5. Development Clusters

5.1 Current Status

One of the more noticeable and highly expressed prerequisites in developing an efficient Cassava Industry in Nigeria was the need for better roads and cheaper transportation.

Throughout the study, access to markets and transport were found related to the quantity that producers sold. In the RTEP survey, respondents located on the road or within 5 km of the market were more likely to indicate that they sold more than 50 percent of home consumption compared with those located more than 5 km away from the market.

Table 5-1 Marketed Produce and Distances to Markets

Marketing produce in Nigeria is complicated by many hidden factors related to supplying produce to markets. For example, the only available transport is by truck and highway. Rail service is virtually non-existent in Nigeria. Reliance on highway transportation means roads are heavily travelled and are in need of regular maintenance and upgrading. Unfortunately good quality roads are few and maintenance irregular.

Breakdowns, accidents, congestion and road closures all represent a substantial cost for Nigerians and the economy. Transportation expenses represent a high percentage of the final product price. While travelling the study team interviewed three traders travelling from Ikom in Calabar. Their 9 11 lorry was faulty and they were offloading 50 kg bags of gari while the gari trader was looking for a vehicle to carry them to Uyo. Their full 9 11 Lorry load of gari was priced by the trader at N30 000 which must build in the costs and likelihood that such a breakdown would occur.

Another example of extraordinary costs to marketing is the time it takes to hire a vehicle and roadblocks. Traders on the New Haven Express reported that it took them from 1630 hours on Friday 12 December 2003 until 0930 hours the following day (the time of the interview) waiting and negotiating with transporters on the cost per bag for transport. The Enugu traders reported that transporters were insisting on N70 or N100 per bag of gari while they were negotiating for N50 per bag of gari. Transporters will typically charge N10 000-N20 000 for 200 bags of gari (a full 9 11 lorry) depending on road conditions and frequency of security checks (road blocks) that demand money from drivers. An example of the number of roadblocks, demanding money from drivers, is listed in Table 5-2. Breakdowns, time to negotiate with transporters and roadblocks all add to the cost of food in Nigeria.

Table 5-2 Road Blocks for a Selection of Routes

Figure 5-1 illustrates the cassava price variability from rural to urban areas by state. These price differences can be used as a proxy for transaction costs (which include transportation) between rural and urban markets. Costs appear highest in the Northern States.

Figure 5-1 Transaction Costs Between Rural and Urban Centres

Typically one would expect the price of cassava to be lower in the rural areas of state production than in the urban areas of state consumption. Negative values mean the opposite has occurred, the price in the rural areas was found to be higher than the price in urban areas. This can happen if traders upon entering the urban market find themselves unable to sell their produce and therefore must accept a price less than they could have received in their rural location or else return home with the produce. This can also happen if the urban area is able to attract a broad range of sellers (especially from outside the state) then the price reflects lower costs of production than that found in the State’s rural areas.

Another way to examine transportation costs is to ask transporters their prices and experiences. Table 5-3 lists the unit price per kilometre and tonne by route and type of vehicle. Although restricted to points starting from Ibadan, a range of destination points are provided. The unit costs are surprisingly consistent, ranging from N3 per km per tonne for a distance of 165 km to N8 per km per tonne for the Owerri-Lagos route.

Table 5-3 Transportation Routes and Unit Costs

In an attempt to identify the location of industrial users of cassava the Corporate Affairs Commission, which registers business names and handles the incorporation of companies, was a logical first step. Its list of businesses, if available, would have provided an unbiased list and location of numerous businesses across Nigeria. Unfortunately this information was unobtainable. Even though it has a web site (Corporate Affairs Commission, 2004) that suggests that a downloadable CD is available repeated attempts to contact the head office in Abuja by telephone, fax and e-mail were fruitless.

A second option was to request a directory of members from known industrial associations. This option however had the potential to be biased in favour of those associations that are more established and better organized, at least in terms of listing their members and locations.

The method finally used was to list all potential users of industrial cassava from the National Telephone Directory Yellow Pages Section. It was believed that such a listing of industries would represent an unbiased cross-section of like industries, at least in terms of their desire to be listed in the Yellow Pages telephone directory. Whether they still exist or not as an industry in Nigeria was irrelevant to the purpose of getting a general idea of preferred locations for industrial cassava production and processing.

The categories used to collect the yellow pages listings included all possible industries, namely, Baby Food and Products Manufacturers, Bakers and Confectioners, Biscuit Manufacturers, Canned Food Manufacturers, Confectionery Raw Material Suppliers, Supermarkets and Department Stores, Explosives, Farmers, Fish Farmers, Flour Mills, Food Contractors and Foodstuffs Suppliers, Food Processing Companies, Foods and Beverage Producers, Gari Processing Industries, Grinding Mills, Hotels, Restaurants, Livestock Feed Manufacturers, Mud Products, Newspaper Manufacturers, Packaging Industries, Paper Bags Manufacturers, Paper Mills, Converters and Distributors, Poultry Farms, Poultry Feeds (Feed Mills), Shipping Companies and Agents, Snack Stores and Suppliers, Starch Mills, Textile Manufacturers, Timber Industries, Trade Organizations, Trade Promotion and Transporters.

Of the 2 356 firms found, some were obviously more interesting than others. For example, poultry farms and feed mills are meaningful because of the extent to which they could utilize cassava in their feeds. Food processing industries such as bakeries and flourmills are also interesting because of the potential to substitute cassava for wheat flour. The concentration of supermarkets and transportation faculties was also interesting in terms of access to urban markets.

The Cassava Handbook contains numerous maps similar to the two shown here for textiles and bakeries. Of note, is the level of concentration along the main expressways running North South from Kano to Lagos and East West from Aba to Lagos.

This type of data is valuable to the selection of future processing locations and production sites.

Map 5-1 Location of Textile Firms

Map 5-2 Location of Bakeries

5.2 Future Targets

Data from the Handbook provides information on the number of small, medium, large or international size plants that would be required to process the additional demand that was described earlier in the processing and utilization section.

It is clear that the number of small and cottage scale industries necessary to meet potential demand is very large (Table 5-4). The implication being that the realization of this size of potential market opportunities will need to be coupled with the development of larger scale processing facilities.

Table 5-4 Number of Plants Required to Meet Estimated Demand

For the supply-chain to develop and survive there is a need to get the members of the supply chain to work together to assure that production, collection, delivery and processing activities are scheduled to work together. If key components of supply are ahead or behind schedule it is quite possible that the supply chain will fail.

The number of small and medium processing plants is great and will likely be scattered across the country. The estimate for large and world scale processing plants is more manageable to fathom and it is for these plants that the following selection criteria was formulated.

5.3 New Initiatives

Suggesting the best production locations or best locations to set up a plant is a difficult task and the answer will change depending on the objectives and situations facing the person, persons or institution desiring to know the best location. A number of conditions are necessary for selecting production and/or processing areas. The main one being proximity to the user.

Owing to data limitations, recommendations on the best site must be primarily limited to state recommendations. An approach is suggested which can be modified and adapted to different levels of aggregation.

It is suggested that the selection of best cassava production sites are not necessarily the best sites for production. However, owing to the bulkiness of cassava and the need, at times, to process freshly harvested cassava, the distance between production and processing sites may become a critical decision factor.

The selection approach demonstrated is based on selected data contained in the Handbook. The selected data are considered to be indicators of the suitability of each state as a cassava production or processing site. Individuals can select their preferred indicators.

For this study the following Table contains the indicators and the measures that were considered positive for production and processing sites.

Table 5-5 Site Selection Variables and Related Indicators

It is suggested that states with low population and village density are states that may have greater opportunities for cassava production expansion and perhaps larger contiguous blocks of land.

In earlier analysis of the baseline data collected by RTEP those farmers that were on the road or within 5 km of the road sold more produce than those farmers farther away. This argument was extended here to suggest that states with an express road have a better chance of marketing cassava than those states without an express road. Obviously more detailed information on the closeness of production areas to good roads would be a useful addition to the selection process.

Production and price variables were also considered in the selection process. It is suggested that states with higher than average yields (greater than 12 tonnes/ha) were better locations for increasing cassava production. Low absolute root prices (less than N8 000) and root prices below the 80 percent maize threshold price were also interpreted as indicators of competitively priced cassava and good producing states.

The selection of potential processing industrial sites follows the process associated with the selection of potential production sites. It is argued that the prices of cassava roots, gari and ratio of cassava to maize prices are all relevant. Low priced cassava roots are an obvious benefit to processing industries. Low gari prices (less than N20 000) are also beneficial. If the price of gari is high there could be a tendency to divert cassava roots from new industries to the gari market. Similarly, a low cassava to maize price ratio again is taken as an indicator that cassava is competitively priced.

The availability of expressways is taken as being beneficial to new industries, both in terms of their sourcing of raw material and their ability to move their products to markets.

Finally the existence of industries that are potential cassava users (animal feed, flour and starch) was taken as a positive indicator.

The number of positive indicators was counted and used as a gauge of the suitability of the state for expanded cassava and industrial processing of cassava. The following Table 5-6 lists the results of the selection process.

Table 5-6 Results of Site Selection Criteria

Six states are identified as exhibiting potential for expanded production (Map 5-3). Sixteen states were identified as exhibiting potential for processing cassava on a large scale (Map 5-4).

Map 5-3 States Identified for Expanded Cassava Production

The six states identified for production were also identified as potential processing sites. The selected states cover the zones North Central, South South and South West.

Map 5-4 States Identified for Expanded Industrial Cassava Processing

The results of the preceding analysis need to be assessed in light of data limitations and the fact that a different set of variables or cut-off levels would greatly alter the results.

Nevertheless it is hoped that the approach may be useful to those trying to identify the best cassava growing areas or best cassava processing areas.

The addition of intra-state data can assist with the selection of production or processing data. The following Map 5-5 illustrates the LGAs that ADP staff members identified as their best cassava LGAs.

Map 5-5 LGAs identified by ADP Staff as Best for Cassava Development

What is interesting to note is that the best LGAs in Kogi, Enugu and Benue almost constitute one large area that is rated as being very good for cassava production.

5.4 The Way Forward

The Nigerian Cassava Growers of Ogun State identified the need to reduce the distance required to move product to processing centres and markets. They suggested less than a 70 km radius or maximum of 200 km radius^[24]. The supply of public goods such as electricity, portable water and a good road system was also frequently identified as necessary improvements in Nigeria by those interviewed.

Four ways to reduce transportation costs caused by road blocks include the elimination of such blockages, the legalization and regulation of blockages, the preferred (free) passage of transport carrying cassava, cassava processed and cassava using products (with complaints to a cassava ombudsman or private police force) and a government refund of the charges imposed by such blockages.

Much is required to lower cassava production, processing and marketing costs in Nigeria. Perhaps a first step would be to provide a structure and organization to the industry. The Handbook is a beginning; an association and application of supply chain management would also help.