Investing in yam flour producing and packaging plant for export

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The Minister of Agriculture, Chief Audu Ogbeh recently disclosed that Nigeria would begin the export of raw yam to other parts of the world, beginning from the 29th June, 2017. According to the Minister, this will serve as the possible means of economic diversification and also serve as a way of generating foreign exchange.

The Minister said that according to Food & Agricultural Organization (FAO) statistics, Nigeria accounts for 61 per cent of the total yam output in the world.

Nigerians on the 30th of June came up with the information that 70 metric tons fresh yam has been prepared for export.

I support fully diversification and export promotions. Export that is well managed will increase local production, and earn foreign exchange. However, there is need to put into consideration the effect of such export on the internal consumption. There is fear that the local prices of yam will go up if producers push their products to the export market. There is subsistence farming in Nigeria, calling for mechanized farming to increase local production to meet local demand adequately before looking at export market. There is fear that since Nigerian farming is not fully mechanized, the production of yam is still in the hands of few subsistence farmers. By the time you expose these farmers into export, they may make more money through export of their yam produce. Their attention will be focused to export market to the detriment of the local markets and consumers, which will lead to increase in the price of yam in the local markets.

From research carried out, you will even make more money from processing agricultural products such as yam. Establishing yam processing plants to produce yam flour, yam chips and yam flakes to mention but few will create more value, employ more hands (both direct and indirect), develop more small and medium scale industries as well as encouraging rural development.

There is need to add value to primary product like yam. When yam is processed, more value is added, local industries established, more jobs created and farmers produce more.

The world all over are reducing the export of primary products to processed products (add values). There is need to add value to primary Agricultural product instead of exporting them in raw form. When yam is processed, more value is added, local industries established, more jobs created and farmers produce more.

One of the more acceptable means of preserving yam is to convert it to yam flour, yam chips and yam flakes. The traditional processing method is out modelled and laborious and grossly inefficient for mass production to satisfy the teeming population and local demand and make room for the export market to earn foreign exchange.

Yam flour is a cherished delicacy among Africans and other parts of the world.

Its processing increases its shelf life, adds value to the tuber (from where it is processed) before being exported to enhance its economic value, reduces waste and cuts down the cost of transporting the product to longer distances compared with the heavy wet tubers that are unprocessed.

The fact that this can be preserved helps to stabilize prices during off harvest season. The setting up of this project is seen to be feasible, considering the following

Technical considerations

The plant aimed here will be able produce and package quality finished products for export. Its rated capacity is 1,250 metric tons of well packaged yam flour per year (8hours per day of 250 days in a year after allowing about 2.5% waste).this implies capacity of about 20tones per day. The conversion ratio of raw yam tubers to yam flour is 3:1. This means that about 1,500MT of raw yam tubers will be needed per day, working at full capacity.

The machinery and equipment needed to process yam flour are

(a) Yam Peeler (could be done manually)

(b) Boiler

© Dryer

(d) International Standard Scale

(e) Automatic Sealing Machine

(g) Packaging Machine

All the above machines and processing technology can be obtained locally. The machines apart from obtaining locally can as well be imported. The addresses of where to obtain both locally made machines and imported ones will be given to prospective investors on reaching to the writer.

Raw materials

The raw materials needed are yam tubers. These are obtainable from farms cultivated by plantations, small holders and co-operative farmers. There is abundant yam grown in this country. Nigeria is the world’s largest producers of yams with over six million metric tons per annum of this output; only about 5 per cent is put into industrial use by way of chips and flour. Almost all states of federation grow yam.

Location

The best place to locate this project is the area where yam tubers are obtained in abundance. Yam tubers are heavy and so transport expenses would be reduced if the project is located in areas where the tubers are grown in abundance, hence it can be sited in any part of the country. Other factors to consider include

(a) Availability of labour and raw materials in commercial quantity.

(b) Availability of infrastructural facilities (water, power, access road etc). Export processing zones will be most ideal for setting up this project, if it is basically for export.

© Ease or otherwise of the accessibility of the plant site to urban areas/ markets both for local consumption and export.

To accommodate the plant, one needs a large building with an area of about 1,500M2.

The market for yam flour

The market is both local and international. The latter should be targeted where there is preponderance of inhabitants of Africans in Europe, America and Asian countries. Based on research, some marketing points internationally have been established and would be given to prospective investors.

The factors that have positively affect the demand for this product include the prevalence of foreign exchange crunch, habit/culture, the increase in population of the country, the fact that its consumption cuts across demographic classes, income levels and religious boundaries.

Production process

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Briefly the processes involved in yam flour production are

(1) Procurement of good quality tubers, weighing and washing of them.

(2) Peeling the washed tubers

(3) Grinding of the peeled tubers into pulp.

(4) Drying of the ground yam pulp

(5) Milling of the dried pulp

(6) Sieving to avoid having lumps when being prepared for eating

(7) Bagging and Packaging (2kg, 5kg, 10kg, 25kg and 50kg).

Details of the standard required in the international market will be given to prospective investors.

Cost and funding

The project can be set up with minimum of N8.0 million using locally made machines. It will be more if imported machines are to be applied.

In terms of funding there are some institutions in Nigeria that are interested in the funding of this type of projects. Details will be given to prospective investors

Investment analysis

The project is very profitable. With good marketing strategies, good management and export oriented, the payback period would be less than 2 years.

The return on investment is very encouraging at over 58 per cent. Details will be given to prospective investors.

Source: The Sun Nigeria