Transcript Slide 1
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 HQCF Value chain End use Milling & sieving & packing Drying Grating & pressing High Quality Cassava Flour Cassava dried grits Cassava wet mash / cake Peeling & washing Cultivating & harvesting Fresh cassava roots Cassava fresh roots 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 $4 per day (opportunity cost of labour) Regular monitoring of prices (incl wheat flour) Disclaimer: these are indicative figures! HQCF value chain Value addition: production costs + profit margins HQCF Value chain End use Milling & sieving & packing Drying Grating & pressing Peeling & washing Cultivating & harvesting Fresh cassava roots Price of HQCF Profit margin processor (transport costs) Fixed costs Other drying costs Diesel costs for drying Processing costs Price of roots Profit margin farmer Production costs of roots (FCR) Costs and profit margins Nigeria Improvement flash driers Costs and profit margins Ghana Costs and profit margins Ghana Costs and profit margins Malawi Costs and profit margins Malawi Costs and profit margins Tanzania Costs and profit margins Uganda Lessons learned • Various (market) drivers influence prices offered for HQCF – different in each country – Price of alternative raw materials (wheat flour, corn starch, local cassava flour) for targeted end use of HQCF determines HQCF price • Policies (import tariffs, tax, subsidies) • Foreign Exchange • Landlocked country vs sea port – Price of alternative cassava products (at local markets) determines price of cassava roots – Technology ↔ scale ↔ productivity ↔ efficiency ↔ profitability • Importance of profit margins across value chain • Need to create consistent and constant supply of raw material (fresh cassava roots): – By improving productivity of cassava – Through contracts and price agreements – By involving large-scale commercial growers, linked with smallholders (‘outgrower scheme’) Thank you Costs and profit margins Uganda Costs of HQCF and projected market prices (June 2011) 1000 flash drying flash drying sun drying sun drying sun drying sun drying US$ / t HQCF 900 capital costs Other drying costs 800 Diesel 700 600 Wet mash processing 500 Farmer's net margin 400 300 Cost of FCR 200 HQCF price Bread 100 0 HQCF price Biscuit Nigeria Ghana Ghana Malawi Tanzania Uganda Costs of HQCF (flash dried) and projected market prices, Nigeria 900 capital costs 800 Other factory costs US$/T HQCF 700 Diesel 600 Wet mash processing 500 Farmer's net margin 400 Cost of FCR 300 wheat flour price 200 HQCF price Bread/Biscuit 100 HQCF price Other 0 Oct 2010 Oct 2010 Jun 2011 Dec 2011 Costs of HQCF (flash dried) and projected market prices, Ghana 900 capital costs 800 Other factory costs US$/T HQCF 700 Diesel 600 Wet mash processing 500 Farmer's net margin 400 300 Cost of FCR 200 wheat flour price 100 HQCF price Bread/Biscuit 0 Oct 2010 -100 Jun 2011 Dec 2011 HQCF price Plywood Costs of HQCF (sun dried) and projected market prices, Ghana 900 Capital costs US$/T HQCF 800 700 Sun drying costs 600 Wet mash processing 500 Farmer's margin 400 Cost of FCR 300 wheat flour price 200 HQCF price Bread 100 HQCF price Plywood 0 Oct 2010 -100 Jun 2011 Dec 2011 Costs of (flash-dried) HQCF and projected market prices, Malawi 1,000 capital costs 900 Other factory costs US$/T HQCF 800 Diesel 700 Wetcake processing 600 500 Farmer's gross margin 400 Cost of FCR 300 wheat flour price 200 HQCF price Paperboard 100 HQCF price rural markets 0 Oct 2010 Jun 2011 Dec 2011 Costs of (sun-dried) HQCF and projected market prices, Malawi 1,000 Capital costs 900 Other sun drying costs 800 Wet mash processing US$/T HQCF 700 Farmer's margin 600 500 Cost of FCR 400 wheat flour price 300 HQCF price Bread 200 HQCF price Rural market 100 HQCF price Paperboard 0 Oct 2010 Jun 2011 Dec 2011 Costs of HQCF (sun dried) and projected market prices, Tanzania 800 Capital costs 700 Other sun drying costs 600 US$/T HQCF Wet mash processing 500 Farmer's margin 400 Cost of FCR 300 wheat flour 200 HQCF price Bread 100 HQCF price Packaging 0 HQCF price Rural Oct 2010 -100 Jun 2011 Dec 2011 Costs of HQCF (sun dried) and projected market prices, Uganda US$/T HQCF 900 800 Capital costs 700 Other sun drying costs 600 Wet mash processing 500 Farmer's margin 400 Cost of FCR 300 wheat flour 200 HQCF price Biscuit 100 HQCF price Rural 0 Oct 2010 Jun 2011 Dec 2011