Transforming the Cassava Sector in Nigeria

Transcription

Transforming the Cassava Sector in Nigeria
A. Adesina, M. Adetunji, T. Odunlami, J. Odeyemi, J.
Awoniyi, A. Egba, A. Oredipe, and M. Fregene,
Do
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o
DATCO, Shareholders Meeting,
December 15, 2011
Federal Ministry of Agriculture and Rural Development | 0
Outline






The Agricultural Transformation Agenda
Lessons on cassava from Asia
Cassava in Nigeria
Action Plan for the Cassava Transformation
An Operational Plan for the Cassava Transformation
Acknowledgements
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Agricultural Transformation Agenda
Directly building on Mr. President’s Transformation Agenda
The
Agricultural
Transformation
Agenda
“Nigeria can no longer continue to be a sleeping giant; we have
to wake up and if we wake up, we must begin to do things
differently”
- His Excellency, President Goodluck E. Jonathan GCFR, President,
Commander-in-Chief of the Armed forces of the Federal Republic of
Nigeria
Nigeria has lost US$10 Billion (1.6 Trillion Naira) annual export opportunity
from four agricultural commodities alone
Potential annual export revenues assuming Nigeria maintained its 1961 market share*
Measure: Millions of USD
Current export
revenue
Oil Palm
Cocoa
Groundnut
Potential additional export revenues†
Cotton
Potential export
revenue
† Additional
export revenues assuming 1961’s market share applied to 2008’s values for global trade of individual
commodities.
* Doreo Analysis, FAO
Nigeria spends 1.3 Trillion Naira importing wheat, rice, sugar and fish annually
Key takeaways
Nigeria’s top 4 food imports *
Measure: Annual food imports in billions of naira
Wheat
World’s largest importer
of US hard red and
white winter Wheat
 Nigeria’s food imports are growing at an
unsustainable rate of 11% per annum.
 Relying on the import of expensive food on global
markets fuels domestic inflation.
 Excessive imports putting high pressure on the
Rice
World’s #2 Importer
Naira and hurting the economy
 Nigeria is importing what it can produce in
abundance
Sugar
 Import dependency is hurting Nigerian farmers,
displacing local production and creating rising
unemployment
 Import dependency is not acceptable, nor
Fish
sustainable fiscally, economically or politically.
*CBN
The Days of Importing Cheap Food are over
The World food price index is at its
highest point in recorded history
Demand drivers: Significant increase in demand
Population growth: Cumulative growth in world population 1999 – 2009*
Measure: Millions of people
FAO world food price index
Measure: Index of price of food globally
Increase in standard of living: Per capita meat consumption in China**
Measure: kg per person
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1990
1995
2000
2005
2011
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4.4%
 Food exporters have demonstrated a
willingness to ban exports to ensure
their countries’ food security e.g.
Thailand, Russia, India, Vietnam etc.
 Export bans jeopardize Nigeria’s food
Increased biofuel demand: % of US corn production used for biofuels
Measure: % of US corn production
security.
10%
 Any shock in global markets will put
Nigeria’s national security at risk
e.g. North African riots.
* Doreo’s Analysis, World bank
** FAO *** Earth Policy Institute
Nigeria’s low agricultural productivity – Yield per hectare
Comparison of Nigeria’s yields across all crops versus
other leading agricultural countries
Index of crop yields relative to Nigeria’s yields in 1961*
Measure: Relative growth in crop yields
Annual growth rates
1961 – 2008
Malaysia
Thailand
Indonesia
Brazil
Nigeria
3%
2%
Key takeaways
 Yield per Hectare is the driver of
agricultural competitiveness.
 Nigeria's yield per hectare is 20% to
50% of that obtained in similar
developing countries.
2.3%
1.6%
1.2%
Indonesia lowest in 1961
 In 1961, Indonesia’s yields were lower
than that of Nigeria. In 20 years
Indonesia increased its yield 3 times.
 Nigeria has one of the lowest usage
1961 1970 1980 1990 2000 2008
rates of agric inputs.
Nigeria’s low fertilizer utilization**
Measure: Kg per hectare
Nigeria’s low utilization of improved
seeds**
Measure: Percent of farmers
 Across the board, Nigeria ranks at the
bottom on agric indices
 Mechanization Intensity: 10 tractors

* Doreo’s Analysis, FAO
**IFDC
per 100 Ha compared to Indonesia
with 241 tractors per 100 Ha
Irrigation: 0.8% of arable land
irrigated compared to Thailand’s 28%
of arable land irrigated
Role of targeted Growth Enhancement Support (GES) to migrate
farmers from subsistence farming to commercialized systems
Commercialized
systems
 Trade
 Competitiveness
Marketed
surplus /
Market
orientation
4 years
Highest
poverty level /
Subsistence
farming
4 – 10 years
GES
Income
 Fiscal Savings /
Greater return on
investment
 Targeting highest
poverty level
 Exit strategy
Time
Growth Enhancement Support Investment will be targeted at Twenty Million
Farmers by 2020. Investment will generate 5X to 10X returns in increased
production.
2012
2013
2014
2015
2016
2017
2018
2019
Key takeaways
2020
 Phased approach with support
Group 1
5 Million Tgt.
Farmers
4 Years of Support


Group 2
5 Million Tgt.
Farmers
4 Years of Support


Group 3
5 Million Tgt.
Farmers
Group 4
5 Million Tgt.
Farmers
4 Years of Support

to farmers reducing over 4
years.
Estimated cost per farmer per
year is 5,000 Naira (US$30)
Expected benefit of program is
up to 80,000 Naira per farmer
(US$500)
Total cost of program is
approximately 400 Billion Naira
(US$2.5 Billion)
Total benefit of program is
6,800 Billion Naira (US$40
Billion) a 16 fold benefit versus
cost
GES will leverage Mobile
technology to achieve scale
e.g. MPESA
4 Years of Support
Target commodity value chains by geopolitical zones
North
East
Cotton, Onion, Tomato and
Sorghum
+ Rice & Cassava
+ Livestock & Fisheries
South
South
Oil Palm and Cocoa
+ Rice & Cassava
North
West
Cotton, Onion, Tomato and
Sorghum
+ Rice & Cassava
South
East
Oil Palm and Cocoa
+ Rice & Cassava
Maize and Soybean
+ Rice & Cassava
South
West
Oil Palm and Cocoa
+ Rice & Cassava
North
Central
Development of Staple Crop Processing Zones (SCPZ)
Key takeaways
Cassava Agro Processing Plant
 Focus on attracting private sector agribusinesses to set up
processing plants in zones of high food production, to process
commodities into food products.
 The government will enable this by putting in place appropriate
fiscal, investment and infrastructure policies for staple crop
processing zones:
 Tax breaks on import of agricultural processing equipment
 Tax holidays for food processors that locate in these zones
 Supportive infrastructure, especially complimentary investment by the
government in roads, logistics, storage facilities and power.
Nigeria Starch Mill, Ihiala
 Infrastructure would focus on power, irrigation, flood control,
roads, rail, air etc.
 Staple Crop Processing Zones will link farmers in clusters to food
manufacturing plants.
 Develop Agricultural Investment Code, in partnership with
Ministry of Finance and Ministry of Trade and Investment and
CBN
 The location of Staple Crop Processing Zones will be dependent
on a combination of State government support and an analysis of
the comparative advantage of the region to produce the identified
commodity.
Support development of private sector driven, public sector enabled
marketing corporations
Leading global examples of marketing corporations
Leading global examples of marketing
corporations
Key drivers of success
 The scrapping of marketing boards during structural
adjustment, without any institutions to replace them or play
their functions, has left millions of farmers in a precarious
situation: market access is a challenge, price uncertainties
and volatility which leave them at the mercy of middle men.
 No developed country has such institutional abandonment
of farmers. We will revamp the functions performed by the
marketing boards, but be careful to ensure that we do not
build non-viable or over-bureaucratic institutions that tax
farmers like the old marketing boards.
 They must be owned by agricultural value chains, run as
private sector led (but government enabled) institutions
and empower farmers and the value chain actors and
generate value.
 These new institutions will be called marketing
corporations and will coordinate the production and/or
export of target commodities. In addition, they will
encourage investment into the sector from R&D to
infrastructure and processing. Finally, they will stimulate
the development of tailored financial services to grow the
sector.
Agriculture’s potential to grow the economy
Agriculture production in Nigeria
Value of Agricultural Sector, constant 2010 $ Billion
256
36
52
+159%
99
2010
69
Increased
Yield
Increased
Acreage
Shift to
Higher
Value
Crops
1
Additional potential
44%
33%
Current
Share of
growth,
%
SOURCE: McKinsey Global Institute; Team
Potential
2030
23%
High Level Key Performance Indicators (KPI’s)
Rice
Paddy
High Quality
Processed Rice
2010
2015
3.4 Million MT
7.4 Million MT
Negligible
2.5 Million MT
Jobs
Cassava Tubers
Cassava
Yield
1 Million
34 Million MT
51 Million MT
12.5 MT/Ha
25 MT/Ha
Jobs
Sorghum Grain
Sorghum
Yield
1.2 Million
9.3 Million MT
10.3 Million MT
0.75 MT/Ha
2.5 MT/Ha
Jobs
Cocoa
150,000
Cocoa Beans
250,000 MT
500,000 MT
Yield
300 Kg/Ha
500 Kg/Ha
Jobs
360,000
High Level Key Performance Indicators (KPI’s)… Continued
Cotton
2010
2015
Cotton Lint
20,000 MT
140,000 MT
Yield
150 Kg/Ha
400 Kg/Ha
Jobs
Fertilizer
Number of
Farmers
Reached
125,000
550,000†
20,000,000
† Assumes 500,000 metric tons of fertilizer is targeted at 5 million farmers (100kg i.e. 2 bags per farmer), only reaching 11% of
targeted farmers.
Do
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Cassava Transformation Plan
Driving Economic Development through Value Addition
Lessons from a Successful Cassava Revolution in Asia
 The Asian cassava revolution is driven by market
opportunities, particularly the huge Chinese
market, and entrepreneurs
 Market opportunities leads to an investment in
processing capacity
 Expanded processing capacity creates a market
outlet for cassava and income for farmers
 Higher income encourages adoption of improved
production methods - of high yielding varieties and
improved production methods - by farmers leading
to increased productivity
 Increased productivity, reduces unit cost of raw
material and makes cassava competitive
 High productivity and a competitive sector reduces
risks to investment in modern and large cassava
processing factories
 Any other learning experiences???
Cassava Map of Nigeria
Source: Akoroda et al. 2010
Federal Ministry of Agriculture and Rural Development |
The Potential of Cassava in Nigeria

Nigeria is the world’s largest producer
with 38 million MT in 2010; up to 45
million MT was produced in 2006

Nearly 90% of cassava production in
Nigeria is for domestic food production

Production is by small holder farmers; a
significant percentage are women
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
More than 95% of production and
processing is by rural communities

Nigeria could easily double its cassava
production with improved markets.

Linking Farmers to Markets is the Key to
unlocking the potential of cassava
Garri Value-Added Chain
 Largest value-added chain, in
terms of volume; an estimated
60-70% of all cassava produced
 Potential demand: 4-4.5 million
tons of garri or 26 – 28 million
tons of fresh roots/annum
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 Inelastic demand; hence cyclic
glut every three years
 Dominated by house-hold,
village-level processors and
trade intermediaries
 Inconsistent quality and low
hygiene
 Different qualities in different
parts of the country
Cassava Value Chains
HQCF
High Quality Cassava Flour (HQCF)
 Principal market –replacement of up to 10% wheat flour in bread; others – food industry,
adhesive industry, dextrins. Demand is over 400,000 tons per year.
Starch
Native and modified starches
 We have two functional starch mills in Nigeria with a combined capacity of 27,000 tons
(although they currently operate below capacity).
 Demand is 230,000 tons per year currently met by corn starch imports.
Chips
Dried Chips
 Principal market – to meet internal and external demand of cassava for industrial use.
China’s demand is expected to exceed 12 mill tons by 2015/16 due to their large ethanol
production. Demand is 520,000 tons per year from China and 400,000 tons
HFCS
Sweeteners - High Fructose Cassava Syrup (HFCS)
 The total sugar requirement for soft drink bottlers and juice manufacturers in Nigeria is
estimated at 200,000 tons of sugar p/a. A replacement of half of this by HFCS from
cassava, would create a 100,000 ton demand.
Ethanol
Fuel Ethanol (E10)
 Nigeria has adopted the policy of blending gasoline with 10% ethanol, the E-10 policy.
This represents a potential one billion liter per year market of fuel ethanol and 3.75billion
for cooking fuel, assuming 50% of feedstock comes from cassava, a raw material
requirement of over 3 million tons of dried chips is required.
The Cassava Action Plan
Fresh root demand (in Millions of metric tons)
Source of demand
2011
2012
2013
2014
2015
36.00
37.44
38.94
40.50
42.11
HCQF
0.35
1.15
1.17
1.20
1.22
Sweeteners
0.01
0.02
0.95
0.98
1.01
Dried chips
1.87
2.24
2.61
2.98
3.17
0
0
0.8
1.2
1.5
High Quality Garri
0.5
0.75
1
1.5
2
Surplus (purchase by govt)
1.7
0.8
0.3
0.2
0.2
40.43
42.40
45.77
48.55
51.21
Base-line for food (4% per
annum increase
Fuel Ethanol
TOTAL
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 Linking Demand to Supply
- Outgrower farmer networks linked to
existing and new processing plants
- Improved supply chain management for
large HQCF, Starch and Sweetener
factories
- Setting up new HQCF, Starch and
Sweetener factories
- Advocacy with end-users
- Production of dried chips for export
- Minimum price guarantee for farmers
 Raising productivity
- Commercial seed systems of processor and
farmer selected varieties
- Network of agro-dealers and capacity
building
- Increasing farmer access to credit to
purchase inputs
- Building capacity of extension agents for
effective farmer education
- Fertilizer and adaptive variety trials
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 The Cassava Market and Trade Development
Corporation (CMTDC)
- Study of expert from Thailand and China on the
Nigerian cassava sub-sector
- Establishment of CMTDC based upon
recommendation of Asian experts
- CMTDC conducts market development and
improvement (qualitative and quantitative)
 Policy report
- Enabling Legislative Acts for Market
development
- Fiscal Policies
- Financial Service Policies
- Agricultural Policies
- Cross cutting Incentives for motivation
 Monitoring and evaluation
- Base-line survey of cassava production and
processing
- Development of M&E plans to assess progress
of interventions
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Operational Plan – Stimulation of demand for HQCF
 Stimulate demand for cassava bread
 Strong political support for bread made from 40%
cassava flour.
 Bakeries will have 18 months in which to make the
transition, and will enjoy a corporate tax incentive
of 12% rebate if they attain 40% blending.
 All equipment for processing of high quality
cassava flour and composite flour blending will
enjoy a duty free regime.
 With effect from March 31st 2012, importation of
cassava flour will be prohibited so as to further
support this programme.
 From July 1st 2012, wheat flour will attract a levy
of 65% to bring the effective duty to 100%, while
wheat grain will attract a 15% levy which will bring
the effective duty to 20%.
 Consultations with the sector to ensure a smooth
transition are on-going.
 An aggressive training program for bakers on how
to make 40% cassava flour bread.
 Media promotion
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Nigerian President promoting 40% cassava flour bread
Nigerian Minister of Agriculture at IITA where the
40% cassava flour bread was first baked
Operational Plan – Expansion of HQCF Production
 Expand production of HQCF in Nigeria
 Upgrade and expand existing HQCF mills:
from total capacity of 60,000 to 100,000 tons
in 3-5 months
 Engage private sector to build 12 new HQCF
factories (40,000 tons/annum): total
additional capacity of 480,000 tons/annum
within 12 months
 Incentivize wheat millers and other actors in
the wheat flour value chain in Nigeria to do
backward integration and build new plants
 Develop effective financing mechanism for
plant upgrade, including 40% government
equity participation
 Encourage formation of out grower farmer
network via facilitation of access to tractors,
inputs, finance
DATCO HQCF cassava factory, Ijabge, Nigeria
Thai Farms HQCF cassava factory, Ososa, Nigeria
Operational Plan – Starch/Sweetener
 Support existing starch processing facilities to compete
with imported starch
 Access to capital, and fiscal incentives
 Preferential water and power supply agreements
 Encourage formation of out grower farmer network via
facilitation of access to tractors, inputs, finance
 Remove tariffs on starch processing equipment and
other agricultural processing equipment.
 Expansion of processing capacity
 Feasibility studies on establishment of large scale starch
and sweetener factories in Nigeria
 Provide incentives for establishment of new starch and
sweetener factories in designated staple crop processing
zones (SCPZ)
 Establish “express lane” policy to expedite agricultural
production machinery imports.
 Create a new generation of farmers around these new
factories
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Fuel Ethanol
 Establishment of a demonstration fuel ethanol
plant

Build a supply chain of farm clusters for supply of
raw materials to the plant from surplus production

Advocacy for fuel ethanol in automotive and
cooking fuel
 Establishment of four demonstration fuel ethanol
plant
 Feasibility studies on establishment of
demonstration scale fuel ethanol factories in
Nigeria
 Provide incentives for establishment of new fuel
ethanol factories in designated staple crop
processing zones (SCPZ)
 Establish “express lane” policy to expedite
agricultural production machinery imports.
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 Create a new generation of farmers, with high
starch varieties, access to finance and inputs, and
mechanization around these new factories
 Develop a financing program that includes smart
support from government
Improving Small Farmer Productivity

Cassava is produced by a little over 6
million farm families at an average farm
size of 0.5Ha and average yield of
11tons/ha

Production systems vary from mono crop,
where land is abundant to inter-cropping
with other crops – even rice

Limited use of inorganic fertilizer and
inappropriate cultural practices

Intervention to raise yield include
establishment of over a thousand
demonstration trials of best bet varieties
and increased access to inputs and
finance

The goal is an average yield of 20ton/ha
in 2014.
Cassava transformation implementation
underway already across 14 states

Cassava Market and Trade Corporation

Audit, upgrade, and pre-qualification of SMEs to supply
High Quality Cassava Flour

Infrastructure improvement /equipment upgrade for
clusters of processors of Gari, Fufu etc.


Private sector investments:

Training of bakeries in 40% HQCF bread

Cassava snack foods

Dried chip plants

Starch mills

Glucose plants

Ethanol plants
Novel cassava-bean flour snacks,
‘Chin Chops’
Supply chain management of producers linked to offtakers across cassava growing belts
Gon-Chuks HQCF factory makers of
Chin Chop, Mbirri
Cassava Market and Trade Development Corporation
 Team from China consisting of the secretary of the
Guanxi Association of starch producers, an
association of 120 starch factories and a dried
cassava chip importer.
 Visited cassava production and processing in
Nassarawa, FCT, Osun, and Ogun States, and IITA,
Ibadan
 Submitted a report on recommendations for a
Cassava Market and Trade Development Corporation
 Highlights include:
1) creation of a strong platform for cassava
producers and processors for advocacy,
information sharing, access to finance, quality
standards, etc
2) Establish a model training farm to train new
generation of farmers
3) Submit proposals to government on
development of novel products and valueadded chains
4) Fund from membership fees and grants from
government
Cassava Job Creation Targets – 1.2 Million Jobs by 2015
Primary Production | Value Chain
Primary Production Jobs
Annual Projected Number of Jobs in Primary Production
Measure: Thousands of Jobs
 Cassava has a relatively high labor content
Value Chain Jobs
Annual Projected Number of Jobs in the Value Chain
Measure: Thousands of Jobs
 The value chain is relatively labor intensive.
requirement of over 300 man days per Ha.
 Estimate that for every 1 jobs created in primary
 This high requirement translates into almost a quarter
million jobs in primary production alone.
production 1 job will be created within the value
chain.
 The value chain includes, input supply, service
delivery, aggregation of output and processing.
ACKNOWLEDGEMENT
 DATCO Shareholders for the Invitation to the Honorable
Minister of Agriculture of Nigeria, Dr Akin Adesina.
 Dutch Government for their support to Cassava + in
Nigeria.
 IITA and CIAT for their past contributions to the cassava
sector in Nigeria.
 Large number of stake-holders in cassava value-added
chain in Nigeria who have shared their experiences with
the transformation team.
 Numerous friends who have contributed to my learning
experiences.
THANK YOU FOR
LISTENING!
Do
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Transforming the Cassava Sector in Nigeria

Transcription

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