Sustaining Profitability and Growth of Starch Markets In Nigeria

The slow pace of growth in the starch value chain in Nigeria has remained a huge problem, and worried by the broad range of challenges faced by the starch industry, the Cassava Adding Value for Africa, (CAVA II), Nigeria team held a consultation on how to sustain growth and profitability of the starch markets in Nigeria. Uche Uduma writes.

The theme of the workshop fits into the current growth challenges enveloping the starch markets in Nigeria. Entitled “Sustaining Profitability and Growth of Starch Markets in Nigeria,” it was designed and organised by the Cassava: Adding Value for Africa (CAVA II), Nigeria team, to address the problems bedeviling the survival and growth of the starch industry in the country. The workshop held in Lagos recently, attracted different experts from various institutions across the country: The Project Director of CAVA II, Prof Kolawole Adebayo; Country Manager of CAVA II, Nigeria, Prof Lateef Sanni; Managing Director of Psaltry Starch International, Mrs Yemisi Iranloye; Managing Director of MATNA Foods Limited, Mr Dele Ogunlade, Managing Director of Thai Farms Limited, Louis Burger and Mrs Folusho Olaniyan, OON of Contact Consulting.
Speaking at the event, the Managing Director of Psaltry Starch International, Mrs Yemisi Iranloye pointed that the growth of starch industries in the country has been at a rather slow pace. This, she attributed to a wide range of problems affecting the value chain, such as the undue competition with imported cornstarch into Nigeria and lack of government policies aimed at supporting growth of the local starch industries.
According to her, “The growth of the starch market in Nigeria is slow, and not everyone that comes into the industry stands. Competition is one of the greatest challenges facing the industry. Many people are going for the imported cornstarch because they know that it is cheaper, even when the quality of cassava starch is whiter and better. Currently the importation of cornstarch in Nigeria is far bigger in value and volume compared to local supply. The latest information as available suggests that the price of imported starch, landing cost at user premises is N147,000 per metric tonne, whereas local starch sells for between 145,000 per metric tonne and 170,000 per metric tonne. The prices of cornstarch coming from outside is relatively cheaper compared to cassava.”
Mrs Iranloye went further to add, “What we have seen is that the starch industry is quite profitable provided all the production cost variables are in sync. If a business is not profitable, then it is not sustainable. Price of cassava in Nigeria fluctuates between N10, 000 and N17, 000 naira per metric tonne.  When the price fluctuates, the multi-national companies find it difficult to change their price and it is very difficult to make projections.”
“The quality of raw material especially starch content is also key. We have several varieties of cassava and their starch content are influenced by weather and soil. Average starch content that comes to the company is just 30 percent, majority of farmers that come to the company come with 22 percent average and our price is higher. The problem is how to get the cassava to produce 27 percent starch content.”
“The starch industry requires a lot of land, capital and technical knowhow. The industry is capital intensive, if a company is not very fluid, it cannot run very well.” She added.
In the same vein, the Managing Director MATNA Foods Limited, Mr Dele Ogunlade, also highlighted the problems constraining the development of the starch market in Nigeria.
He said, “Many have come and gone, those who have managed to remain in business have known no growth over the years. The problems in the industry include: inconsistent supply of cassava, the basic raw material; high cost of energy, and the undue competition with the cheap cornstarch being dumped on Nigeria by the agriculturally developed countries.  Pricing of starch below subsistence level by the high profile starch consumers, simply because they have access to alternative cheaper cornstarch; and the multiple taxation and sometimes irresponsible levies by the state and local governments are the major problems faced by the industry.”
Looking at the bright side, Mr Ogunlade however revealed that great opportunities exist in the starch industries. “The two major products of cassava that has been of major focus in Nigeria in the last 10 years are Cassava Starch and High Grade Cassava Flour. While the cassava flour competes with wheat, the cassava starch competes with imported cornstarch. At the moment, cassava flour has very narrow application; it is promoted as a supplement to wheat flour for the baking industry. On the contrary, starch has wholesale application in virtually all aspects of world economy; the market is therefore huge.”
To move the value chain forward, the Managing Director of Psaltry Starch International, Mrs Yemisi Iranloye said, “Efforts must be geared towards increasing the local starch supply to the Nigerian market and favourable conditions must be created to enable starch manufactures compete favourably. Secondly, industrial users of starch still hesitate to switch to locally produced starch, this needs to urgently be redressed. Thirdly, government should formulate policies aimed at supporting growth of Nigeria starch market.”
CAVA II Reaffirms Commitment To Support The Starch Value Chain
Rising to the issues raised by the stakeholders in the industry, the Project Director, Cassava Adding Value for Africa, (CAVA II) Prof Kolawole Adebayo reaffirmed CAVA II’s commitment to offer technical support to the starch industries.
He said, “In C: AVA project, our emphasis was on HQCF, at the end of the project we realised that it was an error. We realised that the overall goal of the project is to help farmers sell their cassava. In the second project, we expanded the focus to accommodate other industries like the starch, ethanol etc, and we are ready to offer our technical expertise to players in these industries that use cassava as a raw material. CAVA II project has a time limit which is 2019, we are trying to ensure that we do everything we have to do, to ensure that what we are doing is sustained beyond 2019.”
Prof Adebayo, however advised that increasing the cassava yield per hectare, through using the right planting materials can go a long way in increasing the cost-effectiveness of their production. He went further to add that CAVA II has an eclectic team of experts that can be made available to any industry that requires it, free of charge.
Rounding off the meeting, The Country Manager, CAVA II, Nigeria, Prof Lateef Sanni urged the stakeholders in the starch value chain to shift their attention from the government and come together as a group to find the ways to tackle the challenges bedeviling the sector, adding that CAVA is always ready to offer its technical support to any industry that requires it.
He said, “Attention should be shifted from the government. The private sector are the milk of the cassava sector. What CAVA II can contribute as a project is technical expertise. CAVA II can engage any expert. CAVA II can contribute to your farmers in respect of out grower’s scheme, where we can have farm field day, where we can teach the farmers how to do things right.”
In conclusion, Prof Lateef S_anni, advised the stakeholders in the starch value chain in Nigeria, to study the starch markets in countries, such as Brazil, Thailand and China, where the starch market is fully advanced, and use the lessons drawn from the countries to develop the starch markets in Nigeria.

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