava to garri garri
farming addition
Conversion of No
Environmental Waste to Production of
02 cassava peels to 5years Additional
pollution wealth DHQCP
feed Cost **
Employing
Youth Creating additional Employment rural youths as
03 5 years 1,240,000
unemployment job opportunities generation FAs and
processors
Extending
Provision of water  tap for
Lack of Sinking of borehole
04 portable neighbouring 5years 500,000
portable water in the farm
water rural
communities

PS.: * means, even though 5 years was stated as time frame; however, the project is intended to be
sustained for life

**means there will be no additional cost as a result of economics of scale because it’s the same
machine, material and man power  used in garri production that will be also used in DHQCP
production.

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 CONTACTS.
Thank you.

Agroraf