Country comparison of efficiencies and profitability in the HQCF value chain

Helena Posthumus, Kola Adebayo, Francis Alacho, Nanam Dziedzoave, Grace Mahende, Vito Sandifolo, Lateef Sanni,

Andrew Sergeant, Andrew Westby

Partners:

Funded by the Bill and Melinda Gates Foundation

C:AVA project

HQCF value chain

Fresh cassava roots

Cultivating & harvesting

Peeling & washing

Grating & pressing

End use

Milling & sieving & packing

HQCF

Valu

e ch

ain

Drying

Cassava fresh roots

Cassava wet mash / cake

Cassava dried grits

High Quality Cassava Flour

Objectives

The objectives of the exercise were: – to allow comparison of production costs between

countries; – to identify areas for improvement of efficiency and

profitability; – to inform price negotiation; – to provide information for M&E purposes (e.g. return

per beneficiary)

Methodology

Based on typical costs of current practices and yields by country

Assume use of sun drying or upgraded flash dryers

Typical wage for unskilled labour used for labour costs: $1 to $4 per day (opportunity cost of labour)

Regular monitoring of prices (incl wheat flour)

Disclaimer: these are indicative figures!

HQCF value chain

Fresh cassava roots

Cultivating & harvesting

Peeling & washing

Grating & pressing

End use

Milling & sieving & packing

HQCF

Value addition: production costs + profit margins

Valu

e ch

ain

Drying

Production costs of roots (FCR)

Price of rootsProfit margin farmer

Processing costs

Diesel costs for drying

Other drying costsFixed costs

Price of HQCFProfit margin processor (transport costs)

Costs and profit margins Nigeria

Improvement flash driers

Costs and profit margins Ghana

Costs and profit margins Ghana

Costs and profit margins Malawi

Costs and profit margins Malawi

Costs and profit margins Tanzania

Costs and profit margins Uganda

Lessons learned

• Various (market) drivers influence prices offered for HQCF – different in each country– Price of alternative raw materials (wheat flour, corn starch, local

cassava flour) for targeted end use of HQCF determines HQCF price• Policies (import tariffs, tax, subsidies)• Foreign Exchange• Landlocked country vs sea port

– Price of alternative cassava products (at local markets) determines price of cassava roots

– Technology ↔ scale ↔ productivity ↔ efficiency ↔ profitability• Importance of profit margins across value chain• Need to create consistent and constant supply of raw material

(fresh cassava roots):– By improving productivity of cassava – Through contracts and price agreements– By involving large-scale commercial growers, linked with smallholders

(‘outgrower scheme’)

Thank you

Costs and profit margins Uganda